UBE Corporations Flashcards
Req. for incorporation
articles of inc must be filed with the state and if in conflict with the bylaws, the articles control
liability prior to incorporation
generally, corp not liable unless it expressly or impliedly adopts/ratifies the k
the promoter (person entering k on behalf of corp) is liable
Shareholder definition
only owners, do not manage corp
how often to SH meet
generally annually
notice req for SH meetings
10-60 days prior
must state time, place, and purpose of meeting
SH voting
can vote by proxy or by voting agreement
quorum must be present to vote (majority of all outstanding shares)
Directors definition
manage corp and act as a body when voting
SH power w/ regard to directors
SH can hire and fire directors
flexibility of directors voting?
no can’t vote by proxy or by voting agreement
director voting
must have quorum present and can break quorum by leaving (unlike SH)
notice req. for director meetings
no notice requirement except for special meetings
duties of directors of corps (or members of LLC)
duty of care (BJR) and duty of loyalty
duty of care - business judgment rule (BJR)
presumption that in making business decisions, directors act on (1) an informed basis, (2) in good faith, and (3) in honest belief that action was in the best interest of the company
entitled to rely upon info, opinions, reports, etc
party claiming breach of duty of care has burden of proof
duty of loyalty
BJR doesn’t apply
director must act in good faith and with reasonable belief that what he does is in the corporation’s best interest
3 scenarios where duty of loyalty issues arise
BCC:
- director on BOTH sides of the transaction (has material financial interest, knowledge of interest, still votes to approve)
- COMPETES with corp
- CORPORATE opportunity
defenses to liability for breach of duty of loyalty
- approval by disinterested SH
- approval by disinterested directors
- transaction judged to be fair at the time it was entered into
duty of loyalty w/ LLCs
LLC operating agreement may waive the duty of loyalty so long as not manifestly unreasonable
what vote is needed for resolution to pass at SH meeting
more for than against
who can vote at SH meeting
record owner on the record date unless:
SH died (executor can vote) valid proxy (proxy may vote)
how to vote by proxy
SH appoints proxy by signing an appointment form OR making electronically verifiable transmission
cannot orally ask someone to be proxy
are proxys revocable
generally yes by any action inconsistent with the grant of proxy is sufficient revocation
EXCEPTION: if explicitly states its irrevocable + interest (ex: sale of shares); usually valid for 11 months
what happens when 2 or more proxys granted
the last proxy revokes previous ones
when can SH file suit against the corporation
when directors actions are illegal, fraudulent, or willfully unfair or oppressive to EITHER corporation OR SH
Types of SH suits against corporation
direct suits and derivative suits
