Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Corporations > Formation of Corporations > Flashcards

Formation of Corporations Flashcards

1
Q

In the formation of corporations – what do they need to file?

A

File an articles of incorporation

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

In the articles of incorporation, what happens when you file on Jan 1st and sends you a notice back saying you filed wrong..

A

You can file against on Jan. 30 (30 DAYS) and the corporation is formed on Jan 30th. The day of approval, when you fixed. Not when you first filed.

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

What is in the Articles of Incorporation?

A

SPAWN
Shares info
Per value
Address
Purpose
Name of corporation

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

What happens if corporation messes up one of the factors when they file?

A

In the case where they thought they filed and went out in the world and acted as a corporation, the Court will protect them.

Messed up filing and tried to incorporate in good faith and business under corporation and did not know they failed the SPAWN factors?
- Court will impose limited liability and give you de facto corporation status.
- HINT: Someone woilll try and file with the Secretary of State and NOT GET A REJECTION and burst out into the doing business.

DE FACTO STATUS.

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

What is De Facto Corporation Status?

A

When you mess up and file with the State and do not get a rejection. The Court will impose limited liability and give you de facto corporation status.

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

What happens if a third-party does business with me as a corporation and tries to sue me PERSONALLY?

A

CORPORATION BY ESTOPPEL –>
Give B limited liability protection b/c you would get more than you are bargained for.

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

Do we need bylaws too when we form a corporation?

A

No. Articles always win.

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

What are bylaws?

A

Non-public internal govenring rules of the corporation.

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

How do corporations get financing?

A

Stocks, bonds, and loans.

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

Can a company issue more stock than their articles allow?

A

No.
Authorized shares are the max number of shares a corporation can use.
Every share is entitled to 1 vote unless stated otherwise.

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

What is a preferred stock?

A
  • Recieves priority of dividends and distributions.
  • Do not always have vopting rights, but get payments before common shareholders.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What happens if an outsider comes in a buys a huge amount of stock and the current shareholders get scared their voting power will be deluted?

A

Preemption Rights –>
You can keep your voting power the same in your articles of incorporations.

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

What is a dividend?

A

Cash distributions or payments in the form of additional stock given quarterly to shareholders.

SHAREHOLDERS DO NOT HAVE RIGHTS TO DIVIDENDS

CANNOT be held in bad faith and if you want to try to prove bad faith you have to show:
- Money was available to pay dividends
- Dishonest purpose for withholding them.

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

What happens if they withheld dividends in bad faith?

A

Shareholders can compel distribution.

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

Who are the three main players in corporations?

A
  1. Shareholders
  2. Directors
  3. Officers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Corporations must hold at __ to elect board members and address any issues

A

1 annual meeting

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

How many days notice is shareholders entitled to?

A

10-90 day notice before the day of meeting and entitled to know the purpose of the meeting?

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

How many days notice is director entitled to?

A

2 days prior to the meeting

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

Requirement to quorum

A

Majority of the shares entitled to vote are present.

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

Who gets to vote?

A

To be allowed to vote, you need to have owned stock on the record date.
Record Date is 70 days before the meeting.

21
Q

When is the record date?

A

70 days before the meeting.

22
Q

Can you vote on other people’s shares?

A

Yes - Proxy.

23
Q

What is proxy?

A

Proxy is a written agreement which is good for 11 months which is freely revocable by the shareholder who gave to you.

24
Q

For ordinary purposes, how many votes do you need?

A

Majority of votes

25
Q

For fundamental changes, you need how many votes?

A

Majority of outstanding shares need to vote for it.

26
Q

What happens when you are a shareholder and you think shady things are going on?

A
  1. Inspect the books.
    - Articles of incorporation, annual report, bylaws.
    - So long as you are harassing the corporation.
    - If you want to see juicy stuff, you need to give them 5 days notice to view them during regular business hours and need a particularly good and proper connection.
26
Q

For director elections, how many votes?

A

More votes than the other director.

27
Q

What’s an example of shareholder and shady things?

A

Credible newspaper has reported that the company was making bribes - good faith reason to inspect since the newspaper is legit.
If they say national equirer was talking shit = not enough.

28
Q

Must be a connection between documents and why you want to see them.

A
29
Q

Board of Directors

A

Control everything
Fire the CEO
Must need 1 director
Need a quorum of them to present action.

30
Q

Officers

A

President, CEO, secretary, teasturer.
Run day-to-day
Treat them exactly like agents and use authority rules
Owe duty of care.

31
Q

Rule:
Good Faith = Business Judgment Rule Protection
Bad Faith = No Business Judgment Protection.

A
32
Q

Rule:
Presumption that you acted in good fiath until someone shows court conclusive proof of otherwise.

A
33
Q

What happens –>
A director/officer or their family member is a PARTY to the transaction.

A

This is DCIT –>
Director’s Conflicting Interest Transaction.

Example: Not Allowed.
- Some directors approved a trip to themselves to Hawaii and bawling out on money.
- One dude voted to give lots of money to a company his bro owned.

34
Q

How do we prove our loyalty if we do one of these things and called into question?

A

DSF

Disinterested Director
Shareholder Approval
Fair

35
Q

Disinterested Director

A

Approved by a MAJORITY of disinterested directors AFTER full disclosure to them

Ex: The G admitted to everyone he has a conflcting interest transaction, but 5 out of 6 directors approved but they are family members –> 3 were family members, so they were not disinterested.

36
Q

Shareholder Approval

A

Approved by a MAJORITY of shareholders AFTER full disclosure to them

Ex: The conflicting P kind of comes clean to shareholders, but not really.

NEEDS FULL DISCLOSURE.

37
Q

Fair

A

Even tho you had conflicting interest, it was still FAIR to the corporation.

Ex: There was some EXPERT testifying saying this was fair. Obviously expert is being paid a shitload of money by the guy who did the unfair shit.

38
Q

Mergers

A

Happen when 1 party gets sucked into another company through a takeover.

39
Q

Consoidation

A

Happens when 2 companies become a NEW COMPANY.

40
Q

In mergers and acquisitions, what happens with dissenting shareholders?

A
  1. Challenge the merger
  2. Demand fair market value of their shares BEFORE the merger or consolidation happened.
41
Q

What about selling?

A

You need SHAREHOLDER APPROVAL to sell substantially all of the property in the corporation if it is NOT THE ORDINARY COURSE OF BUSINESS.

42
Q

ANYTIME on ANY of these probs, someone does something which is the ordinary course of business, they can do it.
If it is not, a majority or everyone needs approval.

A
43
Q

Two Types of Claims in Shareholder Litigation

A

Direct Claims
Derivative Claims

44
Q

Direct Claims

A

Shareholder can file a direct claim if they are claiming their rights were violated, NOT THE CORPORATIONS.

If one of these claims are successful –> shareholder gets $ directly.

45
Q

Derivative Claims

A

Brought by a S on behalf of a corp., often b/c the corp is not going pursue it b/c he is trying to sue

To file this:
1. Write a written demand to the board asking to file it.
2. Wait 90 days.

46
Q

Dissolution of a Corporation –>
S Attack v. Everyone Attack

A

The RMBCA allows S to petition to court to dissolve a corporation when:
- Deadlock among directors, which causing injury to the corporation.
- Illegality, fraud, or oppressive tactics against S.
- S are deadlocked and failed to elect directors 4 two consecuritve annual meetings.

47
Q

Voluntary Ending the Business

A

The RMBCA allows the Board of Directors to end the corporation if the proposal is:
- Adopted by the Board
- A special meeting is called where all S are notified
- S agree by a majority vote.

Corporations (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions