Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Bar corportations > Directors and Officers and Shareholders > Flashcards

Directors and Officers and Shareholders Flashcards

1
Q

how many board memembers MUST there be?

A

at least 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

who do shareholders elect

A

directrs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

when can shareholders REMOVE a director>

A

ANY FUCKING TIME. with or without case, even before term expires

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

can shareholders remove a director before their term expires

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is required for valid meeting>

A

1) unless all directors consent in writing to act w/o meeting, a meeting is required
2) notice of directors meeting can be set in bylaws
3) proxies ARE NOT allowed. No voting agreements. But conference calls ok
4) qurom: must have MAJORITY of ALL directors to take action
5) vote: to pass a resolution, only majority VOTE of those present (majority of those present)
6) each director is presumed to have concurred in board action unless her dissent or abstention is record in writing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

are proxies allowed for directors meeting

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

are voting agreements valid for directors meetings

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is the quom requirement for directors meetings

A

must have a MAJORITY of all directors to take action (unless # is different in bylaws)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what vote needs to be required in directors meeting to pass resolution

A

MAJORITY VOTE OF THOSE PRESENT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what if there are 9 directors how many must be present to give quom and to vote>

A

Quom: at least 5/9 directors must be present
vote: if 5 are present for quom, at least 3 must vote for resolution in order it to pass

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

do directors have a duty to manage?

A

YES. Directors may delegate management functions to a committee of one or more directors that recommends action to the board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what is the business judgment rule?

A

a presumption that directors manage the corporation in good faith and in the best interests of the corporation and its shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

will directors be liable for innocent mistakes under the business judgment rule?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

are directors fiduciaries?

A

YES. owe duty of care and loyalty

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what duty of care is owed to directors

A

must act with care that a PRUDENT person would in managing the business, unless the articles have limited director liability fora breach of duty of care

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

can the articles of incorporation limit the directors duty of care?

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

can the articles limit the directors duty of loyalty?

A

NO. Can only limit the duty of care not loyalty

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what is the duty of loyalty for a director?

A

may not RECEIVE an UNFAIR benefit to the detriment of the corporation or its shareholders. Unless there has been

1) material disclosure and
2) independent ratification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

when can a director get an unfair bnefit at the detriment of the corporation or its shareholders?

A

IF director gives

1) material advanced disclosure! and
2) independent ratification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what are the directors duty of loyalty prevent>

A

1) self dealing

2) usurping corporate opportunities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what is the duty of loyalty for self dealing

A

director who receives an UNFAIR benefit to herself (or her relative or another one of her business) in a transaction with her own corporation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

what is duty of loyalty for usurping corporate 1) authorized shares

2) purpose
3) Agent
4) incorporator
5) name

A

director receives an UNFAIR benefit by usurping for herself an opportunity which the corporation would have pursed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what are the 2 defenses a Director may use when they received an unfair benefit and breached duty of loyalty

A

1) proving that their conduct was FAIR to the corporation and
2) ratification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

what needs to be met for ratification defenses under duty of loyalty breach and unfair benefit to director

