corps va Flashcards
(133 cards)
1
Q
Promoter duties:
Each promoter should be understood to be in a ________ with the other promoters.
This means that:
The promoter owes the corporation and its investors:
A
joint venture
They each owe each other fiduciary duties to other promoters and cannot act to receive personal gain
Fiduciary duties such that the promoter cannot personally benefit at the expenses of the corporation
2
Q
Promoter Liability:
Is a promoter personally liable for pre-incorporation transactions?
Exception?
The corporation can release the promoter of personal liability through a _____
May the corporation indemnify the promoter?
A
Yes; but will generally have a right to reimbursement
If the promoter contracts on behalf of the corporation with a 3rd party and that 3rd party knows that incorporation has not yet occurred.
subsequent novation
Yes
3
Q
When is a corporation liable for pre-incorporation transactions?
A
When the corporation adopts the contract by accepting the benefits of the transaction or accepting liability through board resolution
4
Q
Requirement for articles of incorporation
A
- Name and basic info (must include variation of corp.)
-Place in VA where its main office is
-Must include number of shares the corporation is authorized to issue
5
Q
Do corporations have to state a corporate purpose in their articles?
A
No but they may, most are broad
6
Q
What is an ultra vires act?
A
When a corporation conducts activities outside its stated purpose.
7
Q
An ultra vires act can only be challenged in a few circumstances?
A
- A SH lawsuit to enjoin the corp from conducting said act
-Corp can take action against a director/officer who engages in an ultra vires act
-The State Corporation Commission of Virginia can initiate a proceeding against the corporation to enjoin an ultra vires act.
8
Q
A corporation has the following powers unless stated otherwise in the articles
A
-To sue or be sued
-To make and amend bylaws
-To purchase and transfer property
- To contract
-To lend money
- To elect and appoint officers
- to establish pension plans
-to insure
to pay compensation
9
Q
VA requires a corporation to maintain a ______ who is a resident of VA and either:
1.
or
2.
Can the agent be another corporation?
A
resident agent
director or officer
member of the VA bar
Yes; so long as its not its own agent and the other entity lists at least one natural person
10
Q
Amending the articles of incorporation
If no stock has been issued:
If stock has been issued:
A
no stock:
The directors may amend;
If no board directors, promoter may amend
Stock:
1. Board must approve amendment
2. Board will submit amendment to SH
- SH give 25-60 day notice and copy of amendment
3. SH must vote to approve
-Default rule is 2/3, unless articles state otherwise, must be minimum of a majority approval
11
Q
If an amendment imposes new personal liability on SH, then:
A
Each SH must sign a separate written consent to such liability, and
The consent will only apply to liabilities that arise AFTER the amendment becomes effective
12
Q
If it is only a minor amendment to the bylaws, does the board need SH approval?
A
No, board may approve alone
13
Q
Does VA embrace de-facto corporations?
A
NO
14
Q
Corporation by estoppel means
A
When a defectively formed corporation holds itself out as a valid corporation to a third party, it cannot avoid liability by raising its lack of corporate status as a defense.
and
A person conducting action on behalf of an invalid corp is not liable to persons who KNEW that the corp did not exist
and
An outsider who deals with a business entity as if it were a valid corporation is estopped from denying its existence (even if improperly formed). and the outside party cannot normally recover from the personal assets of the business owner
15
Q
After the articles of incorporation are filed, most corporations will conduct some additional acts:
A
- Draft bylaws (addle operating rules)
- Hold an organizational meeting (appoint officers, adopt bylaws, approve pre-incorp contracts, elect board)
- Ratification (ratify valid corp action that is void or voidable by board adopting resolution) might require SH approval if the initial action would’ve
16
Q
Equity securities vs debt securities
A
Equity securities convey ownership and control interests, primarily stock (common/preferred)
Debt securities for not convey ownership and control interests and create a contractual debtor-creditor relationship between the corporation and the outside lenders
17
Q
The act of issuing shares must be authorized by:
A
Board of directors
18
Q
How do you increase the number of authorized shares?
A
Amending the articles
19
Q
If the firm issues unauthorized shares then they are:
A
void and the purchaser can recover the money
20
Q
What is par value stock?
Can purchasers pay more for par value stocks?
If there is no par value in the articles, the shares must be sold for how much?
A
This means that a par value will be specified in the articles and that the corp must receive at least this amount before the stock can be issued
Yes
Any amount specified by directors
21
Q
In VA, does a corporation automatically have preemptive rights to shares?
What are preemptive rights?
A
NO; unless provided for in the articles of incorporation
Preemptive rights allow shareholders to maintain a proportional share of ownership interest in the corp
22
Q
In general, registration with SEC is only required for
A
public offerings;
Sale of stock to just a few investors, especially sophisticated investors, may not trigger registration requirements
23
Q
If a corp fails to comply with the registration requirements, a purchaser of the security (if they bought without knowledge of the error) can:
Who might be liable:
A
-sue to rescind transaction
-May recover compensatory damages
Issuing corp
Any signer of registration statement
A director of the issuing corporation
An expert named as having prepared or certified the statement
The underwriter of the issue
24
Q
What is a distribution?
A
The transfer of cash or property from the corporation to one or more of the SHs AKA a dividend
25
Who decides to authorize a distribution?
The board of directors (unless articles say otherwise)
26
Can a corporation issue new shares as a distribution?
Yes, if the articles permit it
AKA stock split or share dividend
27
Can a corporation issue a different class of shares a as distribution?
Yes, if:
The articles permit it
and
The majority of votes entitled to be cast by the class/series to be issued permit it
and
There is no outstanding stock of the class/series to be issued
28
Can a corporation make a distribution if it is insolvent?
No
29
When is a corporation insolvent?
-Payment of the distribution would prohibit the corporation from paying its debts as they become due in the normal course of business or
-The liabilities of the corporation exceed its assets
30
A director who votes for or agrees to an unlawful distribution in violation of her duty of care or loyalty will face ____ to the corporation and its creditors for the excess amount of the distribution.
personal liability
Note. If this happens, the director is entitle to contribution from other liable directors and it may recoup payments from SH who accepted the unlawful distribution
31
The directors will typically set a ____ date, and everyone owning the shares on that date will receive the distribution
record
32
Are restrictions on stock transfers permitted?
Yes
33
Transfer restrictions can be found in:
Articles
Bylaws
SH agreements with other SH or the corp
34
A transfer restriction will be valid if:
The restriction has a lawful purpose and
Restriction does not create and undue burden on alienation
35
The reasonableness of a restriction on transfers of stock is a question of ____; but an ______ restriction on resale is generally considered ____ and ____.
fact
absolute
unreasonable
void
36
Rule 10-b5
Governs the fraudulent purchase or sale of any stock or other security
37
A private investor can bring a private cause of action by establishing seven requirements: BIDBIRD
1. Plaintiff bought or sold security
2. Transaction involved use of interstate commerce (phone, mail, email, natl sec exchange)
3. Defendant engaged in fraudulent or deceptive practices
4. Conduct must relate to basic material information
5. Defendant must act with intent or recklessness
6. Plaintiff relied on D's conduct
7. Plaintiff suffered damages or harm from conduct
38
Bespeaks caution doctrine
If an opinion or prediction is accompanied by adequate cautionary language, it will not constitute a misleading statement
39
Possessing material inside information is not a crime unless they:
A person is presumed to have traded on the basis of nonpublic information if she possesses the information at __ unless __
trades a security based on this knowledge
the time of the trade
the trade was made according to a pre-existing written plan
40
Information is material if:
a reasonable investor would find the fact important in deciding whether to buy or sell a security
41
Four types of traders may be liable for failure to disclose inside information in
connection with a trade:
Insiders- directors/officers/employees of a corp
Constructive insiders: Persons with access to inside info based on a relationship with the cops. (lawyers, accountants)
Tippees: a person who receives info from an insider with the expectation that she will trade (must know it was insider info)
Misappropriators: a person who wrongly uses confidential information of one party in order to trade stock in a different corp.
42
Fraud on the market?
