NY BAR REVIEW BUSINESS RELATIONSHIPS LAW COURSE Flashcards
1
Q
business relationships
A
business corporations.
limited liability companies.
partnerships.
2
Q
formation of a corp under which law?
A
BCL business corporation law
3
Q
BCL
A
requires filing of a certificate of incorporation w sec of state containing certain detailed info
4
Q
what is the certain detailed info?
A
corporate name.
corporate purpose - to engage in any lawful activity.
county where office is to be located.
specific info about shares authorized to be issued.
duration of corp if other than perpetual.
designation of sec of stte as agent for service of process.
designation of registered agent.
5
Q
name of bus corp generally MUST contain the word?
A
corporation.
incorporated.
limited.
6
Q
some phrases and many words are NOT permitted in corporate names or are permitted only w what?
A
consent of particular stte agency
7
Q
the word “insurance” may NOT be used without what?
A
approval of superintendent of financial services
8
Q
the word “school” may NOT be used without what?
A
approval of commissioner of education
9
Q
initial bylaws are adopted by incorporator where?
A
at organizational meeting
10
Q
any bylaw adopted by incorporator is considered to be a bylaw adopted by whom?
A
shareholders
11
Q
bylaws may contain what?
A
any provisions relating to business of corp.
conduct of its affairs.
rts and powers of corp.
rts and powers of shareholders.
12
Q
adoption / amendment / repeal of bylaws requires what?
A
majority vote of shareholders.
if provided in cert of incorporation or bylaw adopted by shareholder, including any bylaw adopted by incorporators, by requisite vote of board of directors
13
Q
BCL revision
A
substly revised effective 02/22/1998.
includes some provisions diff for corporations depending on whether were in existence on 02/22/1998 or formed afterwards.
14
Q
every shareholder is entitled to ___ vote for every share standing in his name on record of shareholders
A
1.
unless otherwise provided in cert of incorporation.
15
Q
any corporate action, other than election of directors, taken by vote of shareholders, generally requires what?
A
majority of votes cast at meeting of shareholders by holders of shares entitled to vote thereon.
unless otherwise provided by statute.
cert of incorp or bylaw adopted by shareholders.
16
Q
statutory exceptions
A
approval of amendment to cert of incorporation and
authorization of shareholders’ petition for judicial dissolution require vote of MAJORITY of all outstanding shares entitled to vote thereon.
approval of a merger or consolidation / approval of any sale / lease / exchange / other disposition of all or substly all, of the assets of the corp, if NOT made in unusual / regular course of business actually conducted by corp.
17
Q
authorization of non judicial dissolution requires what?
A
- corp incorporated after 02/22/1998, or whose certs of incorp expressly so provide, a majority of votes of all outstanding shares entitled to vote tehreon.
- for other corp in existence of 02/22/1998, 2/3 of votes of all outstanding shares entitled to vote thereon.
18
Q
abstention shall NOT constitute what?
A
a vote cast.
except as otherwise provided in the cert of incorporation or bylaw adopted by shareholders
19
Q
in place of voting at a meeting, any action by shareholders may be taken how?
A
w/o a meeting n written consent, setting forth the action so taken, signed by holders of all outstanding shares entitled to vote thereon or if cert of incorp so permits, signed by holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at meeting at which all shares entitled to vote thereon were present and voted.
20
Q
holders of 50% or + of outstanding voting share of bus corp MAY seek dissolution of corp on which grounds?
A
directors are so divided respecting mgt of corp’s affairs that votes required for BOARD ACTION cannot be obtained.
shareholders are so divided that votes required for ELECTION OF DIRECTORS cannot be obtained.
there is INTERNAL DISENSSION and 2 or + factions of shareholders are so divided that dissolution would be BENEFICIAL to shareholders
21
Q
minority shareholder’s rt to petition for judicial dissolution - holders of 20% or + of outstanding shares of bus corp, which is NOT a registered investment company and no shares of which are publicly traded, may seek dissolution of corp on which grounds?
A
directors have been guilty of illegal / fraudulent /oppressive actions toward complaining shareholders.
assets of corp are being looted / wasted / diverted for non corp purposes by its directors / officers or those in control.
22
Q
ct in determining whether to involuntarily dissolve corp MUST consider what?
A
whether liquidation is the only feasible means for shareholder to obtain FAIR RETURN and whether liquidation is reasonably necessary for PROTECTION OF RTS of any substl number of shareholders
23
Q
what are appraisal rts?
A
rt to dissent and be paid for shares.
rt to petition cts to receive payment of fair cash value of his shares.
statutory right of a corporation’s minority shareholders to have a judicial proceeding or independent valuator determine a fair stock price and oblige the acquiring corporation to repurchase shares at that price.
