NY BAR REVIEW BUSINESS RLTSHP 2

Question 1

LLC

Answer 1

not personally liable

tax benefits of partnership

Question 2

formation of LLC

Answer 2

articles or organization filed w NY dept of state
name
county
purpose
date of dissolution
ny sec of state is agent for service of process
at least 1 member

Question 3

failure to file proof of publication

Answer 3

penalty

Question 4

operating agreement for LLC

Answer 4

before at time of or within 90 days of formation
operation of the business
conduct of affairs
rights, powers, preferences, limitations of members, managers responsibility
may be amended, but with consent of the member
may eliminate or limit liability of managers and members for damages for breach of duty of care, NOT for acts/omissions in bad faith, or intentional misconduct/violation of law, personal financial gain, wasn’t legally entitled to.
BREACH OF DUTY OF CARE v. BREACH OF LOYALTY

Question 5

manager/management in LLC voted

Answer 5

members’ vote is proportionate to profits

Question 6

management typically by what type of vote in LLC?

Answer 6

majority

Question 7

PROFESSIONAL service LLC

Answer 7

professional activity or other business LLC can be formed
at least 1 member is to be authorized by law to render that service in NY
multiple professional services

Question 8

formation of PROFESSIONAL service LLC

Answer 8

file articles of organization w NY dept of state, professions, name, address, of all members and managers, cert issued by NYS or another state, certifying they’re all authorized by law to practice
publication and file within 120 days with dept of state

Question 9

liability of PROFESSIONAL service LLC

Answer 9

members and managers NOT personally liable for debts / obligations nor responsible for others

Question 10

negligent or wrongful act of member or manager in PROFESSIONAL service LLC

Answer 10

he/she is liable and also for anyone under their direct control

Question 11

professional service CORP

Answer 11

same professional service

within NY

Question 12

professional service CORP formation

Answer 12

cert of incorporation w NY dept of state
profession
name
address of all shareholders, directors, officers, licensed in profession
NO publication

Question 13

certificate for professional service CORP

Answer 13

each is licensed by law to practice the profession

Question 14

professional service CORP - services

Answer 14

has to be licensed to provide service in NY

Question 15

all professional docs in professional service CORP

Answer 15

must be signed by the licensed person

Question 16

professional service CORP liability

Answer 16

limited
shareholder
director
officer
NOT personally liable for torts others commit
ARE liable for negligent or wrongful conduct committed individually or person under direct supervision or control while providing service
NOT liable personally for corporate indebtedness

Question 17

professional service CORP management

Answer 17

board of directors- elected by shareholders

Question 18

shareholders power

Answer 18

limited

elect directors

Question 19

board of directors

Answer 19

elect officers to manage business day to day

Question 20

professional service CORP formation

Answer 20

file cert of incorporation w NY dept of state
name
county
purpose / any lawful purpose / catchall provision to NOT limit what can do- to engage in any lawful act/activity for which organized
except state statute - railroad or bank

Question 21

cert of incorporation - professional service CORP

Answer 21

number of shares
authorized to issue
par value
or no par value
1 class or more than 1 class of common stock
preferred share authorize
duration / perpetual
ny sec of state agent for service of process

Question 22

bylaws / professional service CORP

Answer 22

rules re regulation/mgt of corp.
procedure for corp decisions, right and powers, conduct of business
shareholder meeting, annual meeting
director appointment
MUST be consistent w law
adopted by incorporator, then shareholders adopt /amend/repeal

Question 23

any board adopted bylaw

Answer 23

can be amended/repealed by shareholders

Question 24

shareholder voting

Answer 24

unless cert/bylaws state differently, plurality of votes cast

Question 25

directors may be removed

Answer 25

FOR CAUSE by vote of shareholders

Question 26

shareholder may remove director WITHOUT CAUSE IF?

Answer 26

provided for in cert of incorporation / bylaws

Question 27

other shareholder action requires

Answer 27

majority of votes cast | abstaining from voting DOESNT count toward the votes cast

Question 28

voting to amend cert of incorporation

Answer 28

majority of total shares entitled to vote

Question 29

voting for merger requires

Answer 29

a. two thirds vote 2.22.1998 (NY amended bus corp law) b. majority of votes after 2.22.1998

Question 30

officer types

Answer 30

``` president vp sec treasurer elected by board ```

Question 31

officers may hold how many offices?

Answer 31

more than 1

Question 32

removing officers

Answer 32

board is authorized WITH OR WITHOUT cause

Question 33

election of officers

Answer 33

can be by shareholders, instead of by the board

Question 34

officer elected by shareholders may NOT removed by whom?

Answer 34

the board

Question 35

officer elected by shareholders may be removed by whom?

Answer 35

with/without cause by the shareholders . | authority to act may be suspend by board, FOR CAUSE.

Question 36

director / officer STANDARD OF CARE

Answer 36

perform duties in good faith with degree of care that ordinarily prudent person in like / similar circumstances depends on issue at hand, circumstances of the case, nature of corporation's business

Question 37

business judgment viewed by courts

Answer 37

courts WONT second guess it , if exercised in good faith based on available info after reasonable investigation in good faith in corp interest BUSINESS JUDGMENT RULE even someone else may have reached a different decision

Question 38

didnt breach fiduciary duty

Answer 38

not liable

Question 39

breaching fiduciary duty

Answer 39

bad faith self dealing conflict of interest

Question 40

director/officer liability

Answer 40

no personal liability as long as performed duties | even if chose to breach a contract, liability is the corporation's

Question 41

director / officer when making business decision may rely on

Answer 41

information, opinions, reports, statements, data, for director - presented by committe of board, on which director does NOT serve, if director believe the committee merits confidence, so long as director- acted in good faith proper degree of care for directors and officers, can rely on officer/ employees of corp., or 50% direct or indirect subsidiary, whom believes to be reliable and comptent on matter presented. can rely on counsel and public accountants

Question 42

director/officer NOT acting in good faith

Answer 42

if has knowledge that would cause the reliance on the information/statements to be unwarranted