A misleading public statement is presumed to satisfy th reliance element of 10b5 action
43
Section 16b
governs insider short swing profits
restricts indoors from rapid trading profits related to her firm's stock
44
Only some publicly traded corporations are protected by Section16(b):
Corps that trade on a national exchange
Corporations with more than 10 million in assets and more than 500 shareholders
45
Only a few a people are governed by Section 16b
Corporate insiders
SH holding more than 10% of any class of stock
46
During any ____ period, an insider who both buys and sells his corp's stock is liable to the corp for any profits
Primary state cause of action?
six month
Tort of fraud
47
What is a tender offer?
an offer to SH of a publicly traded corp to purchase their shares for a fixed price
Often used to conduct hostile takeover
48
A person who acquires more than __ of any class of stock needs to file a statement with the SEC revealing:
5%
Percentage of ownership
Source of funding; and
Purpose in acquiring stock
49
SH meeting requirements
Corps are generally required to hold one SH meeting a year
50
The time and place of the SH meeting is specified in:
the bylaws
51
The main purpose of a SH annual meeting is:
to elect directors but any proper business decision of the SH may also be addressed
52
A special meeting may be held to
address a purpose specified in the notice of the meeting
53
May other unrelated corporate business be conducted at a special meeting?
No
54
Who calls a special meeting?
Typically, the president, or board of directors,
The articles may allow other parties to call a special meeting
55
If the corporations nonpublic and has __ or fewer SH, VA allows a special meeting to be called by a group of SH owning at least __ of the share entitled to vote at the meeting (unless the articles provide otherwise)
35
20%
56
Written notice must be given to SH for either an annual or special meeting. The notice must include:
and
must be given:
Include time, date, and place of meeting
It must be given between 10 and 60 days from meeting date
57
For meetings involving fundamental corporate change, notice must be given:
25-60 days from the meeting date
58
Notice for special meetings must also include ___
the purpose of the meeting
59
How should notice be delivered?
Any method of delivery used in commercial practices is permitted
Electronic transmission allowed if consented to by recipient
60
When is notice for a meeting waived?
If notice for 2 consecutive annual meeting were returned undeliverable
or
two consecutive distributions within a 12-month period were sent to address of record and returned undeliverable
61
SH may waive notice requirement by:
in writing
or
by attending the meeting (unless they object to improper notice at the meeting)
62
Can a SH meeting be held outside of VA?
Yes; but must be held at corp's principal office unless another place is mentioned in notice
63
Can the directors call a meeting by phone?
yes
64
If a firm is not holding timely shareholder meetings, a shareholder can petition the ______________ in the firm’s principal place of business for an order compelling the meetings.
Annual meetings—Any shareholder may seek such an order if more than ____________________ months have lapsed:
Since the last annual meeting; or
If no annual meeting has been held, since incorporation.
Special meeting—A shareholder who sought the special meeting may seek such an order if the corporation has not given notice of the meeting within _________ days of the receipt of the requisite number of demands for the special meeting.
Alternatively, shareholders can take any action that could have been performed at a shareholders’ meeting by _____________ written consent.
circuit court
15 months
30
unanimous
65
For co-owned shares, _____ may vote the shares
If more than one co-owner votes, the votes are divided _____
An executor, guardian, or conservator can vote shares that are owned by another on proof of ____
either party
proportionally
authority
66
Is a corporate owner of another corporation's stock entitled to vote?
Yes
67
Treasury stock is
can treasury stock be voted?
stock that is owned by the issuing corporation
No
68
Who gets to vote when stock is sold or transferred?
Board will set a record date prior to day of vote
Record date cannot be more than 70 days before vote
All owners on record date entitled to vote regardless of if they sold before meeting
69
Decisions requiring SH vote:
Electing bord fo directors
Fundamental corporate changes such as amending the articles or a merger
70
A valid SH vote requires the presence of a _____
quorum of the shares that are eligible to vote
71
In general, a quorum is established by a ____
These can be adjusted in the articles but not less than ____
majority of the votes entitled to be cast on the matter
1/3 of eligible shares
72
Approval requirements usually require _____
a majority of votes cast at a s vote with a quorum present
73
Voting for directors; normally elected by a ___
plurality vote; don't need a majority, director with most votes wins
74
A corp may establish cumulative voting for directors by:
Cumulative voting is:
Cumulative voting makes it easier for:
Expressly providing for this system in the articles
Each SH will multiple the # of shares they are voting x the # of directors to be elected
for a minority SH to get board representation
75
A proxy vote must be:
A proxy is valid for:
Can a proxy be revoked prior to the election?
