Corporations Flashcards

Question

may not take a business opportunity for own when

Answer 1

The corporation is financially able to exploit the opportunity The opportunity s w/i the corporation’s line of business The corporation has an interest or expectancy in the opportunity and By taking the opportunity, director/ officer is in a position not compatible with duties to corporation Only required to consider the facts only as they existed at the time he determined to accept the offer

Answer 2

Opportunity is presented to director in her individual role, and not in her role as director Opportunity is not essential to the corporation Corporation has no interest or expectancy in the opportunity Director has not wrongfully employed corporate resources in pursuing the opportunity

Answer 3

director presumed to concur with board action unless dissent// abstention note in writing in corp records Director not liable under rule if absent from board meeting

Answer 4

Officers owe same duty of care and loyalty as directors Is agents of corp Roles One person can simultaneously serve in more than one office Officers are selected and removed by board Remove with or without cause Breach K officer had = remedies Shareholders do not hire and fire officers

Answer 5

Category 1: Corp cannot indemnify if D/O held liable to corp or improper benefit Category 2: corp must indemnify D/O successful in depending on merits or otherwise Category 3: Corp may indemnify D/O shows acted in good faith believed conduct in best interest of corp Catch all If D/O does settlement it would fall here Court order indemnification If justified in view of all circumstances D/O held liable, reimbursement limited to costs and attorneys fees Limitation on liability Articles can eliminate D/O liability only for duty of care cases

Answer 6

Small # of shareholders Stock not publicly traded Shareholders can manage directly Shareholder management agreements In articles and approved by all shareholders OR Unanimous written shareholder agreement Agreement noted on front and back of stock certificate = failure doesnt affect validity Whoever manages corp owes duties of care and loyalty Shareholders in close corp owe a fiduciary duty of utmost good faith Controlling shareholders cannot use power to benefit at expense of minority shareholders Oppression of minority shareholders = they can sue controlling shareholders who oppress them for breach of this fiduciary duty

Answer 7

Name must include one of phrases or PC or PA Articles state purpose is to practice particular profession Corp directors, officers, and shareholders must be licensed professionals Personally liable for malpractice Shareholders not liable for each others malpractice Cant be liable for debts Maybe personal liable for what corp did

Answer 8

Doctrine allows shareholders to be sued for debts of corp Available only in close corporations Shareholders have abused the privilege of incorporating Fairness requires holding them liable Two common fact patterns Alter ego Commingled funds corporation is mere “alter ego” of owner Corporation is same as shareholder Recognizing corporation as separate entity would lead to unfair result Undercapitalization Undercappitalized when form Shareholders failed to invest enough to cover prospective liability Cts are more willing to pierce corporate veil for a torts victim than for a contract claimant

Answer 9

shareholder sues to enforce corp's claim direct suit= shareholder individually hurt

Answer 10

Money from judgment goes to corp P recovers costs and fees only Loses Liable for D’s fees if sued w/o reasonable cause Other shareholders barred from suing on same transaction again

Answer 11

Stock ownership when claim arose and throughout suit Or got by operation of law (inheritance or divorce degree) Adequate representation of corp’s interest Written demand on corp ( usually on board) Some states always demand and cant sue until 90 days after , unless already rejected or irrerparable injury Other states don’t have to if futile ( asking to sue themselves)

Answer 12

Ct approval required to settle or dismiss derivative suit Corp may move to dismiss Based on independent investing = concluded suit is not in corp’s best interest Made by independent directors or a ct appt panel of one or more independent persons Ct will dismiss if finds Those recommending dismissal were truly independent They made reasonable investigation

Answer 13

Each outstanding share has one vote Must be record shareholder on record date Record shareholder = person shown as stock owner in corp records Record date: voter eligibility cutoff date Exception to record owner rule Corp reacquires stock = no one vote stock bc not outstanding Shareholder dies = executor can vote

Answer 14

Proxy = writing authorizing another to vote the share , good for 11 months Requirements Writing Signed by the record shareholder Directed to secretary of corp Authorizing another vote the shares Revoked by Writing to the corp secretary Attend meeting to vote Irrevocable proxy : only irrevocable if states that it is and is coupled w/ an interest or given as security Must state that it is irrevocable Holder has some interest in shares other than voting

Answer 15

Requirements Written agreement controlling how shares will be voted Give copy of agreement to corp Transfer legal title to voting trustee Give original shareholders trust certificats

Answer 16

Must be in writing and signed Specifically enforceable ? Increasingly yes

Answer 17

at meeting or by unanimouse written consent meeting- kinds Annual meeting is required Elect Directors If not w/i 15 months can petition ct Special meeting 10% to call notice Must be in writing and delivered 10-60 days before meeting Date place and time Special meeting State purpose improper notice= voidable unless waiver Express: writing and signed any time OR Implied : shareholders attend meeting without objecting at outset

Answer 18

Elect directors Need plurality vote Remove directors Need a majority vote of shares actually voted on On fundnmental corp changes

Answer 19

Quorum # of shares represented, not number of shareholders GR: quorum requires majority of outstanding shares entitled to vote, unless articles or bylaws require greater Not lost if ppl leave meeting Cumulative voting Method to give small shareholders better chance of electing someone to the board Multiply number of share by number of directors to be elected Only one at large voting Can distribute votes how want

Answer 20

Allowed if not absolute restraints on alienation enforceable if restriction is conspicuously noted on the stock certificate or transferee had actual knowledge of restriction at the time of the purchase

Answer 21

Shareholder’s right to review corp books and records on written demand Need not state a proper purpose Noncontroversial things To inspect controversial things Proper purpose One reasonably related to interest as a shareholder 5 business days advance notice Examples Minutes of board meeting Corps books, papes, accounting reccird Shareholder recorders Directors do not need to go through same process

Answer 22

Payments from corp to shareholders Types Dividend Repurchase Redemption: forced sale to corp at price set in articles P must show abuse of discretion to win Show making profits and not paying but giving self bonuses In boards discretion when to distribute No right to it until board declares it

Answer 23

can eliminate personal liability for money damages to SH or corp for actions taken EXCEPTIONS - Director received a benefit to which he is not entitled - intentionally inflicted harm on the corp or its SH - approved unlawful distributions - intentionally committed a crime

Corporations Flashcards

(47 cards)