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Yaeger REG > Mod 25 Key Terms Business Structure > Flashcards

Mod 25 Key Terms Business Structure Flashcards

0
Q

Articles of incorporation (corporate charter) are filed with the state contain…6

A 
1 proposed name of corp and initial address
2 purpose of corp
3 powers of corp
4 name of registered agent of corp
5 name and address of each incorporator
6 number of shares authorized
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1
Q

Short form merger 3

A

1 Parent mergers with a 90%+ owned sub

2 only approval needed is from board of parent

3 only stockholder’s of sub get appraisal rights

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2
Q

Incorporator said may be…

A

Promoters

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3
Q

To be a partnership parties must be co-owners of…

A

A business, not co-owners of property

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4
Q

A partnership must be operated for…

A

Profit

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5
Q

Partnerships impossible to perform…

A

In one year must be in writing

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6
Q

If a partner breaches the partnership agreement he is…

A

Liable to the other partners

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7
Q

General partners are jointly and severally liable for…3

A

1 all partnership debts
2 contract obligations
3 all partnership torts

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8
Q

General partners are agents…

A

Agents of the partnership and agents of each other

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9
Q

A general partner upon termination must give…2

A

1 actual notice to old customers and

2 published notice to new customers

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10
Q

Limited partnership consists of 2 or more parties formed by filing with…

A

A state

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11
Q

A general partner may also be a…

A

Limited partner in the same partnership

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12
Q

Limited and general partners may be either…

A

Secured or unsecured creditors of the partnership

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13
Q

Limited partners have the right to inspect and copy…

A

Partnership books and records to specifically include the right to receive copies of any partnership tax returns

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14
Q

Limited partners have no liability beyond…

A

Their capital contribution

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15
Q

If limited partners participate in daily management they are…

A

Personally liable to any party reasonably believing they were a
general partner

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16
Q

Limited partners may vote on the following 5 areas without losing limited liability

A

1 dissolution of limited partnership
2 fundamental changes in limited partnership
3 admission or removal of general or limited partner
4 amending certificate of limited partnership
5 act as agent

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17
Q

Partner’s rights: most decisions require only…

A

A majority vote

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18
Q

Partner’s rights:

Unless otherwise agreed, the following 5 require unanimous consent of all partners

A

1 admit new general partners or new limited partners
2 transfer partnership property to others
3 change written partnership agreement
4 admit liability in law suit or submit claim to arbitrator
5 fundamental changes in partnership business to include selling goodwill

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19
Q

Partnership rights:

If division of profits is specified, but not losses…

A

Losses will follow profits

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20
Q

In limited partnership, if it doesn’t state how to divide up profits and losses, then they are divided up based on…

A

Their capital allocations

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21
Q

Each partner has the right to be…

A

Reimbursed for loans and advances made to partnership

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22
Q

A partner is entitled to repayment for loans only…

A

After all other creditors are paid

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23
Q

All partners and limited partners have a right to full information of partnership, which is…

A

The right to inspect and copy books and records

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24
Q

Each partner is not a co-owner of…

A

Partnership property

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25
Q

Each partner has a right to use partnership property for…

2) But no other right to…

A

Partnership purposes

2) use property without consent of other partners

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26
Q

A partner cannot transfer or assign his individual interest in…

A

Partnership property to others

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27
Q

Partnership property may not be attached by…

A

An individual partner’s creditors

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28
Q

An general or limited partner may assign or sell…

A

Their partnership interest

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29
Q

Assignor still remains partner and is still…

A

Liable for partnership debts

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30
Q

The partnership will not dissolve from…

A

Assignment of partnership interest

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31
Q

An assignee does not become a partner without…

A

The consent of all other partners

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32
Q

The only right an assignee has is the right to…

A

Receive the assignor’s share of profits

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33
Q

The assigned is not liable for…

A

The assignor’s share of losses

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34
Q

3 steps required for partnership to formally end

A

1 dissolution
2 winding up or liquidation
3 termination

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35
Q

Dissolution, what is it caused by?

A

Caused by any partner ceasing to be associated with business

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36
Q

What does dissolution terminate and not terminate?

