BO assignment sets

Question 1

We are dealing with LLC annual report and names of ppl. on it don’t match three managers we expected. what happened?

Answer 1

Admin dissolution

Question 2

Can a LLC that was admin. dissolved apply for reinstatement?

Answer 2

Yes.

Question 3

Majority SH in a corporation dies. He has a spouse. Who get’s shares? What can SHs do?

Answer 3

Goes to spouse. Nothing. They can sell their shares, that’s about it.

Question 4

Majority interest holder in partnership dies. Who gets those interests?

Answer 4

Remaining partners buyout or dissolve.

Question 5

Majority interest holder in LLC dies. Who gets the interests? He had a spouse.

Answer 5

Spouse is transferee. She owns distribution rights to the interests.

Question 6

GP dies in a partnership. Who gets his interests?

Answer 6

LP vote for new GP.

Question 7

Majority SH wants out of corporation. [He ain’t dead this time.] How can he get out if other SHs wont cooperate?

Answer 7

Don’t make it complicated. He is a SH. Just sell your shares off dumb ass.

Question 8

How can majority interest holder leave LLC if other members don’t wont him to?

Answer 8

He can’t get his money out unless they let him.

Question 9

Best entity for law students?

Answer 9

LLC or partnership. Keep it one-tier in terms of governence.

Question 10

Can a LP sell substantially all assets if 25% of LPs oppose it?

Answer 10

No. Need unanimous consent.

Question 11

SHP valid?
“Company shall not sell guns equipped w/ magz of ten rounds or more.”

Answer 11

Not if this relates to ordinary business operations or less than 5% of the business.

Question 12

SHP valid?
“SHs recommend that BD remove Matt for making racist remarks?”

Answer 12

No. Cannot submit proposals related to director elections.

Question 13

SHP valid?
“Recommend electing three WoMeN.”

Answer 13

Nah. #8) Director elections.

Question 14

T/F) Setting a specific amount of dividend is appropriate SHP.

Answer 14

False!

Question 15

Default rule for director election?

Answer 15

Plurality of votes, straight vote, annual.

Question 16

SHs voting to amend A.O.I. Process?

Answer 16

1. BD adopt resolution to amend and submit to SHs.
2. SHs must approve by ABSOLUTE majority of SHARES entitled to vote.

Question 17

Solution for 3 SHs who want to control corporation but can’t agree among themselves?

Do they need to tell other SHs?

Answer 17

1. Voting trust
2. Must register shares in the trustee name and disclose to corporation.

Question 18

1. Where can you get names of corporation officer’s and directors?
2. SHs names?
3. AOI? Bylaws?

Answer 18

1. SOS website, company website or annual report
2. Become SH
3. SOS & SH

Question 19

Corporation’s shall prepare SH lists at least __ days before meeting of SHs entitled to vote.

Answer 19

10 days

Question 20

When should corp. send notice of annual SH meeting to vote?

Answer 20

10-60 days

Question 21

Do individual partners owe fiduciary duties to each other?

Answer 21

Yes. Loyalty and care in every partnership to the entity itself and its partners.

Question 22

Define duty of loyalty?

Answer 22

1. Do not deal with persons with adverse interest to entity
2. Refrain from competing with the entity
3. Don’t engage in reckless, negligent, or misconduct or violation of law

Do what’s in best interest of entity

Question 23

Can partnership eliminate fiduciary duties of a partner?

Answer 23

If shifted to one or more other partners or committee.

Question 24

When can partnership alter or eliminate duty of loyalty and care?

Answer 24

If not manifestly UR

Question 25

Questions to ask if director / SH fired without cause from other SHs?

Answer 25

Controlling investor rule to entity and to the co-investors [Fiduciary duty]

Question 26

T/F) Personal emails among directors are NOT corp. "books and records" entitled to inspection.

Answer 26

True. Directors have right to examine only "Books and records."

Question 27

Do LLC members have right to inspect personal emails between other members?

Answer 27

Yes. Much broader than corporation "books and records" rule.

Question 28

Who can call "special" BD meeting in corp.? How much notice?

Answer 28

1. President 2. BD Chair 3. Majority BD mbrs W/ 4 days if mailed notice 24 hours if oral.

Question 29

Who elects BD chairperson?

Answer 29

BD. Or SHs.

Question 30

What can excuse director of what would otherwise be breach of DOC or DOL?

Answer 30

Exclupation clauses bby

Question 31

BJR protects directors for lots of shit, including contributions to charities. Where is the limit?

Answer 31

When it becomes wasteful

Question 32

Duty of care) What is required to find that reliance was legit?

Answer 32

1. GF reliance 2. Reasonably believed in their expertise

Question 33

BJR?

Answer 33

1. Business related 2. Rational Fiduciary duties then assumed: 3. Care 4. Loyalty 5. GF

Question 34

Duty of care?

Answer 34

1. Inform themselves [neg standard] 2. GF decision makingg [BJR protects] 3. Oversight measures [BF standard]

Question 35

DOC) Oversight measures?

Answer 35

Liability if: 1. BF 2. Conscious disregard red flags

Question 36

Duty of loyalty?

Answer 36

1. Act in entity best interest 2. Dont compete 3. No help adverse comp / secret income

Question 37

Conflict of interest? Liability for it?

Answer 37

Material financial interest adverse to corp. Liability for not disclosing.

Question 38

Conflict excusal?

Answer 38

Disinterested directors / Qualified directors approve it AND it is procedurally / substantively fair.

Question 39

For derivative or direct, what is the fucking Q?

Answer 39

Can P demonstrate that he/she can prevail without showing injury to entity? If no, derivative. [If it harmed the entity = Derivative]

Question 40

T/F) Absent evidence of agreement to contrary, partners share losses in the proportions they have agreed to share gains.

Answer 40

True

Question 41

Tools to help minority SHs?

Answer 41

1. Cumlative voting 2. Pooling agreement 3. Voting trust agreement

Question 42

PCV?

Answer 42

1. Unity of interest not distinct so as to be one entity [alter ego] 2. To recognzie as entity would be injustice a. undercapitalization b. lack of formalities c. one person entities d. commingling funds

Question 43

2 types liability?

Answer 43

Direct and vicarious

Question 44

T/F) Absent limited liability entity [LLC /LP/ Corp.] other entity investors have direct and vicarious liability for injuries business inflicts.

Answer 44

True. For LLC / Corp. you will need to argue PCV.

Question 45

Are investors in LLC, LPs, and Corp. liable for entity wrong acts?

Answer 45

No, must PCV.

Question 46

Case for PCV?

Answer 46

Folger v. Cottle

Question 47

What did folger v. cottle say?

Answer 47

Such a unity of interest that sep. personalities no longer exist. [Factor one]

Question 48

T/F) One person entities, by itself not a sham.

Answer 48

True Nelson v. Admas

Question 49

Entity disregard theories?

Answer 49

PCV and RVP Equitable ownership Joint enterprise liability Aiding and abetting Substantive consolidation

Question 50

How to get non investors?

Answer 50

Equitable ownership [argue simalar unity facts]

Question 51

T/F) Argue same factors for RVP and Equitable owenrship

Answer 51

True

Question 52

Entities are part of same enterprise.

Answer 52

Enterprise liability which moves sidewarys

Question 53

How to get after parent?

Answer 53

Agency. Look at control. Telling sub what to do.

Question 54

AA?

Answer 54

Tortfeaser bad shit. Abettor knows and helps. Wolf v. Liberis

Question 55

1. Creditors dealt with multp. entities as single ecpnomic unit 2. So entalged that consolidation good for all.

Answer 55

Substantive consolidation

Question 56

Is a SP directly and vicariously liable for tort actions comitted by employees?

Answer 56

Yes to their own torts [direct] and employee [torts.] Only lim liab. companies exempt from vicarious liability UNLESS entity disregard theory applies.

