Demi Corp Flashcards
SH RIGHTS:
o mavro new queen dissents
- Shareholders are owners, and do not manage a corporation. SH generally have annual meetings, with written notice (10-16) stating time place purpose, and vote annually, through record shareholder or proxy, or by agreement in quorum.
- Proxy: is news notice via electronic or writing to secretary authorizing vote
- Revocable by showing up to meeting, receipt of death.
- irrevocable when “proxy coupled with interest.” (i) irrevocable proxy + (ii) interest in shares other than voting (owning shares is coupled with interest)
- Dissenter rights→ merger SH will be entitled to valuation of shares, including: (i) prior to merger, (ii) written demand notice demanding fair value, no change in ownership of shares, (iii) no vote shares to approve merger.
SH LIABILITY
SH vs. Corp/Individual add + sad bj + grr
R: A SH may file an action to establish that the acts of the directors are illegal, fraudulent or oppressive to either the corporation or to the shareholder. Whether the suit is brought as direct or derivative turns on the type of injury suffered.
Direct: Direct suit is appropriate when injury to shareholder personally.
Example: SH sues for denial of preemptive rights, payment of dividend or oppression in a close corporation
Derivative: Derivative action is appropriate when harm was to the corporation. SH can enforce rights on behalf of the corporation if sad bj grr
Standing- shareholder owns stock throughout litigation
A- represents fair and adequate interests of corp
D- written demand showing that demand is futile, irreparable inj to corp
Ct may dismiss BJR. (Farmco can dismiss der action under BJR)
Under the business judgement rule, presumption is that the board investigated reasonably. Ct will not second guess a decision that was done in (i) Good Faith (ii) Rational Basis (iii) Reasonably informed. Here, prior to making a decision to seek termination of the shareholder derivative suit, the board formed a special litigation committee consisting of outside directors..
Law v. SH case + clonapif + duck
R: Company apart from shareholders, even where owns all stock. Court may nevertheless PVC and hold SH liable whereas here, clonapif: Close corporation, or Llc No precise test.. Ct will pvc if sh Abuse Privilege of Incorporating and Fairness requires SH be held liable. Generally one needs to show ducko Deceit of creditors Undercapitalization Commingling assets Knowing formalities but not following them Oppressive behavior towards minority shareholders Ex: duty to refrain from using control to gain advantage over minority shareholder, cant sell office for private gian Internal Affairs
II. DIRECTORS AND OFFICERS
Rights
II. DIRECTORS AND OFFICERS
R: Directors have a duty to manage corporation act as a body by voting. Shareholders hire and fire directors. Directors cannot vote by proxy or agreement, but quorum must be present. Unlike SH, director will not break quorum by leaving. (o mavro queen flipped)
II. Directors and Officers- Duty of Care
DUTY OF CARE pm ib gf + hb bic, bj
Under BJR, there is presumption that director, in making business decisions, does so with informed basis, good faith and honest belief, that the decisions are in the best interest of company. Decision may rely upon opinion, expert reports etc. Ct will likely dismiss bc will find that business decision was made consistent with bj rule.
examples→ nonfeasance and misfeasance
II. Directors and Officers- Duty of Loyalty
gf + rb, bcc (fag, cd, dow)
DUTY OF LOYALTY gf + rb, bcc (fag, cd, dow)
Rule: Director owes a corporation a fiduciary duty of loyalty, to discharge duties in good faith + reasonable belief that decisions were in best interest of company. BJ does NOT apply. Duty of loyalty arises in BCC
- B- BOTH SIDES OF TRANSACTION
Transaction will be set aside unless it was fag
Fair to corporation
Agreed upon by disinterested shareholders
Good faith when made - C- COMPETE WITH CORPORATION
Director cannot compete unfairly with corporation. Where facts suggest unfair competition, remedies include
constructive trust on profits imposed, or
disgorged profits and corp recovers profits - C- ANT USURP CORPORATE OPP
Director cannot usurp corporate opportunity, and instead must (1) Disclose OPP to the board and
(2) Wait for the board to reject the opportunity
ROADMAP: CORPORATIONS
SH RIGHTS–>
SH LIABILITY
SH RIGHTS_ OH MAVRO (new) QUEEN DISSENTS
SH LIAB_ ADD + sad bj gr
DIRECTOR
DUTY OF C: pm + ib gf hb bc, bj
DUTY OF L: gf r bc + bcc + fag, cd, (usurge)dow
FED INCOME TAX:
exclusions on gross income
** GILT… PIPE **
- Gift………………..unless Property
- Inheritance:
- Life insurance…. unless Installments
- Tort Aw……………..unless Punitive/Emotional
Fed income tax-
exclusions on gross income, employee
- PARLAMENT**
4. Premiums on health benefit
5. Accident insurance
6. Reimbursement of medical costs
7. Life insturance up to 50 k
8. Actual Medical care rec. as a result of health insurance
9. Meals, lodging if (1) by employer, (2) in kind, (3) on prem 10.Employee Tax Free benefits (de minim, discounts,
11. No additional costs to employer- flying , gifts/cer 500
12. Tuition
- PARLAMENT**
Fed income tax
basis of gains and losses ar- ab
BASIS OF GAINS/LOSSES→ AR-AB= LOSS R: Unless statutory or common law exception applies, whenever a gain is realized, it must also be recognized for tax purposes. Amount realized (AR) - Adjusted Basis (AB) =LOSS/GAIN
Property
Taxpayers basis in property acquired by purchase is PROPERTY VALUE (market value of property) + MORTGAGE/LIABILITY B takes subject/assumes - COST BASIS (PMC)
Divorce Property Settlements
Not cost basis→ Spouse receiving property will have same basis as delivering spouse CARRY OVER
Gift Property:
Recipient of gift takes the DONOR basis. This is known as SUBSTITUTE CARRY OVER BASIS
Inherited
The recipients basis is the FMV at the date of decedents death
mortgage or liability the buyer takes subject to/assumes -
Wills
I. Execution
Under PA statute, a will is valid if it is in
(i) writing
(ii) signed by T who is over 18
(iii) if not executed by T, witnessed by 2 other individuals.
(iv) Any mark that is intended to adopt the will counts as a signature, and anything before the signature is valid.
This applies to codicil as well, no holographic
Wills
I. Execution
Under PA statute, a will is valid if it is in
(i) writing
(ii) signed by T who is over 18
(iii) if not executed by T, witnessed by 2 other individuals.
(iv) Any mark that is intended to adopt the will counts as a signature, and anything before the signature is valid.
This applies to codicil as well, no holographic
Wills- Revocation by physical act requires
RIP BOD
Revocation by physical act requiresRIP
(i) intent to revoke
(ii) physical act.
Pennsylvania statute refers to burnt, torn caneled or destroyed.. bod.. NOT CHARRED
Civ Pro
Issue Preclusion
**APES F** actually litigated prior judgement essential to the judgement same parties/ privity full and fair opportunity to try case
Civ Pro:
Claim preclusion
STOP
same parties
t/o
prior judgement on the merits