A

Terminates actual authority

does not terminate apparent authority

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37
Q

Winding up or liquidation

A

Settlement of partnership affairs

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38
Q

Termination

A

Completion of winding up process

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39
Q

Changes in limited partners do not…

A

Dissolve partnership

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40
Q

Any partner can dissolve the partnership by simply withdrawing, even if…

A

Prohibited by partnership agreement

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41
Q

If partnership agreement is breached by partner…

A

Partner is liable

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42
Q

Dissolution may occur by operation of law. 3 examples

A

1 death of partner
2 bankruptcy of partner or
3 bankruptcy of partnership

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43
Q

Exception: under Revised Uniform Partnership Act. Partner’s that own majority of partnership may choose to…

A

Continue general partnership within 90 days of partner’s withdrawal, death or bankruptcy

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44
Q

Upon dissolution, non continuing partners are…2

A

1 credited with their profits or charged with losses

2 liable to creditors

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45
Q

Upon dissolution, non continuing partners are liable to creditors even if…

A

Continuing partners agree to hold them harmless

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46
Q

Upon dissolution, creditors of old business are…

A

Creditors of the new business

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47
Q

Upon dissolution, a new partner has…2 for liability

A

1 Liability limited to his share of partnership property

2 not liable to creditors of old partnership

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48
Q

Order of distribution in dissolution of general partnership 4

A

1 pay creditors
2 pay loans made by partners to partnership
3 distribute capital contributions made by partners
4 distribute profits

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49
Q

Partnership creditors have first claim on partnership assets, but they may only sue a partner personally after…

A

All partnership assets are exhausted

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50
Q

Most states require 2 members to form a…

A

LLC

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51
Q

3 key areas of LLCs differing from other business forms

A

1 liability advantage

2 participate in management

3 federal tax advantage

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52
Q

All members in LLC have…

A

Limited liability and can participate in management

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53
Q

An LLC must file its articles of organization with…

A

The state

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54
Q

Operating agreement

2) is it filed with the state?

A

Agreement with LLC members (like a partnership agreement)

2) no

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55
Q

2 main methods of managing an LLC

A

1 member managed

2 manager managed

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56
Q

Member managed LLC 2

A

1 Each member has equal right unless otherwise agreed and

2 each member has actual and apparent authority to bind LLC

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57
Q

LLC may be managed by…

A

Managers elected by members

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58
Q

Manager managed LLC 2

A

1 members have no actual or apparent authority unless also a
manager

2 LLC managers have same limited liability as LLC members

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59
Q

LLC member rights:

3 rights determined by operating agreement

A

rights to profits, losses and distributions

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60
Q

LLC member rights:

Unless otherwise agreed, a member has the right to…

A

Assign his interest in the LLC

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61
Q

LLC member rights:

Unless otherwise agreed, a member has the right to assign his interest in the LLC 2

A

1 assignment doesn’t dissolve LLC, assignee doesn’t become
member

2 assignee only receives the right to receive assignor’s share of distributions

62
Q

An LLC is dissolved in much the same manner as…

A

A partnership

63
Q

In most states remaining members may continue LLC by…

A

Unanimous consent

64
Q

LLP is treated by law as…

A

A general partnership for most purposes

65
Q

In an LLP, partners in LLP are…

A

general partners

66
Q

In an LLP, partners are not jointly and severally liable for…3

A

1 partnership contracts

2 debts

3 torts

67
Q

An LLP is taxed as…

A

A partnership

68
Q

LLP must file with…

A

State

69
Q

Joint venture

A

Business association of 2 or more owners acting together for profit
For limited purpose and limited duration

