Special Deck - Business Structures Flashcards

1
Q

Is a limited partnership security an interest? Why or why not?

A

Yes. It meets the definition of a security because they are intended as an investment to make a profit through the efforts of others. They can also be subject to federal securities laws.

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2
Q

Under the Revised Uniform Limited Partnership Act how many votes does it take to dissolve a partnership, form limited partners and general partners?

A

Vote must be unanimous among partners to dissolve. All a general partner has to do to dissolve the partnership is to merely withdraw.

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3
Q

When admitting a new partner, how much majority vote does it take under RULPA?

A

Unanimous consent among all partners; 100% positive vote

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4
Q

What is cumulative voting?

A

A method by which minority shareholders may get better representation in stockholders meetings. For each share owned the stockholder gets 1 vote times the number of directors running. This allows them to place all votes on one person, as opposed to the winner taking all.

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5
Q

In a general partnership, how are profits and losses divided among the partners?

A

If no agreement exists, profits are split equally. If no LOSS AGREEMENT exists, losses are split the same way as profits.

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6
Q

Is a partnership a separate legal entity?

A

Yes, but it is not a taxable entity like a corporation.

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7
Q

How much liability for past debts does new partner in an already existing partnership responsible for?

A

He is responsible for past debts only in the amount of capital he contributes.

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8
Q

What is the “ultra vires” doctrine?

A

Ultra vires means “beyond the powers”. I has to do when a company goes beyond outside of its authority granted by its Article of Incorporation

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9
Q

For what reasons would be grounds for a judicial dissolution of a corporation on the peition of a shareholder?

A
  • Waste of corporate assets
  • Illegal of oppresive acts of directors
  • Directors deadlocked in management of company
  • Inability to elect directors for two years due to shareholders deadlock
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10
Q

How are profits shared in a limited partnership?

A
  1. If no profit sharing plan exists, profits are split according percentages of capital contributions.
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11
Q

Are preferred dividends collected if declared but not distributed?

A

CUMULATIVE preferred dividends are, not regular preferred dividends.

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12
Q

If a company becomes insolvent, what is the order of payouts: stockholders, creditors, etc.

A
  • Creditors are paid first, then stockholders.
  • Preferred paid before common stockholders.
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13
Q

Define a derivative suit?

A

Where a shareholder sues a third party on behalf of the corporation.

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14
Q

In a shareholder derivative lawsuit is indemnification of an officer found at fault possible?

A

Possible, but not probable. Though normally indemnification isn’t even considered, it can be allowed by court order.

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15
Q

Who has management rights in a partnership?

A

The general partners, although it may be voluntarily given over to a managing partners.

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16
Q

For what reasons would the corporate veil of a corporation be pierced?

A
  • Used to perpetrate fraud
  • Corp not treated as a separate entity
  • Shareholders comingling assets
  • Corporate formalities not followed
17
Q

Can creditors get a court order against a parntership interest for money owed? If not, why not?

A

No, because you can’t separate a partnership interest from the partnership like you can separate a piece of pie from the whole pie. The entire partnership must be sued, not just the individual partner’s interest in the partnership.

18
Q

What does a certificate of incorporation contain?

A

Name, purpose and powers of the corporation.

19
Q

What do bylaws cover?

A

Sets forth the authority of the officers in a corporation.

20
Q

Is a retiring partner stil liable for partnership debts?

A

Not for partnership debts acquired after retirement, but for those existing at retirement.

The partnership cannot prevent thrid party creditors from coming after the retired partner for past debt, even if they agree among themselves to be responsible for them, unless the individual creditor releases the retired partner from responsibility to pay.

21
Q

According to the Revised United Parntership Act how are profits among partners split when no profit-sharing agreement exists?

A

Equally among all partners.

22
Q

What is respondeat superior?

A

Doctrine that provides an employer is responsible for the torts of his employees during their normal course of duties.

23
Q

What types of consideration can be used to purchase stock?

A

Money, present services or promises of future services.

24
Q

Approval from who is required for a merger of corporations?

A
  1. Board of directors of both corporations
  2. Majority of shareholders of each corporation