Attack Plan Short

Question 1

Partnership Fiduciary Duty

Answer 1

RUPA: breach of duty of loyalty or duty of care
UPA: broad

Question 2

Corporation Breach of Fiduciary Duty

Answer 2

Duty of Loyalty and Duty of Care

Question 3

Duty of Care

Answer 3

Business Judgment rule with Van Gorkham (duty to be informed)

Question 4

Business Judgment Rule (3)

Answer 4

Presumption that directors acted in (1) good faith, (2) were informed, and (3) was in the best interest of the shareholders

Question 5

Van Gorkham

Answer 5

Will take reasonable, affirmative steps to become informed when making corporate decisions

Question 6

Duty of Loyalty

Answer 6

Two ways to breach: self dealing or corporate opportunity.

Question 7

Self Dealing (2)

Answer 7

Must determine whether director validated transaction pursuant to (1) Section 144 and whether passes the (2) intrinsic fairness test.

Question 8

Section 144 (3)

Answer 8

A self dealing transaction can be validated by (1) disclosure and board authorization by majority vote, (2) disclosure and shareholder authorization, OR (3) was fair at the time it was authorized.

Question 9

Intrinsic Fairness Test

Answer 9

Was the transaction fair?

Question 10

Corporate Opportunity (2)

Answer 10

Use Section 5.05 of the American Law Institute Test to determine (1) when there was a corporate opportunity and (2) if that opportunity was taken advantage of.

Question 11

American Law Institute Test - When
(1,2,3ab,4)

Answer 11

When director: (1) becomes aware of opportunity in their corporate capacity, OR (2) should have know it was an offer to the corporation, (3) (a) became aware of opportunity through the use of corporate info and (b) should know corporation was interested, OR (4) knows it was closely related to corporation’s current or expected biz.

Question 12

American Law Institute Test - Taken Advantage (1-4a,b,c)

Answer 12

Director may not take advantage unless (1) the opportunity is offered to corp AND (2) disclosure concerning the conflict of interest is made AND (3) the opportunity is rejected by the corporation AND (4) EITHER (a) rejection is fair, (b) opportunity is rejected in advance by disinterested directors, OR (c) the rejection is authorized or ratified by the shareholders.

Question 13

Indemnification

Answer 13

Permissive and Mandatory

Question 14

Mandatory Indemnification

Answer 14

required when director or person being sued is wholly successful on the merits

Question 15

Permissive Indemnification

Answer 15

usually specified in the bylaws

Question 16

Director and Officer Insurance

Answer 16

provides a broad range of financial protection for lawsuits

Question 17

Piercing the Veil (2)

Answer 17

Must be (1) Alter Ego (bal test) and (2) deception, misrepresentation, or fraud

Question 18

Piercing the Veil - Alter Ego

Answer 18

Three factors to consider: (1) commingling of funds, (2) failure to observe corporate formalities, (3) undercapitalization.

Question 19

Partner Liability - UPA v RUPA

Answer 19

UPA: partners are jointly liable for K, severally and jointly for torts
RUPA: jointly and severally liable for all obligations

Question 20

Partnership: Sharing Profits and Losses

Answer 20

Profits shall be shared equally or split up by agreement, losses will be equal to % of profit breakdown.

Question 21

Transfer of Partnership Interest

Answer 21

Partner may transfer financial interest but not management interest.

Question 22

Partnership Order of Priorities during Winding up (4)

Answer 22

(1) non-partner creditors, (2) partner creditors, IF MONEY LEFT: (3) return of capital, (4) return of profits

Question 23

Partnership - Creditors (what they can go after)

Answer 23

Partnership creditors: can go after partnership and individual property

Individual creditors: individual property

Question 24

Partnership Liability (3)

Answer 24

(1) Ks entered into on partnership’s behalf authority, (2) any wrongful act/omission of a partner acting in course of biz, (3) certain circumstances where a partner misapplied money or property of a 3rd person

Question 25

Losing Limited Liability

Answer 25

Limited Liability partner will be liable as general partner if 3rd party reasonably believed they were general partner.

Question 26

Doctrine of Ultra Vires

Answer 26

where there is action outside the scope of the purpose of business.

Question 27

(3) Who can bring an ultra vires action?