24
Q
who gets appraisal rts?
A
any dissatisfied shareholder of bus corp who dissented from certain types of corp action, and minimum ownership interest is NOT required
25
what is the purpose of appraisal rts?
to allow a corp to proceed w an action it views as beneficial while protecting rts of dissenting shareholders
26
shareholder of domestic corp is entitled to appraisal rts if what?
he opposed a plan of merger or consolidation to which corp is a party, subject to certain enumerated exceptions, including where shareholder's shares are PUBLICLY TRADED.
27
appraisal rts are available to shareholder who opposed what?
transfer or disposition of all or substly all of assets of a corp NOT in regular course of business (other than a transaction for cash in combination w dissolution of the selling company)
28
shareholder is entitled to appraisal rts if shareholder opposed amendment to certificate of incorporation that after the amendment was adopted, it what?
adversely affected any of shareholder's rts , including preferential rts, redemption rts, preemptive rts, voting rts
29
shareholders claiming appraisal rts MUST follow what?
procedures and time limits in BCL
30
what are the procedures and time limits in BCL re appraisal rts?
prior to vote being taken on proposed corporate action, shareholder MUST file WRITTEN OBJECTION to the action, including DEMAND FOR PAYMENT of fair value of his shares if corporate action is taken.
upon consummation of corp action, corp MUST timely make WRITTEN OFFER to each shareholder who has filed NOTICE OF ELECTION TO DISSENT to pay for his shares at a specified price, which corp considers to be their fair value.
if corp fails to make TIMELY offer of payment, or if dissenting shareholder fails to AGREE w price specified in offer, corp may initiate SPECIAL PROCEEDING to FIX the fair value of their shares. if it fails to do so, shareholder may initiate the proceeding.
31
board of directors may consist of what?
1 / more members
32
in absence of controlling provision in by law or cert of incorp, which provide for cumulative voting - ex., directors are elected how?
plurality of votes cast at meeting of shareholders by holders of shares entitled to vote in election
33
directors may be removed how?
vote of shareholders for cause, and if cert of incorp or bylaws so provide, without cause
34
majority of entire board constitutes what?
quorum for transaction of business
35
cert of incorporation or bylaws may fix quorum at less than majority but not less than what?
1/3
36
cert of incorp may fix quorum at more than a majority for what?
transaction of all, or any specified item of business
37
board action requires what?
majority vote of directors present at time of vote provided a quorum is present
38
cert of incorp may provide greater proportion of votes shall be necessary for what?
transaction of all, or any specified item of business
39
unless otherwise restricted by cert of incorp or bylaws, directors may participate in meeting by means of conference phone / similar communications equipment allowing what?
all persons participating in meeting to hear each otehr at same time and such participation constitutes presence at meeting
40
unless otherwise restricted by cert of incorp / bylaws, action by board may be taken w/o meeting if all member of board do what?
consent in writing to adoption of resolution authorizing action
41
contract / transaction bw corp and 1 of its directors, or any other business entity in which director is also a director/officer or has substl financial interest, is NOT what?
void or voidable by reason alone of director's interest / by reason alone that such director is present at meeting of board which approves such contract - interested director may be counted to establish quorum / that such director's votes are counted for such purpose if-
material facts as to director's interest in such contract / transaction and as to any such common directorship / officership / financial interest are disclosed in good faith / known to board, and board approves such contract / transaction by vote sufficient for such purpose w/o counting vote of such interested director, or if votes of disinterested directors are insufficient to constitute an act of the board, by unanimous vote of disinterested directors, or
if material facts as to such director's interest in such contract / transaction and as to any such common directorship / officership / financial interest are disclosed in good faith / known to shareholders entitled to vote thereon, and such contract / transaction is approved by vote of such shareholders.
42
if interested director contract / transaction is NOT approved as stated above, contract / transaction is still NOT voidable if what?
party / parties establish affirmatively that contract / transaction was fair and reasonable to corp at time it was approved by board / shareholders
43
corp loans to directors and guarantees of director obligations MUST be approved how?
by shareholder vote
44
majority of shares entitled to vote constitutes what?
quorum
45
shares of directors benefited by transactin may NOT vote / be included in determination of what?
quorum
46
for corp's formed after 02/22/1998 and for other corp's if so provided in certific of incorp, board may determine what?
that specific loan / guarantee benefits the corp and either approve specific transaction / general plan authorizing loans & guarantees
47
officers are typically elected by whom?
board
48
officers may be removed by whom?
