Gleim 17 Flashcards
Define Novation
A novation substitutes a new party (the corporation) for an original party (a promoter of that corporation). For the novation to be effective, the corporation must agree to assume the promoter’s obligations, and the third party must agree to release the promoter
What can cause the piercing of the corporate veil
The corporation is thinly capitalized
List some LLP examples
Attorneys, CPAs, and physicians and family enterprises
Definite joint venture
An association of persons engaged as co-owners in a single undertaking for profit
WHAT MUST be contained in ARTICLES of incorporation? what is not?
Must - Number of shares of sock authorized to be issued by the corporation
NOT required - names of stats in which corporation will do bsuiness
NOT required - names of the initial officers and their terms of office
NOT required - name of the state it will maintain its business
What is a corporate shareholder entitled to what rights? what is not?
Entitled to - Approve Dissolution
NOT entitled - to receive annual dividends ; the board determines dividend policy
NOT entitled - elect officers ; the board elects officers
Corporation bylaw definition
A corporation’s initial bylaws shall be adopted by either the incorporators or the board of directors
By laws are NOT contained in the articles of incorporation
Partnership and right of management?
Has the right to participate in management of ABC partnership
RUPA factoring whether a partnership relationship exists - give an example
Fine and Walters divide the net profits equally on a quarterly basis
Ways to raise capital in a general partnership (3)
- Borrow money from family member
- Secure a business loan from a bank
- receive personal capital of the partners
cannot - sell shares of the business to reaise capital
What are (2) things an LLC must maintain in the state it is formed
- an agent for service of process
- an office
Can a general partner be a limited partner?
Yes
Explain a stock dividend in a corporation having only one class of par value stock
A stock dividend is a corporation’s ratable distribution of additional shares of stock to its shareholders
Characteristics of both sole proprietorship and a general partnership (3)
A “doing business as” filing is required if the owners will conduct business under a fictitious name
- the business’s profit and losses are passed through to the owner (s)
- equity capital may not be raised by selling shares of the business
Only Sole proprietorship NOT PARTNERSHIP - death of owner cases the termination of the business
Who does not have right to inspect partnership books and records ? (3)
Transferress of partner’s interest
- former partners
- employees
Allowed - INACTIVE PARTNERS