70
Q

Joint ventures are usually for…

A

A single project

71
Q

Joint ventures are treated as…

A

A Partnership in most cases by law

72
Q

Death of joint venture does…

A

Not dissolve joint venture

73
Q

Corporations are formed by…

A

Promoters who are primarily liable for preincorporation contracts

74
Q

If a corporation accepts a promoter’s contract…

A

Both corporation and promoter are liable

75
Q

Corporation cannot…

A

Ratify promoters contracts

76
Q

Promoters remain primarily liable unless there is…

A

Novation

77
Q

Novation

A

Release

78
Q

Corporations are formed by filing Articles of Incorporation which must contain 2

A

1 stock provisions

2 names

79
Q

Stock provisions 3

A

1 Amount authorized shares

2 voting stock

3 capital structure

80
Q

Articles of incorporation:

names 3

A

1 name of corporation

2 it’s registered agent

3 names of all incorporators

81
Q

Common shares characteristics 2

A

At least one class and have voting rights

82
Q

Preferred stock has special rights over other stock usually as to…

A

Dividends

83
Q

Cumulative dividends

A

Dividend carry overs to future years if not paid

84
Q

Treasury stock 4 characteristics

A

1 no preemptive rights
2 no voting rights and no dividends
3 corporation can’t buy if it will become insolvent
4 can be distributed as stock dividend or resold at less than par

85
Q

Watered stock

A

Selling par value at less than par in original issue

86
Q

Watered stock, initial purchaser and all others with notice are…

A

Liable for difference in price

87
Q

Foreign corporation

A

Corporation doing business in state other than state of incorporation

88
Q

Foreign corporations must obtain a…

A

Certificate of authority from any state where they are doing business

89
Q

Merger of A&B

A

Combine and one survives

90
Q

Consolidation of A&B

A

Combine and new company emerges

91
Q

Approval steps for merger/consolidation 3

A

1 submit formal palm of merger to both boards and get majority approval
2 submit to all stockholder’s and get majority approval
3 submit plan to Secretary of State

92
Q

For a merger plan submitted to Secretary of State, the Secretary of State issues a…

A

Certificate of merger upon approval

93
Q

When submitting merger plan to stockholder’s and getting majority approval, notice must be given for…

A

Time, date and place

94
Q

Right of appraisal

A

Dissenting shareholders can buy out of corporation at FMV

95
Q

Piercing the corporate veil define

A

Disregarding corporate form and holding stockholder personally
liable

96
Q

3 situations where stockholder’s are liable under piercing the corporate veil

A

1 fraud

2 under capitalization

3 commingling of funds

97
Q

2 management rights of stockholder’s

A

1 elect board of directors

2 vote on fundamental changes to corporation

98
Q

Stockholder’s voting on fundamental changes to corporation 4

A

1 amending articles of incorporation
2 dissolution
3 selling substantially all of corp. assets
4 mergers unless short form merger

99
Q

Investors can inspect books and records at reasonable times if…

A

They have proper motive

100
Q

Pre emotive rights are only available if…

A

Corporation permits

101
Q

Preemptive rights are not available for…2

A

1 treasury stock

2 if stock is traded for property or services

102
Q

Derivative suit is brought by…

A

Large group of stockholder’s in the name of the corporation

103
Q

In derivative suit stockholder’s must show…

2) If successful recovery goes to…

A

Harm to corporation

2) goes to corporation

104
Q

Stockholder voting agreements are enforceable in most states if…

A

They are in writing

105
Q

When are directors liable for dividends?

A

Wrongful declaration of dividends

106
Q

Dividends become a corporate debt only after…2

A

1 after declaration and

2 public notice stockholders

107
Q

One a dividend is duly declare it can’t be revoked unless…2

A

For fraud or illegality

108
Q

Once a dividend is duly declared, stockholder’s become…

A

Unsecured creditors

109
Q

Stock dividends don’t reduce corporate assets or increase stockholder’s percentage of ownership or wealth, therefore they have no effect on…

A

Earnings for tax puposes

110
Q

Principal duties of directors

A

Handle overall management of corp and set policy

111
Q

Principal duties of officers

A

Handle day to day affairs

112
Q

Officers are selected by…

A

Board of directors

113
Q

Business judgement rule

A

Officers and directors not liable if acted reasonable and in good faith

114
Q

Directors can usually rely on reports of…

A

Officers and agents

115
Q

Officers and directors are liable if…

A

Negligent

116
Q

Officers and directors may make personal profit on deal with their own corporation in 2 cases