board
49
may officers be removed with or without cause?
both
50
if cert or incorp permits, officers may be elected by whom?
shareholders instead of the board, and officers so elected may only be removed with or without cause by the vote of shareholders
51
an officer's authority to act as officer may be suspended by board how?
for cause
52
10 largest sharehlders of corp, not registered investment co and no shares of which are publicly traded, are ________ liable to its employees for ALL wages due the for services they performed for corp
jointly and severally liable
53
directors are ___________ liable if they vote for or concur / director is presumed to concur unless he expressly dissents in declaration of dividends / purchase of shares contrary to BCL / loan to director contrary to BCL
jointly and severally
54
there is a cause of action ag a director / officer for what/
self dealing.
loss of corp assets.
waste of corp assets.
55
BJR
business judgment rule
56
officers and directors MUST perform their duties how?
in good faith.
| w degree of care which ordinarily prudent person in like position would use under similar circumstances.
57
in performing duties in good faith and w deg of care of ordin prude pers in like position under simil circums, they are entitled to rely on what?
```
info.
opinions.
reports.
sttmts.
financial sttmts.
other financial sttmts.
other financial data.
```
58
info /opinions / reports / sttmts / financial sttmts /other financial data / other financial sttmts prepared of presented by 1 / more other officers / employees of the corp /or any other corp of which at least ____ % of outstanding shares of stock entitling holders thereof to what?
50%
vote for election of directors is owned directly / indirectly by corp, whom officer believes to be reliable and competent in matters presented
59
info /opinions / reports / sttmts / financial sttmts /other financial data / other financial sttmts prepared of presented by counsel / public accnts / other persons as to matters that officer believes to be w/in such person's professional/ expert competence, so long as in so relying he is acting how?
in good faith and w such degree of care, but officer shall NOT be considered to be acting in good faith if he has knowledge concerning matter in question that would cause such reliance to be unwarranted
60
director is entitled to rely on info /opinions / reports / sttmts / financial sttmts /other financial data / other financial sttmts presented by committe of the board upon which he does NOT serve, as to matters w/in its designated authority, which committee the director believes to merit what?
confidence, so long as in so relying he shall be acting in good faith and w taht deg of care which an ordinarily prudent person in like position would use under similar circumstances but director shall NOT be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted
61
officer / director who so performs his duties shall have ___ liability by reason of being / having been an officer / director of the corp
NO
62
individuals authorized by law to render same prof service may form professional service corp for purpose of providing that service, except that what?
individuals duly authorized to practice professional engineering / architecture / landscape architecture / land surveying / geology may join in same professional service corp / design professional service corp
63
formation of a professional service corp requires what?
filing of cert of incorp w sec of state containing certain detailed info,including profession or professions to be practiced and list of individuals who are to be its shareholders / directors / officers, who MUST be licensed in profession, except that in a design profssional corp, w some limitations, shareholders may include employee stock ownership plans and employees who are not design profs, which employees may also be directors / officers.
64
cert of authority issued by licensing authority MUST accompany what?
filing of formation docs
65
prof serv corp may only render services through LICENSED individuals in designated profession/s and ________________ generated by corp in rendering prof services MUST bear signature of licensed indiv in charge of such doc
```
plans.
reports.
transcripts.
opinions.
like docs.
```
66
name of prof service corp MUST end w words ___?
PROFESSIONAL CORPORATION
| P.C.
67
name of design prof serv corp MUST end w words _____?
DESIGN PROFESSIONAL CORPORATION
| D.P.C.
68
each shareholder / employee / agent of prof service corp / design prof corp is ____ liable for negligent / wrongful act / misconduct committed by him or any person under his direct supervision / control while rendering prof services on behalf of corp
personally
69
such shareholders and other persons are ______ liable for negligence of any other shareholder / person if they did NOT supervise them / personally participate in questioned actions w them, nor are they responsible personally for what?
NOT.
| contractual debts and obligations of the corp.
70
each same shareholder and prof employee of prof serv corp continues to be governed by what?
same prof regulatory and licensing authority applicable to shareholder / employee prior to formation of corp
71
practitioners should be aware that corps for certain specific purposes are formed under and regulated pursuant to other statutes, including which laws?
```
banking.
cooperative corps.
education.
insurance.
not for profit corps.
railroad.
religious corps.
transportation corps.