Answer 27

(1) shareholder to enjoin corporate act, (2) the corporation against officer/director, (3) attny general

Question 28

Promoter liability - Pre-incorporation contract

Answer 28

Will be liable on preincorporation K unless 3rd party knew it was no in existence but agree (ex/imp) to look to corp for performance or there is novation

Question 29

Promoter - Novation

Answer 29

3rd party, promoter, and corp all get together to release promoter from liability

Question 30

Defective Incorporation liability

Answer 30

knows no incorporation but acts as if there was: jointly and severally liable

Question 31

De Jure Corporation

Answer 31

formed per statutory requirements

Question 32

De factor Corp

Answer 32

attempt to organize and good faith claim to be doing business as corp

Question 33

Corporation by Estoppel

Answer 33

equitable reasons where a person has already contracted with entity as if it was a corp

Question 34

Section 12 - Can a corp trade on national securities exchange (2)

Answer 34

(1) 10 million in assets AND (2) shares of a class held by more than 2000 shareholders

Question 35

Shareholder voting with Registered/record owner and beneficial owner

Answer 35

Registered owner can vote for big changes like mergers, reforms, amending bylaws etc. Registered owner votes for beneficial owner as a proxy vote.

Question 36

Cumulative Voting equation

Answer 36

Shareholder # of votes = number of shares X number of seats

Question 37

Straight Voting

Answer 37

You have the number of shares as votes for each candidate but cannot stack. If you have 300 shares, you can apply 300 votes per seat. -still same number of votes under cumulative but cannot stack like in cumulative.

Question 38

Vote pooling

Answer 38

a private contract among shareholders to coordinate voting

Question 39

Irrevocable Proxy

Answer 39

Only upheld where (1) agreement specifically states that it is an irrevocable proxy, (2) proxy has an interest.

Question 40

Board Vacancy

Answer 40

Any vacancy may be filled by a majority vote from the board of directors regardless of if quorum is met.

Question 41

Equal Opportunity test

Answer 41

if controlling shareholder sells shares back to the corporation, all other shareholders must have the opportunity to sell shares at the same price

Question 42

Insider Trading: Section 10

Answer 42

Delegates enforcement and rule making authority to SEC utilizing interstate commerce to enforce. Prohibits manipulative or deceptive device when buying or selling securities, with an intent to deceive (scienter)

Question 43

Actions and stat of lim for insider trading

Answer 43

Criminal, civil, and private enforcement. -5 years from when it occurred and within that time frame, 2 years from when you found out.

Question 44

Classic Insider Trading

Answer 44

corporate insider trades using material, nonpublic information obtained thru insider's corporate position, + Chiarella: duty to disclose if there is a fiduciary relationship to corp whose stock the insider was trading

Question 45

10b-5-1

Answer 45

if person is aware of material, non-public information at the time they traded, they are presumed to have traded on that info

Question 46

Misappropriation Theory + 10b-5-2

Answer 46

misappropriating confidential info to purchase or sell securities in violation of a duty owed to the source. 10b-5-2: 3 situations in which a person has a duty of trust or confidence: (1) person agrees to maintain confidence, (2) history, pattern, practice = relationship of confidence, (3) convo w/ spouse, parent, child, or siblings = bright line duty of trust and confidence. -can avoid liability by disclosing to source intent to use info to trade.

Question 47

Rule 14e-3

Answer 47

Duty to disclose/abstain for any person possessing material nonpublic info who trades securities related to a tender offer.

Question 48

Tipper Liability

Answer 48

whether tipper expected a personal benefit by giving tip, thus breaching a fiduciary duty

Question 49

Tippee Liability

Answer 49

knew or should have known of the breach of fiduciary duty.

Question 50

Short Swing Trading

Answer 50

(1) JDX, Section 12, corp must trade on national stock exchange, have 10 mill in assets and shares of a class held by more than 2k shareholders (2) be specified insider (officer, director, more than 10% shareholder), and (3) buy or sell security then w/in 6 month buy or sell securities again.

Question 51

Contemporaneous Liability

Answer 51

Anyone who trades on the same security as the insider and around the same time as them has a private cause of action against the insider trader. (if any money left after SEC)

Question 52

Partnership Dissolution UPA

Answer 52

when any partner ceases to be associated with the partnership, the partnership dissolves. The partners still have a fiduciary duty to partnership until it terminates.

Question 53

Disassociation RUPA

Answer 53

when one partner leaves the partnership, the partnership still exists. The og partners still have a fiduciary duty until termination.

Question 54

Wrongful Dissolution

Answer 54

wrongful to dissolve when a partner withdraws before the end of the specified term, when dissolution is contrary to agreement, at any time when circumstances dont permit dissolution

Question 55

Termination

Answer 55

when the partnership is all paid up and winding down period has ended