A

1 they make full disclosure and don’t participate in approval process

2 absent pre approval, only if deal is fair and reasonable for corp

117
Q

Indemnification of officers and directors

A

Reimbursement for losses in lawsuit if acting in their corporate
capacity

118
Q

Directors and officers may be indemnified by corporation if…

A

They win lawsuit

119
Q

If officers and directors lose the law suit indemnification may require…

A

Court approval

120
Q

Voluntary dissolution of a corporation requires…2

A

1 resolution is drawn up by the board of directors and

2 approved by majority of stockholder’s

121
Q

Involuntary dissolution requires…

A

Court action

122
Q

State can request court dissolution of corporation for…3

A

1 fraud

2 illegality or

3 no business activity

123
Q

Stockholder’s can request involuntary corporate dissolution if corporation is…3

A

1 hopelessly deadlocked

2 acting illegally or oppressively or

3 for waste of corporate assets

124
Q

Upon dissolution first creditors are paid and then shareholders receive their…

A

Pro rata share

125
Q

Silent partner…2

A

1 one who does not help manage

2 has personal unlimited liability

126
Q

In a sole proprietorship, business is not a…

A

Separate legal entity apart from its owner

127
Q

If business is operating under name other than that of sole proprietor, most states require that it…

A

File fictitious name statement with government

128
Q

Upon partner’s death, his/her estate is entitled to deceased partner’s…

2) but the estate is not entitled to…

A

Charge of profits and capital

2) not entitled to any specific partnership property

129
Q

Upon partners death, remaining partners have duty to…

2) Heirs do not automatically become…

A

Account to heirs for value of interest

2) partners

130
Q

4 other activities limited partners are allowed to engage in without risk of losing unlimited liability

A

1 6 surety for limited partners
2 consulting with general or limited partner about partnership
3 bring derivative suit on behalf of limited partnership
4 voting on loans of limited partnership

131
Q

Generally joint venture is not required to file a…

A

Document or certificate with the state

132
Q

Laws for LLCs generally governed by

A

Revised Uniform Limited Liability Company Act (RULLCA 2006)

133
Q

LLC must be formed according to…

A

LLC statue in the state in which formed

134
Q

General partners that convert partnership to LLC…

A

Retain liabilities they had with partnership

Only have limited liability with future transactions

135
Q

LLC is foreign LLC in other states in which it does business and laws of…

A

Laws of state in which it was formed typically govern LLC in those
Other states

136
Q

LLC is a separate legal entity so it can…

A

Sue or be sued in its own name

137
Q

Foreign LLC must register with the Secretary of State and obtain certificate of authority to…

A

transact business in state or it can’t sue in state courts

138
Q

To form an LLC 1 or more persons may act as organizers by…

A

Filing Certificate of Organization with Secretary of State

139
Q

LLC may be amended by filing an…

A

Amendment with Secretary of State

140
Q

There is no limit to…

A

The number of member in an LLC

141
Q

When LLC is manager managed, only…

2) if LLC is member managed…

A

Managers have authority to bind LLC to contracts to LLC

2) all members have authority to bind LLC to contracts to LLC

142
Q

LLC is bound to contracts that…2

A

1 LLC has authorized under agency law or

2 are made in ordinary course of business

143
Q

In an LLC, a member who is not a manager has no right to compensation for…

2) What’s the exception?

A

for services performed

2) entitled to compensation for services performed in winding up
The LLC

144
Q

LLC is required to reimburse members and managers for…

A

Payments they made in name of LLC

145
Q

Dissolution of LLC may require…

A

Filing dissolution document with state

146
Q

Majority of states require majority of partner approval to…

A

Become LLP (not unanimous)

147
Q

Most states allow LLP to be formed so the general partners have no personal liability for…

A

Contractual obligations of firm

148
Q

Partners in LLP have no personal liability for debts arising from…

A

Torts of LLP

149
Q

Partners have personal liability in LLP if…2

A

1 partner actually committed tort

2 those supervised under partner committed tort

150
Q

In general most provisions for Subchapter C and Subchapter S corporations are similar such as…2

A

1 limited liability for shareholders

2 structure of corporate management

151
Q

Main distinction between S corps and C corps is…

A

Tax treatment

152
Q

In professional corporations, professionals retain liability for…

A

Professional acts (malpractice)

Yaeger REG (77 decks)

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