Corps Flashcards
Pre-Incorporation Liability
Promoters - personally liable, Corps - Not liable for pre-incorp tansactions. (except with novation)
Articles of Incorporation (AoI)
(i).Name; (ii) address of principal office; (iii) shares; (iv) name and address of registered agent; (v) name and address of each incorporator.
Naming conventions (Can’t be)
(i) indicate unauthorized purpose; (ii) can’t contain governmental-esque names; (iii) can’t be indistinguishable from other names (no suffixes or stupid characters).
Articles MAY include
Purpose/ Broad statement of; corporate powers.
How many directors
At least one.
AoI are prohibited from having provisions:
That impose liability on shareholders for attorneys fees in connection with internal claims.
List of Reasons for Internal claims:
(i) violation of duty; (ii) derivative action; (iii) actions via breaking internal/state laws; (iv) internal affairs doctrine.
Florida does not issue
Certificate of Incorporation
Incorporation Timing (dates)
Effective on date accepted. Or (i) five days or less prior to filing date; (ii) 90 days or less after filing date.
Time to fix failed filing
60 days. State returns failure within 15 days
Ultra Vires
Any action beyond the scope of the stated purpose.
Ultra Vires Challenges (How its done)
(i) Shareholder files suit to enjoin; (ii) Corp can take action against director/officer/employee; (iii) State can enjoin
Stock Subscriptions
(i) Irrevocable for pre-incorp for six months from date BUT can be revoked if all subscribers agree; (ii) has to be in writing; (iii) Non-payment can be enforced if given wwritten notice and more than 20 days lapses.
Pre-emptive Rights
None unless stated in articles.
Distributions only authorized by
Board of Directors (Shareholders can’t compel but court can order it)
Insolvency Tests
Equity: Must be able to pay debts. Balance-Sheet: Corps total assets must exceed total liabilities
Solvency Docs
(i) financial statements from accounting practices; (ii) fair valuation (reasonable).
Liability for Unlawful Distros
Directors are personally liable to corps. Can force directors to pay other directors or shareholders to pay pro rata of overage.
Shareholder Meetings
Annual - Time, Date, Place (any business is fine). Special - Only described business
Meeting Notice
No fewer than 10 days, no more than 60 days. | Special meetings require purpose. | Merger meetings require this purpose stated.
Voting Types:
Cumulative - Number of Shares x Vacancies - So, Dude owns 30 shares and Co has 3 vacancies. Dude gets 90 votes total to split. |
Proxy Voting
Valid for 11 months unless otherwise specified
Shareholder Inspection Without Restriction
(i). AoI; (ii) most recent annual; (iii) all written comms with shareholders for last three years; (iv) names/addresses current directors/officers; (v) minutes; (vi) records of actions taken without shareholder meeting.
Shareholder Inspection needing a Proper Purpose
(i). Corporate Books/Records; (ii) records taken without board member meeting; (iii). financial statements/accounting records; (iv). current shareholder record.
Notice of Inspection Timing - Corps
Shareholder needs to give at least 5 days prior.
Disclosure of Financial Statement
Must disclose to shareholder upon written request unless publicly shown.
Whats required to pursue Derivative Action?
(i) action is commenced; (ii) possession of stock through purchase or transfer.
Demand upon Board (Derivative Action) & Exceptions
Demand needs to be made first, then wait 90 days. (i) refuse; (ii) reject; (iii) ignore; (iv) irrep. injury; (v) futility.
Demand Syntax Requirements for Derivative Action
Verified and stated with particularity whether plaintiff made a demand, waited 90 days, or why they didn’t
Derivative Action Proceeding Stay
Inquiry will auto-stay.
Derivative Action Dismissal
Majority vote by independent directors; (ii) majority vote of committee consisting of two+ appointed directors; (iii) panel of 1+ appointed persons.
Piercing Corporate Veil Definition:
Goes after shareholders personally. - No Brightline on how to do this. Can include fraud, siphoning, unreasonable shit, etc.
Resignation of Director
Fine. Written notice to board, chair, sec.
Removal of Director by Shareholders
Anytime w/ or w/o cause. Has to be done at a meeting with that stated purpose. Can only removed by shareholder class who he was elected by.
Removal of Director by Judicial Proc.
Fraud or Best Interest of Company (dude gets fucked by politics)
Director Compensation
Fine. They can compensate themselves (of course they can…)
Director Regular Meeting Rules
Can be held without notice of time, date, place, or purpose unless stated otherwise in AoI/Bylaws.
Director Special Meeting Rules
At least two days notice of D/T/P, but no needed purpose. AoI/Bylaws can state otherwise.
Quorum
Based upon original amount of directors (majority needed)
Directors Voting Presence
Have to be there, unlike shareholders.
Director Duties
Duty of Care & Duty of Loyalty.
Self-Dealing/CoI
Breaches Duty of Loyalty.
How many Officers needed?
No Florida specifics. Bylaws do it. Appointed by directors but no contract rights afforded.
Merger Notice
ALL shareholders (regardless of ability to vote) must be given notice.
Is Approval Needed by Shareholders for sale/transfer.
No, (NOT THE SAME AS MERGER!)
Right of Appraisal
Granted when objection to corporate actions. Can force corp to buy shares at fair value.
Creditor Dissolution
Judgement, isn’t paying, insolvent/ Corporation admits its insolvent.
When Shareholders Can Dissolve
(i) Deadlocked + Irreparable Injury, business can’t be conducted; (ii) Shareholders deadlocked in voting for directors; (iii) Misapplied/wasted assets; (iv) Directors do illegal/oppressive/fraudulent nonsense; (v) corporation abandons business
Non-profs AOI
(i) Corporate name; (ii) principal office address; (iii) purpose; (iv) director electing method; (v) limits of corporate powers; (vi) registered agent address and written acceptance; (vii) name/address of incorporators.
Non-Profit Name
MUST contain Corp. or Inc.
Non-prof Shares
Can’t do it/ No distros/ No loans unless both non-profs
Non-Prof Number of Directors
3
Dissolution Plans
Has to adopt a plan for distro of assets. (Debts first, then others - Enumerated)
LLC Membership
Must have one member upon formation —- Can become a member through initial creation, merger, consent, owner transfer after 90 days of no members.
LLC Profit/Loss Allocation
According to each members contributions. (percentages)
Voting Rights Member Managed LLC
Each member has right to vote. Proportionate to current percentage.
Voting Rights Manager Managed LLC
Each manager has equal rights.
Member Managed LLC Liability
If member acts on own accord for unrelated things doesn’t make the LLC liable unless act was authorized.
LLC Statement of Authority
Can limit or itemize member authority
LLC members generally not _______ liable
personally
Operating Agreement Duties
Loyalty/Care. Operating agreement CANNOT eliminate obligation of good faith/fair dealing
Inspection Rights LLC
10 days to respond to demand
Rights of Judgment Creditors for LLC
Single member LLC - Creditor can foreclose and gain membership to exclusion of debtor. | Multi-member - Charging order only to get member’s distros.
Dissociation by Members
Can do it at anytime; may be liable to members and LLC though.
Voluntary Dissolution Will occur when
Member consent, event/circumstances trigger, 90 days with no members (Can save with new member)
