California Corporations Flashcards
(40 cards)
Identify the rights, duties, and liabilities of directors and officers (California).
Directors and officers are responsible for the governance and management of the corporation, with duties to act in good faith, with care, and loyalty to the corporation. They may be held liable for breaches of these duties.
Identify the rights, duties, and liabilities of shareholders (California).
Shareholders have the right to vote on significant corporate matters, receive dividends, and inspect corporate records. They are generally not liable for corporate debts beyond their investment.
Explain the process of shareholder voting (California).
Shareholders vote on corporate matters at annual or special meetings, typically through a majority vote. Voting can be done in person or by proxy, and cumulative voting may be allowed to strengthen minority shareholder representation.
Predict the outcome of attempts to pierce the corporate veil (California).
Piercing the corporate veil occurs when courts hold shareholders personally liable for corporate debts, typically in cases of fraud, undercapitalization, or failure to observe corporate formalities.
Understand the processes of merger (California).
Mergers involve the combination of two or more corporations into one, requiring approval from the board of directors and a majority of shareholders of each corporation.
Analyze the pros and cons of different corporate forms (California).
Corporations provide limited liability, perpetual existence, and easier access to capital, but face double taxation and more regulatory requirements compared to other business forms.
Nature of Corporations (California).
A corporation is a legal entity distinct from its owners, with perpetual existence, centralized management, limited liability for shareholders, and free transferability of ownership.
Structure of a corporation (California).
Corporate directors govern the corporation, officers manage day-to-day operations, and shareholders own the corporation without direct control over management.
Promoters and Pre-Incorporation Transactions (California).
Promoters take preliminary steps to form a corporation and may enter into contracts on behalf of the not-yet-formed corporation, but they are personally liable for these contracts unless specific conditions are met.
Incorporation requirements (California).
Incorporation requires filing articles of incorporation with the California Secretary of State, including information such as corporate name, purpose, registered agent, and stock details.
Organization after incorporation (California).
After incorporation, a corporation must elect directors, appoint officers, and adopt bylaws. Failure to properly organize can expose shareholders to personal liability.
Corporation by Estoppel (California).
Corporation by estoppel prevents parties from denying corporate existence in contractual disputes if it would unjustly expose principals to liability or deprive third parties of relief.
Powers of Directors (California).
Directors manage the corporation’s business and exercise corporate powers as a collective body, requiring a quorum for board actions.
Authority of Corporate Officers (California).
Corporate officers act as agents of the corporation, with powers to enter transactions as authorized by corporate governance documents or by the board.
Doctrine of Ultra Vires (California).
The ultra vires doctrine restricts corporations from engaging in activities beyond their stated purposes, though it has limited applicability in California due to broad purpose statements.
Removal of Directors (California).
Directors may be removed with or without cause by a majority of voting shares or by the board or court in specific circumstances such as unsound mind or fraudulent actions.
Fiduciary Duties of Directors and Officers (California).
Directors and officers owe duties of care, loyalty, and good faith to the corporation, with protections under the business judgment rule for informed, good-faith decisions.
Shareholder Participation in Management (California).
Shareholders elect directors, remove directors, amend bylaws, and approve fundamental changes. Shareholder meetings require proper notice and quorum for actions.
Cumulative Voting (California).
Cumulative voting allows shareholders to allocate all votes to one or more candidates, enhancing minority shareholder representation on the board.
Shareholder Voting Rights (California).
Each share typically has one vote. Shareholders can vote by proxy with a written or electronic authorization. Proxies are generally revocable unless explicitly stated as irrevocable and coupled with an interest.
Shareholder Rights to Information (California).
Shareholders have rights to inspect bylaws, accounting books, and meeting records for purposes reasonably related to their interests in the corporation.
Direct and Derivative Suits (California).
Shareholders can bring direct suits for personal harms and derivative suits on behalf of the corporation for breaches of fiduciary duty, subject to specific procedural requirements.
Duties of Controlling Shareholders (California).
Majority shareholders have fiduciary duties to avoid benefiting disproportionately at the expense of minority shareholders, evaluated under the duty of loyalty.
Piercing the Corporate Veil (California).
Courts may hold shareholders personally liable for corporate debts if the corporation is used to commit fraud, is undercapitalized, fails to observe formalities, or is an alter ego of its shareholders.
