REG 8 Flashcards
Dodd-Frank Act
The orderly liquidation authority
covers only:
financial institutions, including insurance companies, banks, and securities companies
Mechanic’s lien
and
Artisan’s lien
Mechanic’s lien arises from improvements made on real property
Artisan’s lien arises from improvements made to personal property
- both lienholders are generally required to give notice of legal action before selling debtor’s property to satisfy the debt.
Agency-principal agreement
Principal must be competent (not a minor and not incompetent)
Agent need not have capacity
Creation of an agency relationship requires the consent of the parties and that the principal be competent.
A writing to establish an agency-principal agreement is generally not needed unless:
(i) the agent is to buy/sell land on behalf of the principal and/or
(ii) the agency relationship cannot be performed within one year
Agency-principal relationship: When is notification to third parties is NOT required
1) when actual authority of an agency relationship terminates as an operation of law
(i) these include death of either the principal or the agent
(ii) incapacity of the principal
(iii) discharge in bankruptcy of the principal
(iv) failure to acquire a necessary license
(v) destruction of the subject matter
(vi) subsequent illegality
Revised Model Business Corporation Act (RMBCA)
- a corporation may indemnify its officers for liabilities incurred in a suit by stockholders, especially if the officer prevails
- there is no restriction against serving as both a director and an officer
- provides that officers are to be appointed by the board unless the bylaws provide otherwise
- there no requirement that an officer own stock in the corporation in which he or she serves.
Short form merger
One between a parent and a sub 90% of which is owned by the parent, then the sub’s shareholders have a right to dissent and take advantage of the appraisal remedy.
Reasons for shareholders to inspect the books of the corporation
The below are reasonably related to their status as shareholders:
(i) to commence a stockholder’s derivative suit
(ii) to solicit stockholders to vote for a change in the board of directors
(iii) to investigate possible management misconduct
Documents for each type of organization/company
The following must be filed with the respective state government agency
1) Corporation must file the “Articles of incorporation”
- owners of a corporation are addressed as shareholders
2) Limited Liability Company (LLC), must file “Articles of Organization”
- owners of an LLC are addresses as members
- articles of organization must include: name of the entity that includes some indication it is a LLC, name/address of registered agent, if company is manager managed a statement to that effect
- absent an agreement, profits and losses are based on ownership interest (contributions)
3) Limited Partnership (LP), must file “Certificate of Limited Partnership”
- owners are addressed as limited partners
4) Limited Liability Partnership (LLP), must file with the state a registration statement “Articles of LLP”
- general partnerships, sole proprietors do not need to file with the state.
- owners of GP are addressed as general partners
- partnerships, absent to the contrary, profits are shared equally, and losses follow.
Pierce the corporate veil
The corporate veil of limited liability may be pierced and the personal assets of the shareholders may be reached to satisfy corporate obligations if:
(i) the corporation was inadequately (thinly) capitalized at the time of its formation
(ii) the shareholder commingles personal assets with his own (i.e. uses corporate assets to pay personal debts)
Corporations to dissolve
1) the directors must adopt a resolution recommending dissolution
2) certificate of dissolution must be executed and filed (not amend the certificate of incorporation)
3) fundamental corporate changes such as dissolution need only be approved by a majority of the outstanding shares.
Registered agent,
Promoter, and
Incorporator
Registered agent: an agent for the corporation who would accept service of process in the event the corporation is involved in a lawsuit
Promoter: personally liable for all pre-incorporation contracts
Incorporators:
*promoters or the incorporators are responsible for organizing the corporation
FUTA (Federal Unemployment Tax Act)
- Payable by employer, and deductible as a business expense
- Applies only up to $7,000 ceiling
- Applies to employers who have a quarterly payroll of at least $1,500 or employ at least one employee at least one day a week for 20 weeks during a year.
Title VII of the 1964 Civil Rights Act
Prohibits discrimination on the basis of race, religion, sex, national origin, etc.
(age discrimination is covered under another federal statute, the Age Discrimination in Employment Act which prohibits age discrimination whether intentional or unintentional)
Social security benefits include all of the following
The federal social security system contains four major benefit programs:
1) (OASI) old age and survivors insurance
2) (DI) disability insurance
3) (Medicare)
4) (SSI) Supplemental security income
FinCEN (Financial Crimes Enforcement Network)
-FinCEN may pursue only civil sanctions
Department of Justice pursues criminal sanctions