A

by obtaining INDEPENDENT ratification through

1) majority vote of INDEPENDENT DIRECTORS or
2) majority vote of at least 2 INDEPENDENT DIRECTORS or
3) majority vote of shares held by INDEPENDENT shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
do officers hold the same duties as directors?
YES
26
are officers agents of the corp
YES and bind the corporation by their activities
27
do directors have virtual unlimited power to select officers and remove them?
YES at any time. But the corporation will be liable for breach of K damages.
28
can a director or officer who has incurred costs, attorneys fees, and a judgment or settlement in course of corporate business, seek to reimbursement from corp
sometimes
29
when can the corp NEVER indemnify a director who
is held liable to own corporation
30
when MUST the corp. MUST ALWAYS indemnify officer or director
if 1) liability to 3rd party or settlement with the corp 2) Directors or officer shows acted in good faith and believed was in corp's BEST INTEREST
31
who may determine w/e to grant permissive idemnity>
1) majority vote of INDEPENDENT DIRECTORS; 2) majority vote of a committee of at least 2 INDEPENDENT DIRECTORS; or 3) majority vote of shares held by independent shareholders; or 4) a special lawyers opinion could recommend it and get it as well
32
what is a derivative suit
a shareholder suing to ENFORCE the corporations cause of action
33
what are the 3 requirements for shareholder bringing a derivative suit?
1) contemporaneous stock ownership 2) adequacy 3) must MAKE DEMAND ON DIRECTORS that they cause their own corp to bring suit - cannot bring suit until 90 days have passed on the demand (x/c 1) shareholder has received notice that corporation has rejected demand - x/c 2: irreparable injury to the corporation would result by waiting the 90 days to pass
34
what is the requirement of derivative suit for contemporaneous stock ownership
must own at least 1 share of stock when claim arose and | 2) throughout entire litigation
35
what is the derivative action suit requirement for adequacy
stock holder who brings suit MUST fairly and adequately represent corporations OWN interest
36
when must demand be made for derivative suit on directors
demand must be made OR at least 90 days have passed since demand was made
37
in IL when can a shareholder not make a demand on directors for derivative suit
demand can be excused IF alleged with particularity that demand would be FUTILE
38
For voting of shareholders does it matter who owns share at time voting occurs?
NO
39
who has rights to vote as shareholder?
only RECORD DATE owner votes
40
what is a record date owner
record date is the elibigity cut off ate set by board on any day w/i 70 day period leading up to vote
41
in IL what is the record date
set by board on any day b/w 10 days and 60- days in advance of meting
42
are shareholders voting by proxies recovable>
YES
43
when is a proxy vote irrevocable
must be in 1) writing 2) singed by record shareholder 3) sent to secretary of corporation 4) authorizing another to vote the shares 5) valid for only 11 months MUST BE LABELED IRREVOCABLE COUPLED WITH AN INTEREST
44
can a record owner revoke proxy even though it states that it is irrevocable>
YES, but be labeled irrevocable AND coupled with an interest
45
what must be required for a properly noticed ANNUAL MEETING
ever corp must have an annual meeting at which 1 director position is open for election 2) notice MUST include the time and place of meeting
46
where is the annual meeting in IL
at corporations registered office unless other wise said
47
what must the notice include for annual meeting
notice must include the time and place of meeting
48
how is a specially noticed special meeting called
called by board, the president or the holders of 10% of voting shares
49
what is a specially noticed special meeting
meeting of shareholders to vote on proposals or a fundamental corporate change
50
what must the special notice meeting include in notice
meetings special purpose b/c nothing else can happen at meeting unless in special notice
51
can anything be discussed in special notice meeting?
NO. only what is included in special purpose may be discussed
52
What is a quorum for shareholders?
focuses on the # of SHARES represented, not the # of shareholders - requires MAJORITY of OUTSTANDING shares when the meeting begins, unless provided in articles
53
for a quorum of shareholders is it the number of shareholders present?
NO. focuses on the # of SHARES represented, not the # of shareholders
54
what is the vote required for shareholders
if quorum is present, action is approved if the votes cast in favor of the proposal EXCEED the votes cast against - votes cast in favor exceed the votes cast against
55
for a vote approval of shareholders is it only the votes casted?
YES, votes casted in favor must exceed the votes casted against
56
what is a voting trust
formal delegation in writing of voting power to voting trustee which is generally enforceable for up to 10 years
57
what is a shareholder voting agreement
just agreement in writing to vote shares by agreement itself, is not binding and enforceable by all signing owners
58
what is cumulative voting
you may multiply the number of shares X the number of directors elected (ex: if 1000 shares and 9 elections 1000x9 and can put votes anywhere on 1 or more directors election
59
what if articles of Incorp is silent on cumulative voting?
under majority rule right to engage in cumulative vote DOES not exist unless in articles
60
in IL is cumulative voting presumed?
YES. cumulative voting presume unless in articles
61
do the shareholders have a right to examine the books and records of the corp?
YES ANY shareholder shall have acess upon 5 days written notice, stating a proper purpose
62
do the board of directors have discretion to issue divdidents
YES.
63
when may the board NOT issue dividends?
when corporation is 1) insolvent OR 2) would render corporation insolvent by the dividend
64
is the board members personally liable for unlawful dividends?
YES. but have a good faith reliance on financial officer's representations regarding solvency
65
when do COMMON stock get paid and how?
get paid last and paid equally
66
how are preferred stocks paid and when
preferred are paid 1st.
67
what are preferred participating stocks paid and how
get paid twice and first.
68
how are cumulative stock paid
get paid right away and any past years that were not paid. Paid first and back pay of previous years
69
may a corporations articles of incorporation limit or eliminate directors' personal liability for money damages to the shareholders or corp for actions taken?