```
72
banking law
corps providing banking services / state chartered banks / savings banks / trust companies / safe deposit co's/ investment co's MUST be incorp under this law
73
cooperative corp's law
cooperative corp's are generally formed by those who are producers / marketers / consumers of food products for purpose of rendering mutual help and service
74
education law
universities/ colleges / libraries / museums / other educational institutions are incorp by board of REGENTS
75
insurance law
ins co's are incorp by SUPERINTENDENT of fin services
76
not for profit corp's law
most corp's formed other than for profit - charitable / educational / religious / scientific / literary / cultural organizations / societies for prevention of cruelty to children / animals / civic / patriotic / social / fraternal org's and prof / commercial / industrial / trade associations are incorp pursuant to this law
77
railroad law
corps formed for purpose of owning and operating railroad are formed pursuant to this law
78
religious corps law
religious corporations are incorp under this law / contains specific provisions regarding various religions
79
transportation corp's law
gas and electric corp's / telegraph and phone corps / water works corps / ferry corps / pipe line corps / freight terminal corps / district steam corps / sewage works corps, formed pursuant to this law
80
formation of LLC requires what?
limited liability co.
filing of articles or organization w sec of stte containing certain detailed info - co name / county where office is to be located / designation of sec of stte as agent for service of process and if desired, designation of registered agent - LLC law
81
an LLC is formed when?
at time of filing initial articles of organization / at any later date specified in articles of org.
82
at time of formation, LLC MUST have ___ members
at least 1
83
name of LLC MUST contain words _____
LIMITED LIABILITY CO. or abbreviation L.L.C or LLC
84
other restrictions on words MAY be included in the name are substly the same as for ____
business corps
85
the LLC MUST, in accordance w detailed statutory requirements, publish a copy of what?
articles of org or notice containing its substance in 2 newspapers - selected by county clerk, in county in which principal office will be located, once a week over
period of 6 consecutive wks, MUST file proof of publication w sec of stte w/in 120 days following effective date of LLC registration.
86
in event of failure to comply w publication requirement, authority of LLC to conduct business w/in state is suspended and LLC is unable to maintain what?
name / action /special proceeding
87
doesnt preculde LLC from defending what?
any action / proceeding brought ag it.
impair validity of contract / other act of LLC.
impair rts or remedy of other party by virtue of contract.
act or omission of LLC.
result in member or manger of LLC becoming liable for LLC'S contractual or other obligations.
88
members of LLC MUST adopt what?
written operating agreement - bylaws of business corp / partnership, before, at time of, or w/in 90 days following filing of LLC'S at of organization, to be effective upon formation of LLC / at later time as provided in operating agreement
89
operating agreement MAY be amended from time to time, but NO amendment may what?
adversely affect various rts of member w/o member's consent
90
LLC'S may be managed by whom?
mmbrs or mgrs apptd / elected by mmbrs.
91
unless arts of org provide that LLC will be managed by mgrs, LLC will be deemed to be managed by whom?
its mmbrs, in capacity as mmbrs, w voting rts in proportion to their shares of LLC profits
92
if arts or org provide for mgt by managers, such mgrs will hold offices and have responsibilities accorded them by whom?
members as provided in operating agreemnt.
| any action to be taken by vote of mgrs requires majority vote
93
mmbrs & mgrs are generally liable?
NOT personally liable for debts and obligations of LLC / each otehr, whether arising in contract or tort, solely by reason of being mmbr or mgr LLC LAW.
94
ten members of LLC w largest percentage ownership interest are jointly and severally liable to employees for what?
wages for services they performed for LLC
95
operating agreement may eliminate or limit personal liability of mgrs to LLC or members for what?
money damages arising from breach of duties but NOT for acts taken in bad faith involving intentional misconduct / knowing violation of law or for pecuniary gain
96
individuals authorized by law to render same professional service may form what?
professional service limited liab co. for purpose of providing that service
97
individuals duly authorized to practice professional engineering,architecture, landscape architecture, land surveying, geology may join in what?
same prof service limited liability co - PLLC
98
if PLLC engages in multiple permitted professions, at least 1 member of PLLC MUST be what?
licensed in NY to practice each such profession
99
all prof services MUST be rendered by whom?
licensed individuals
100
formation requirements of LLC LAW applicable to LLCs are applicable to what?
PLLCs, including filing of arts of org w sec of stte containing certain detailed info, proper publication of copy of its arts of org or notice containing substance and adoption of operating agreement
101
certs of authority for licensed individuals issued by licensing authority MUST accompany what?
filing of formation docs
102
name of prof service limited liability co MUST end w what?
professional limited liab co / limited liab company or their abbreviations
103
each member / manager / employee / agent of PLLC is personally liable for negligent / wrongful act / misconduct committed by him or person under their direct supervision / control while rendering professional services on behalf of PLLC but such mmbrs or otehr persons are NOT personally liable for what?
negligenc of otehr mmbrs or prsons is they didnt supervise them / personally participate in questioned actions w tehm nor are responsibel personanlly for contractual dbs / obligations of PLLC or any other mmbr.
