NY BAR REVIEW BUSINESS RLTSHP 3 Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

interested director transaction

A

between corp. and director
or
corp. and entity in which director is director or officer or has substl financial interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

centuries ago, who was tainted, void, voidable - by the corp.

A

interested director

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

business corporations law sec 713

A

when an interested director transaction can be voided

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

material facts of the transaction of an interested director MUST be what?

A

disclosed or known to those who are voting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

vote of board is sufficient without counting vote of interested directors

A

first material fact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

unanimous vote of disinterested directors is needed to reach a QUORUM

A

second material fact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

shareholder approval

A

third material fact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

failure to reach a required vote

A

corp. may void the transaction unless parties establish was fair and reasonable to corp. at time of approval

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

approval

A

doesnt automatically validate the transaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

transactions with interested director

A

may be subject to close court scrutiny

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

interested director considerations

A
  1. did he/she satisfy fiduciary duties to corp.
  2. acted in good faith and loyalty
  3. fully disclosed terms with the board
  4. was transaction fair to corp.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

bus corp. law sec 714

A

loan to officers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

lend money or guarantee money to officer/director IF

A

approved by shareholders where quorum, majority of shares entitled to vote, not counting shares owned by director who’s seeking loan/guarantee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

corp.’s formed after 2.22.98 (and other corp.’s where designated in their bylaws), re loans/guarantees

A

can be approved by board after finding that benefits the corp.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

dissipation/improper transfer of assets, suits ag. director/officer for misconduct - liability?

A

directors are jointly and severally liable to corp./creditor/shareholder if vote for/concur in:

  1. declaration of dividend or other distribution purchased by corp. of own shares contrary to bus corp. law / cert of incorp.
  2. distribution of assets after co. dissolved, without adequately providing for known liabilities
  3. making of a loan to a director contrary to bus corp. law
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

director doesnt need to benefit personally in order to be ________?

A

liable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

director presumed to have ________ in an action, unless expressly ______.

A

concur

dissent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

absent director dissents how?

A

file his/her dissent with the meeting minutes a reasonable time after learning of the action

19
Q

director is not liable if discharges his duties in _________ with degree of _________ that an ordinary prudent person in similar circumstances would in a likely position

A

good faith

diligence, care, and skill

20
Q

reliance in good faith on _________, prepared by others

A

information, opinion, reports, statements

21
Q

defense against liability

A

good faith reliance on report, even if erroneous

22
Q

compel an accounting of _________

A

managing of duties and disposing of assets, waste , misappropriation, self dealing

23
Q

must demonstrate more in order to set aside corp. decision

A

lacking a legitimate business purpose, involving a conflict of interest, bad faith, fraud, unlawful transfer of assets - which knows to be unlawful, didnt assent to merger

24
Q

amending cert of incorp.

A

shareholder vote required

25
Q

appraisal rights

A

right to receive fair value of shares if voted adversely and amendment alters or abolishes preferential rights of their shares, changes the redemption rights of their shares, alters or abolishes preemptive right of shareholder to acquire shares/securities, exclude / limit voting rights of shareholder except by authorizing the issuance of new voting shares

26
Q

merger / consolidation with another firm requires _______ vote

A

shareholder

27
Q

short form merger is between a ______ and a _____

A

parent
subsidiary
when shareholder is shareholder of surviving company

28
Q

appraisal rights do not arise when?

A
  1. regular merger between 2 companies
    when shareholder is shareholder of surviving company
    2.unless cert of incorporation is amended to give those shareholders appraisal rights mentioned
  2. shareholder shares are listed on national securities exchange or on NASDAQ national market system
29
Q

appraisal right DO arise when?

A

in connection with any transfer of substantially all assets of a corp. other than for cash

30
Q

when consideration IS cash / transfer of corp. assets, selling company dissolved, cash distribution to shareholders, appraisal rights?

A

NO

31
Q

shareholder of target company participating in share exchange, all of outstanding shares acquired by acquiring corp. appraisal rights?

A

YES, but not applicable when youre the shareholder of the acquirer, NOT of the target

32
Q

holdout problem

A

any shareholder can block from happening of merger, change of cert of incorporation in as such that will affect shareholders rights

33
Q

________ than all of shareholders can approve corporate decision

A

LESS

34
Q

protect minority shareholders from risk that would have to sell shares in a merger at unfair price, they are permitted to turn to court for what?

A

demand appraisal rights payment for their shares

35
Q

shareholder written objections before or after vote must be given?

A

BEFORE

36
Q

shareholder chooses appraisal rights and by that cuts off what?

A

all other actions/rights as shareholder except actions based on fraud or unlawfulness of action being objected to, NO action for money damages

37
Q

corporate dissolution

A

company continues to exist to wind up affairs, distribute assets to stakeholders according to their respective rights, but cannot carry out business

38
Q

dissolution may be …

A

voluntary or involuntary = judicial action

39
Q

shareholder petition for judicial dissolution of corp. whose shares NOT publicly traded under special circumstances

A

20% of voting shares may petition for judicial dissolution if directors or majority shareholders are guilty of illegal oppressive acts, in which they are squeezing out the minority
corporate assets looted, wasted, diverted

40
Q

oppression

A

change in policy concerning corporate dividends to provide minority shareholders with NO return on their investment

41
Q

judicial dissolution is __________

A

DISCRETIONARY

42
Q

court considerations for judicial dissolution

A
  1. whether liquidation is ONLY feasible way petitioners may reasonably expect return on their investment
  2. protect petitioners / shareholders
43
Q

court may consider imposing

A
  1. impose surcharge on directors or those who control the corp.
  2. order majority shareholders to buy petitioners’ shares at fair value / independent appraiser + terms approved by court