Jd - Corps

Question 1

Duty of care

Answer 1

Creates a presumption that in making a business decision, the directors acted on an informed basis, in good fair and in honest belief that the action taken was in the best interest of the company.

This is BJR.

Directors must be informed to an extent that they responsibly believe is appropriate. They are entitled to rely on information, opinions, experts, reports, or statements of corporate officers, legal counsel, public accountants, etc. when making decisions

Question 2

Burden of proof in showing directors breached duty of care

Answer 2

A party alleging directors breached.

Question 3

BJR

Answer 3

Directors are presumed to have decided on an informed basis, in good faith, and with the honest belief that the action was in the company’s best interest.

Question 4

Duty of loyalty breach

Answer 4

Director is on both sides of transaction
Competes with the corporation
Usurps a business opportunity

Question 5

Direct suits

Answer 5

Appropriate when the wrong done amounts to a breach of duty owed to the shareholder personally.
Not bringing suit on behalf of corp.
ex. Shareholder denied preemptive rights, denied payment of a divedend, or is bringing suit for oppression in a close corp.
ALL PERSONAL TO SHAREHOLDER

Question 6

Derivative suit

Answer 6

Injury caused to corporation and share holder is trying to enforce the corporations rights.
She can bring bc it is an owner of the corp.
SAD
the SH needs standing to bring lawsuit (owns stock in corp)
Adequacy (SH represents the interest of the corp)
Demand (SH should file a written demand and wait 90 days before filling a suit unless irreparable injury would result or a demand would be futile)

Question 7

Piercing the corporate veil

Answer 7

Plaintiff must show that shareholders of the corp or members of the LLC abused the privilege of incorporating and fairness requires holding them liable.

Plaintiff can pierce the corporate veil if it can show under capitalization of the business, failing to follow formalities, commingling assets

Question 8

Directors

Answer 8

Manage corporation. Meet regularly. Must vote responsibly, so can’t vote by proxy or voting agreement. BJR applies, and directors are presumed to act reasonably

Question 9

Shareholders

Answer 9

Own corporation. Entitled to annual meetings. Must receive notice of meetings: shareholders can vote by proxy or agreement bc they are not managers.

Question 10

Officers

Answer 10

Agents of the corporation. President, Secretary, tresurar, etc. power to enter into transactions on behalf of corporations. In agency question, an officer likely has actual or apparent authority to enter into a contract on behalf of corporation.

Question 11

Corporation must be

Answer 11

Incorporated. Articles of incorporation must be filed in the state in order to be valid

Question 12

LLC must

Answer 12

File articles of organization with the state. Members of an LLC are similar to officers in that they may have actual or apparent authority to bind LLC

Question 13

Articles of incorporation

Answer 13

Corporations contract with the state. Corporations name, address, names of incorporates. Additional provisions can be added. Because the corporation files these with the state, they are public

Question 14

Subscription

Answer 14

Offer to buy a certain number of the corporations shares. In general, the offer must be in a signed writing and state a price.

Question 15

Promoter

Answer 15

Someone who promoted a corporation before it is even formed by entering into pre incorporation contracts on behalf of the corporation.

Question 16

Promoters liability

Answer 16

Personally liable on contracts which they enter into on behalf of to be formed corporation.

Liability ends if there is a no action or release

Question 17

Ratify

Answer 17

Approving the acts of another. Usually the promoter. Expressly ratify or implied my ratify.

Question 18

Liability of corp for promoters actions

Answer 18

Not liable unless
The board of directors expressly adopts the agreement
There is a knowing acceptance or retention of the contracts benefits

Question 19

Quorum

Answer 19

Majority of the directors or outstanding shares entitled to vote represented at the meeting in person or by proxy. Look at number of shares present, not the number of people present for a shareholder quorum