104
each mmbr of PLLC continues to be governed by what?
same prof regulatory and licensing scheme applicable to member prior to formation
105
partnership
association of 2 / more persons to carry on as CO OWNERS a business for profit / PARTNERSHIP LAW.
person = individuals / partnerships / corps / other associations
106
PARTNERSHIP LAW SEC 11
sets forth rules for determining existence of partnership
107
participation in profits is prima facie evidence of a what?
partnership
108
when no written partnership agreement bw parties, whether partnership in fact exists is determined from what?
conduct.
intention.
relationship bw parties.
109
factors to be considered in determining existence of partnership include what?
```
sharing profits.
sharing losses.
ownership of partnership assets.
joint mgt.
joint control.
joint liability to creditors.
intention of parties.
```
110
all partners are jointly liable for what?
debts and obligations of partnership - PARTNERSHIP LAW SEC 26.
jointly and severally liable for loss / injury to 3rd person chargeable to partnership bc of partner's wrongful act /omission or for partner's breach of trust.
111
LIMITED PARTNERSHIP
formed by 2 /more persons having as members 1 / more general partners and 1/more limited partners PARTNERSHIP LAW
112
formation of LIMITED PARTNERSHIP
execution by general partners of partnership agreement and filing of cert of limited partnership w sec of stte - detailed info -
name.
county in which partnership office located.
name and address of each general partner.
duration.
designation of sec of state as agent for service of process.
designation of registered agent.
MUST meet substly same statutory publishing requirements as LLC
113
name of LIMITED PARTNERSHIP
MUST contain w/o abbreviation words LIMITED PARTNERSHIP or abbreviation L.P.
other restrictions on words MAY be included in name are substly same as for business corps.
114
LIMITED PARTNERS are or are not personally liable for obligations of partnership?
NOT.
and may NOT participate in mgt of limited partnrshp's business w/o potentially losing their limited liab status w regard to persons who transact business w limited partnership reasonably believing based upon limited partner's conduct, that limited partner is general partner.
115
general partner of LIMITED PARTNERSHIP has what type of liability for ALL debts and obligations of limited partnership?
UNLIMITED
116
general partnership engaged in prof service activities may form a what?
REGISTERED LIMITED LIABILITY PARTNERSHIP.
| PARTNERSHIP LAW.
117
REGISTERED LIMITED LIABILITY PARTNERSHIP- each partner MUST be a what?
professional.
| at least 1 MUST be authorized by law to render professional service w/in NY.
118
REGISTERED LIMITED LIABILITY PARTNERSHIP formed to provide certain services, including medical - dental - veterinary, each MUST be licensed where to provide the service?
NY
119
authorizations and restrictions for REGISTERED LIMITED LIABILITY PARTNERSHIP to engage in multiple permitted professions are same as for what?
PLLC
120
formation of REGISTERED LIMITED LIABILITY PARTNERSHIP requires filing of cert of registration w sec of stte containing what?
detailed info - name, address of principal office, profession to be practiced, designation of sec of stte as agent for service of process, and if desired -designation of registered agent.
121
REGISTERED LIMITED LIABILITY PARTNERSHIP must meet substly same statutory requirements as what?
LLC
122
name of REGISTERED LIMITED LIABILITY PARTNERSHIP must contain without abbreviation, which words?
REGISTERED LIMITED LIABILITY PARTNERSHIP or LIMITED LIABILITY PARTNERSHIP or
RLLP or R.L.L.P or LLP or L.L.P.
other restrictions on words may be included in name are substly same as for bus corps
123
a RLLP must file what type of sttmt w dep of stte every how many yrs to maintain status as RLLP containing name of rllp, address, principal office, post office address to which sec of stte would send copy of process ag rllp served upon him, and sttmt that its eligible to register as rllp
status sttmt
| 5 yrs
124
failure to file status sttmt for rllp may result in dep of stte making what?
proclamation declaring registration of rllp be revoked
125
liability of partners in rllp
presonally liable for negligent / wrongful act / misconduct committed by him or any person under his direct supervision / control while rendering prof services on behalf of rllp.
partners are NOT liable for negligence of OTHER partners / persons if they didnt supervise them / personally participate in questioned actions w them.
NOT responsible personally for contractual debts and obligations of rllp except to extent at least a majority of parterns have agreed otherwise. each partner in rllp continues to be governed by same prof regulatory and licensing scheme applicable to partner prior to registration