Question 57

Do partnerships have limited liability?

Answer 57

Only if they elect to have it > LP

Question 58

Lim Liab. is an _______ to or negation of ______ _______.

Answer 58

Exception / negation of VL

Question 59

What is the argument FOR lim. liability?

Answer 59

Encourages creation of businesses by limiting risk.

Question 60

Is lack of formalities itself enough to PCV?

Answer 60

No, must weigh all factors.

Question 61

_________ = Amount contributed by investors as equity. Lack of this is factor for PCV.

Answer 61

Capitalization

Question 62

The fact that a manager serves same offices and roles in two corporations is not enough to PCV.

Answer 62

True. Bestfoods.

Question 63

Is it app. for directors of a parent corp. to serve as directors of a subsidiary?

Answer 63

Yes, Bestfoods.

Question 64

T/F) One person entities not automatically a sham.

Answer 64

True, nelson v. adams

Question 65

Is it OK to meet sequentially as the boards of several corporations?

Answer 65

Yes, bestfoods. This can be PCV factor, but alone, not enough.

Question 66

What case showed just how hard to pierce the CV?

Answer 66

Verni v. HMS

Question 67

Entity disregard theories?

Answer 67

1. VP 2. RVP 3. Enterprise liability 4. Agency 5. Ratification 6. A&A 7. Partnership 9. Partnership by estoppel 10. Substantive consolidation

Question 68

_____ _____ in a corporation is demonstrated by control exercised by an individual other than SH, IE: someone with personal and family ties, control of resources, etc. Same test as PCV.

Answer 68

Equitable ownership [Bushman]

Question 69

Equitable ownership case?

Answer 69

Bushman

Question 70

_____ ____ ___ is holding the entity liable for the investor debts.

Answer 70

RVP: 1. If investors initiate = inside RVP 2. If creditors initiate = outside RVP

Question 71

How to argue enterprise liability?

Answer 71

1. Entities part of same enterprise [look at ownership]And 2. PCV factors are present

Question 72

You can also use _____ to go after entities. One person [investor] manifests assent to another person [entity] that the entity shall act on the [investors] behalf and be subject to [investor] control and [entity] manifests assent to do so.

Answer 72

Agency

Question 73

If parent tells sub what to do, how can you get the parent? Maybe not enough factors to PCV.

Answer 73

Argue agency. Investors manifests assent for entity to act on its behalf and entity manifests to do so. Look at degree of control, consent, and reliance.

Question 74

A person may ratify an act only if...

Answer 74

...if the actor/entity purported to act as agent on the person/ investor behalf.

Question 75

A ratification is not effective unless it precedes....

Answer 75

....the occurrence of circumstances that would case ratification to have adverse effects on 3rd party.

Question 76

Elements: 1. Tortfeasor is committing wrongful acts 2 Abettor is knowingly helping

Answer 76

A&A. Wolf v. Liberis. Abettor is liable for the tort.

Question 77

Under Wolf v. Liberis, what is a key factor to hold the abettor liable?

Answer 77

The ∆ must "knowingly and substantially assist" the principal violation.

Question 78

If parent and subs. are carrying on as co-owners of a business for a profit, they are....

Answer 78

Partners!! Use same factors from McArthur v. Stein to show partnership. 1. Contribute 2. Control 3. Share 4. Both manifest assent [Now both are liable for what the other does]

Question 79

If you can establish that a parent and subsidiary ar both partners, who is liable?

Answer 79

Then are both are liable for what the other does. i

Question 80

Combining the assets and liabilities of two entities into a single bankruptcy estate. What test used?

Answer 80

Substantive Consolidation = Bonham test.

Question 81

What is the Bonham test for finding Substantive Consolidation?

Answer 81

1. Creditors dealt with entities as single economic unit 2. Affairs of debtor are so entangled that consolidation benefits all creditors

Question 82

What is the effect of substantive consolidation?

Answer 82

Effect = All assets are one estate. So, all claims are against that estate. Massive entity disregard.