Model Stock of the Fiduciary is a Duty of Ratification and Dividends but Limited

Question 1

Model

Answer 1

Model Filing After

(1) revised MBCA as adopted by WA = bus. Entity separate from its SHs and Ds who have limited liability; default provisions unless modified in AOI or bylaws
(2) Filing = AOI w/ SOS = registered office/agent, incorporator, corp name = inc, corp, co, ltd; stock info of shares, classes, voting, etc.
(3) After = organizational meeting = issue stock, adopt bylaws, and elect Ds; 120 days to file report w/names of Ds, Os, etc.
(4) Incoroporator = breach for not filing incorporator documents; knowing not in existence creates personal liability, unless the 3rd party knew; no right to compensation; ratification or novation to create Corp. liability

Question 2

Stock

Answer 2

Stock Director Shareholders
(1) Stock issuance = may be issued by Ds for any R. valuable exchange of good or services made in good faith
(2) Director = meet regularly (2 days advance notice and purpose for special and quorom, no proxy voting, electronic and oral notice ok in bylaws, so is telephonic appoval approval can be made outside if all agree and later ratified, recusal can be made on the record), minutes, day-to-day = majority vote by all present, else non-ministerial amendment, merger = 2/3 approval of all SH with at least 20 but no more than 60 days notice;
Director is deemed to approved unless object on record or submit later writing.
(3) Shareholders = own = do so by electing Ds at properly held meetings w/sufficient notice to all; Cumulative voting: Quorom; 10 days advance for regular and special; 20 for fundamental

Question 3

Fiduciary

Answer 3

Fiduciary Due Director

(1) Fiduciary = to corp and SHs
(2) Due Care = (manage/day-to-day) = protected under BJR = Honest errors of judgment after R. investigation = maintain corp. record + give SH access regardless of shares; 5 days advance written notice, no right to copy, describe purpose and documents
(3) Director Indemnification = mandatory when successful, but not if liable to corp

Question 4

Duty

Answer 4

Loyalty Competing Approval

(1) Loyalty = no secret benefits or self dealing or competing or usurping opportunity
(2) Interested transaction = duty to disclose interested transactions
(3) Approval = a majority of the disinterested Ds approve

Question 5

Ratification

Answer 5

Ratification Directors Officer

(1) Ratification (express/implied) = GP liability = personal liability when knowledge of outside scope
(2) Director’s agency != individual, but board
(3) Officers = all 3 agency = fireable employee for no reason by majority of Ds unless K; multiple positions = ok; can create corp. liability

Question 6

Dividends

Answer 6

Dividends Shareholders Piercing

(1) Dividends = profits proportionate to share != absolute right; Declaring = unsecured creditor = D liability when knowledge of no $
(2) Shareholders = liability up to share, unless knowledge of no $
(3) Piercing Corp. Veil = Corp. form used to evade a duty and disregarding form is necessary to prevent aiding injury/fraud

Question 7

Limited

Answer 7

Limited Manager Member

(1) WA LLC Act != partnership or corp, but common features; must say LLC, members names ok
(2) Manager /Member managed = effective w/filing = constructive notice of sole authority if manager; voting share based on contribution, revert back unless a new manager elected
(3) Member transactions = those obligation of any third party (relaxed conflict of interest); no right of buyout on dissociation; Piercing the veil = grossly undercapitalized.