Inspection Rights Flashcards
1
Q
Stockholders Inspection Rights
A
- right to inspect the corp’s books, records, ledger
- purpose relate to interest as a stockholder
2
Q
Stockholder Suits
A
- direct actions: stockholder is plaintiff, damage award goes to stockholder.
- derivative action: harm is to the corp. only derivative to corporation. Targets corp’s agents, usually drop in stock value, damages go to corporation.
- stockholder standing: own stock time of alleged wrong, time of filing, fairly/adequately represent corp’s interests.
- demand requirement: writing identify alleged defendants, wrongdoings, ask company to do something. Serve letter and wait to see what comp. does. EXCEPT
- if it would be futile (irreperable harm to corp. or majoriy of directors so biased couldn’t reasonably expect to respond in good faith)
- directors conduct a reasonable invesitagion, if directors reject demand, stockholder can file complaint for wrongful refusal, board’s decision governed by business judgment rule. Corp’s creditors generally cannot bring a derivative lawsuit.
3
Q
Stockholder Liability Piercing the Corporate Veil
A
- creditors hold stockholders responsible for a debt, necessary to prevent fraud or uphold paramount equity. Creditor who is not getting paid + stockholder doing questionable things. Not for aggrieved stockholders.
4
Q
Controlling Stockholder’s Fiduciary Obligation
A
- owns majority of stock, can influence the corp’s affairs bc has blocking position in the stock, appoints most of directors.
- may have fiduciary duty to minority stockholders if seeks to sell stock, eliminate other stockholders, or receive a distribution denied to other stockholder.