yes
70
X/C for a corporations articles of incorporation limit or eliminate directors' personal liability for money damages to the shareholders or corp for actions taken?
except to the extent that the director 1) received a benefit to which he was not entitled 2) intentionally inflicted harm on the corporation or its shareholders 3) approved unlawful distributions or 4) intentionally committed a crime
71
if the approval for voting is different b/w by laws and articles of incorporation which one controls
When there is conflicting b/w articles and bylaws, articles win
72
what 2 instruments can set forth the way the votes needed q
1) articles of incorporation | 2) by laws
73
what if the by laws and articles of incorporation are conflicted on voting approval
the articles of incorporation govern
74
GR for shareholders proxy votes with revocability
GR revocable
75
when are shareholders proxy votes irrevocable
1) when it says they are irrevocable AND 2) coupled with an interest (proxy holder essentially pays for the right to be proxy, such as where the proxy holder has purchased the underlying shares from the owner of record)
76
what does it mean for shares for proxy to be coupled with an interest to be irrevocable
proxy holder essentially pays for the right to be proxy, such as where the proxy holder has purchased the underlying shares from the owner of record
77
how can shareholder proxy votes that are revocable be revoked
1) by subsequent instrument | 2) by the shareholder of record showing up to vote
78
what are the only 2 ways for directors have power to bind the corporation in K
only if there is actual authority to act. 1) regular meeting (a) NOTICE was given for a directors meeting (b) a QUROUM was present and (c) MAJORITY of directors approved the action OR 2) UNANIMOUS written consent of the directors
79
what is the other way directors can act without a meeting
unanimous written consent on all directors
80
does a notice of special shareholders meeting need to state purpose of meeting
YES
81
does a notice of a special DIRECTORS meeting need to state the purpose
NO
82
how may a director waive improper notice
either by signing a notice of waiver and filling it with the minutes of the meeting or attending the meeting
83
what is a DIRECTOR considered present for quorum purposes
a director will be considered present at the meeting if the director attends in person OR THROUGH REMOTE COMMUNICATION DEVICE that allows each participant to simultaneously hear the other participants
84
what is the required notice time for special director meetings
at least 2 days prior notice
85
can a director be present for quorum of meeting by through remote communication
YES. a director will be considered present at the meeting if the director attends in person OR THROUGH REMOTE COMMUNICATION DEVICE that allows each participant to simultaneously hear the other participants
86
can directors vote in meeting by remote communication
YES. a director will be considered present at the meeting if the director attends in person OR THROUGH REMOTE COMMUNICATION DEVICE that allows each participant to simultaneously hear the other participants
87
what are the 2 was shareholders can bring a suit regard to corporation which they own stock
1) derivative actions | 2) direct demand
88
what does direct demand require
no demand requirement. | -
89
a suit to compel a dividend
a suit to compel a dividend seeks to enforce a right that he individual shareholders have against the corporation; it is not seeking to enforce a right that the corporation has against anther.
90
Shareholders: if a quorum is present can it be broken by withdrawal of shares from the meeting
No
91
Directors:Can a director break the quorum by withdrawing from a meeting
Yes, unlike shareholders
92
Directors Meetings: does attending meeting constitute waiver of lack of notice
YES x/c unless attendance is for the sole purpose of protesting lack of notice
93
difference between shareholders special notice and directors special notice of meeting
Directors: special notice must be 2 days prior to meeting. unlike a special shareholders meeting a notice for special directors' meeting NEED NOT state the purpose. Only the time, place and location of meeting Shareholders: MUST STATE THE SPECIAL PURPOSE of meeting. Can only do matters in that special purpose
94
For shareholders special notice of meeting does purpose of meeting need to be told?
YES. Only matters within the special purpose of the shareholders notice can be discussed.
95
For directors special notice of meeting does purpose of meeting need to be told?
NO. special notice must be 2 days prior to meeting. unlike a special shareholders meeting a notice for special directors' meeting NEED NOT state the purpose. Only the time, place and location of meeting
96
how is director present at meeting
considered present at a meeting if the director attends in person or through a remote communications device that allows each participant to simultaneously hear the other participants
97
what are the only types of shares of stock that can vote
ONLY OUTSTANDING stock, not stock that corporation repurchased.
98
Rule for removing a director:
Shareholders may remove a director with out WITHOUT cause unless the articles of incorp or by laws provide otherwise
99
Rule for removing a director with cumulative voting
Generally, when a director is elected through cumulative voting the director cannot be removed if the votes cast against removal would be sufficient to elect the director if cumulatively voted at an election of the directors.
100
What is the BJR
presumption that a director's decision may not be changed if 1) acted in good faith 2) with the care of an ordinary prudent person would exercise in a like position 3) in a manner that the director reasonably believed to be in the best interest of the corp
101
what the requirements of BJR
1) director acted in good faith 2) with the care of an ordinary prudent person would exercise in a like position 3) in a manner that the director reasonably believed to be in the best interest of the corp.
102
does the BJR protect a director who has a personal interest in the transaction
NO. the BJR requires a director to act in a manner the director believes to be in the best interest of corp.
103
type of liability that exculpatory clauses cannot limit
cannot limit to the extent that the director 1) received a benefit to which not entitled 2) intentionally inflicted harm to the corp or shareholders 3) approved unlawful distributions 4) or intentionally committed crime.

Bar corportations (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions