MEE Rules Review

Question 1

What are a shareholder’s rights as it relates to a corporations books and records?

Answer 1

Shareholders have a right to inspect their corporation’s books a records for a proper purpose.

Question 2

How can a shareholder assert their right to inspect their corporation’s books and records?

Answer 2

A shareholder must give the corporation five days advance notice and state the reason for the inspection.

Question 3

Can a shareholder bring anyone with them to the inspection?

Answer 3

Yes. A shareholder can bring an attorney, accountant or agent to inspect the records.

Question 4

What are the differences between derivative shareholder actions and direct shareholder actions

Answer 4

Derivative shareholder actions→ Shareholder is addressing wrongs done to the corp. Must make a demand on the corp. before asserting this action.

Direct Shareholder action→ is enforcing duties owed to shareholder. Do not need to make a demand on corp. first.

Question 5

Do shareholders have a right to receive dividends?

Answer 5

Generally, no.

Question 6

When can dividends be declared?

Answer 6

When the board of directors declare one. It is in their sound discretion to declare it.

Question 7

Can a shareholder challenge the board’s failure to declare a dividend?

Answer 7

Yes, but they have the burden of proving the board acted in bad faith. Generally, the Court will not disturb the board’s decision if it’s done in good faith.

Question 8

Who can vote in a shareholder meeting?

Answer 8

Shareholders of record

Question 9

When are proxy agreements irrevocable?

Answer 9

When the proxy agreement is coupled with an interest (such as a security interest or sale of shares).

Question 10

How many votes are needed for a quorum?

Answer 10

Unless the Art. of Inc. or bylaws say otherwise you need a majority of outstanding shares entitled to vote for a quorum.

Question 11

How many votes are needed to elect a director?

Answer 11

Unless the Art. of Inc. or bylaws say otherwise, a director is elected by plurality of the votes.

Question 12

What is the Business Judgement Rule?

Answer 12

It is the presumption that the directors acted (1) in good faith, (2) with the care of an ordinarily prudent person in like position would exercise and (3) reasonably believed to be in the best interest of the corp.

Question 13

What is a director’s duty of care?

Answer 13

A director has a duty to act in good faith, with the care that a ordinarily prudent person in like circumstances would exercise and under the reasonable belief that their action is in the best interest of the corporation.

Question 14

In exercising due care who or what can a board director rely on?

Answer 14

A director can rely on reports from officers whom the directors find reliable and competent and outsiders about matters the director reasonably believes is within the outsider’s profession expertise.

Question 15

What is a director’s duty of loyalty

Answer 15

It is their duty to avoid profiting at the expense of the corporation (self-dealing)

Question 16

If a director self-deals can the transaction be cured?

Answer 16

Yes, if the interest director discloses all material facts and is approved by the majority of disinterested directors or shareholders OR the deal is fair.

Question 17

What actions would constitute a fundamental change?

Answer 17

sale of all assets in a corp. when it’s not done in the ordinary course of business.

Question 18

How can a fundamental change of corp. be valid?

Answer 18

The directors must pass a resolution for the shareholders to vote on. Then shareholders have a meeting to decide whether to approve it.

Question 19

How many directors are needed for a director meeting

Answer 19

a quorum of the directors.

Question 20

If a shareholder disapproves of a fundamental change what is the shareholder’s recourse

Answer 20

The shareholder can force the corp. to buy their shares (a.k.a.) appraisal rights.

Question 21

How can a shareholder assert their appraisal rights?

Answer 21

The shareholder must (1) file an objection with the corp. before the shareholder meeting about the fundamental change, (2) not vote in favor of the resolution and (3) deposit their shares with the corp.

Question 22

What happens if a dissenting shareholder and Corp. cannot agree on the fair market value of dissenting holder’s shares?

Answer 22

The corp. must file an action with the Court to determine the fair market value.

Question 23

In a conflict between the Articles of Incorporation and By-laws, which prevails?

Answer 23

Articles of Incorporation

Question 24

When will exculpatory clauses not protector board members

Answer 24

the director received a benefit that they were not entitled to, intentionally harmed the corp. or shareholders, approved unlawful distributions or intentionally committed a crime

Question 25

Where is the right against Double Jeopardy Derived from?

Answer 25

The 5th Amendment

Question 26

What does Double Jeopardy preclude?

Answer 26

D from being prosecuted for the same offense?

Question 27

When does Double Jeopardy attach?

Answer 27

In a jury trial→ when the jury is empaneled

In a bench trial→ when the first witness is sworn in.

Question 28

When are crimes not considered the same offense for Double Jeopardy purposes?

Answer 28

When each crime requires proof of an additional element that the other does not.

Question 29

If a state law allows D’s maximum sentence to be increased upon a showing of additional facts, to whom must these facts be submitted to and what is the prosecutor’s burden relating to them

Answer 29

The prosecutor must submit these additional facts to a jury and prove these facts beyond a reasonable doubt.

Question 30

What is the key difference between larceny by false pretenses and larceny by trick.

Answer 30

Title must pass for the crime to be considered larceny by false pretenses.

Question 31

What is commercial puffery

Answer 31

mere statements of opinion rather than fact (often includes superlatives like “best”).

Question 32

Can larceny by false pretenses be based on commercial puffery?

Answer 32

No.

Question 33

What is larceny by false pretenses

Answer 33

1. It is obtaining title
2. To personal property of another
3. By an intentional false statement of another
4. With the intent to defraud the other.

Question 34

How can the intentional false statement element of false pretenses be established?

Answer 34

By proof that D was aware of the high probability that the statement was false and made the deliberate decision to avoid the trust.

Question 35

How can the intent to defraud element of false pretenses be established?

Answer 35

By establish and intent for the victim to rely on the statement.

Question 36

How many days advance notice is a direct entitled to get for a special meeting?

Answer 36

Two days advance notice unless the article of incorporation says otherwise.

Question 37

What does a notice for special board of directors meeting include

Answer 37

information about the time, location, and date of the meeting. It does not need to have information about the purpose of the meeting.

Question 38

When is a board director legally present at board meeting?

Answer 38

When they can ““may simultaneously hear each other during the meeting”

Question 39

What must a director who received inadequate notice of a special meeting do?

Answer 39

Object to holding the meeting and not vote on the resolution.

Question 40

What happens if a director attends and votes at special meeting which they were not given adequate notice for?

Answer 40

The director waives their right to object to the special meeting.

Question 41

What are the three ways in which evidence of subsequent remedial measures can be used?

Answer 41

1. To show ownership and control
2. To rebut a claim that the precaution was not feasible or
3. prove that the opposing party has destroyed the evidence.

Question 42

Must an agreement for someone to act as an agent to sign land contract on their behalf be in writing?.

Answer 42

Yes. If the agent is signing a land contract on behalf of their principal. The agency appointment must be in writing. Note: This is assuming that the principal is the party to be bound.

Question 43

Can a tortfeasor seek contribution from a co-tortfeasor, if that tortfeasor settles with plaintiff.

Answer 43

No. By getting a release of liability (i.e. settling), the tortfeasor waives the right to seek contribution.

Question 44

What are the pre-charge requirements for a line up?

Answer 44

It cannot (1) be overly and unnecessarily suggestive and

(2) the procedures employed must not result in a substantial likelihood of misidentification

Question 45

Does negligence per se apply on only to criminal statutes?

Answer 45

No, it applies to civil statutes too!

Question 46

What is the implied condition to every contract?

Answer 46

There is an implied condition to act in good faith and deal fairly.

Question 47

What is a necessary component of third party actions? (civil law not contracts)

Answer 47

It must arise out of the same transaction or occurrence.