Flashcards in Business Entity: Rights & Duties Deck (4)
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1
Business Entity:
Rights & Duties
General Partnerships
General Partnerships
- partners are entitled to equal management rights and their share of capital contribution
- partnership property belongs to partnership
- partners are entitled to use or possess only on behalf of partnership
- creditors may not seize assets of partnership to cover partners personal debts
- general partners are not entitled to compensation for work performed
- partners may veto new partner admission
- partners have information rights
- standards of conduct: duty of loyalty & care
2
Business Entity:
Rights & Duties
Corporations
Shareholders
Corporations
Shareholders
- right to vote
- right to inspect corporate records
- right to have financial priority respected
- right to exercise appraisal rights
- right to file derivative lawsuits
- right to exercise preemptive lawsuits
3
Business Entity:
Rights & Duties
Corporations
Directors
Directors
Duties
Duty of Attention
- attend board meetings, gain basic familiarity with business, study financial statements
Duty of Care
- in good faith, with care of ordinarily prudent person, in manner reasonably believed to be in best interest of corporation
Duty of Loyalty
- fiduciary duty
- avoid conflict of interests, transactions should be scrutinized, respect corporate opportunity doctrine
Rights
- right to rely on officers
- Business Judgement Rule
- shareholders can eliminate their personal liability
Officers
- run day-to-day operations
- same duties as directors
4