Does a proxy remain valid if the SH dies or is deemed incompetent?
executed in writing and deliver dot the Corporation or its agent
11 months unless specified otherwise
Yes, unless it states its irrevocable and coupled with an interest
Yes, unless the corp. has notice before the proxy acts
76
What are SH Agreements
Where are the often seen?
SH are free to form agreements to govern voting rights and other managerial interests
Often seen in closely held corporations, but can be used in any type of corp
77
SH Agreements
Voting Trust:
Pooling Agreement:
VT: An agreement where all the participating SH transfer their shares to a trustee; the trustee then votes the shares and distributes distributions according to trust instructions; the trustee is the legal owner of shares, the underlying SH are the equitable owners
Voting trusts established before July 1, 2015 were limited to 10 years, there is no longer a durational limit
PA: An agreement among SH to vote all shares together as the majority of those in the agreement dictate
78
SH Management Agreements
These agreements can adjust:
This agreement must be set forth in:
May be amended or terminated by:
Existence of agreement must be noted _____ on each certificate
*not a ground for imposing personal liability on SH for corporate acts or debts
Allows SHs to alter the way in which a corporation is managed, even though the agreement is inconsistent with normal statutory governance provisions
-Elimination of board or restrict powers
-Make distributions, even not in proportion to ownership of shares
-Determine directors/officers, or terms of employment or manner of selection
- Exercise or division of voting power
- transfer or use of property or services b/w corp and any SH/director/officer/etc.
-Transfers to one or more SH all or part of authority to run corp
-dissolution of corp
-exercise of corp powers
Articles or bylaws and approved by ALL SH at the time
or
In a written agreement signed by ALL SH at that time and that is made known to corporation
May be amended or terminated by ALL persons who are present at the time of amendment or termination.
conspicuously
79
Rights of SH
Inspection of corporate records:
Without purpose:
With proper purpose:
SH has a right to inspect corporate books and records; right extend to a record SH, a beneficial SH, or an agent or attorney by a SH
w/o purpose: Can inspect/copy these record during normal business hours:
-Current articles/bylaws
-Most recent annual report
- Names and business addresses of current directors/officers
-SH meeting minutes, records of all SH actions taken w/o a meeting, all written communications with SH within last 3 years
- Any board resolution creating one or more classes or series of shares
W/ purpose:
-Other materials from board meetings
-Accounting reports and related work papers used in prep of corp's financial statements
- record of corp's current SHs
Must be during regular business hours at a reasonable location specified by firm and satisfy four elements:
1. SH must have held their stock for at least 6 months or hold at least 5% voting shares
2. SH demand must be in pursuit of a proper purpose (in interest of corp) made in good faith (non-harassment)
3. SH must describe with reasonable particularity of purpose and records SH desires to inspect
4. Requested records must be directly connected to SH inspection purpose
Corporation may enforce reasonable restrictions on the confidentiality, use , or distribution of these records.
80
Inspection notice:
A signed written request for inspection must be made at least 10 business days before the inspection and delivered to the corporation's secreatry
81
If the corporation improperly denies inspection rights the SH may:
-Obtain an expedited court proceeding to secure access to corporate records
-Get reimbursement for litigation costs
82
VA law requires all corporation to provide the most recently published financial statement to a SH upon:
Public firms that have issued securities are typically required to supply SHs with an ________ under federal securities laws
a written request
audited annual financial statement
83
Direct SH Actions
A shareholder may initiate direct legal action against the corporation in two basic circumstances:
Any recovery will go to :
1. An action to recover for harm linked to they status or rights as a SH
2. AN action that does not arise based on the plaintiff's status as a SH (e.g. a tort action against corp by SH)
The SH
84
SH Derivative Actions
Any recovery will go to:
A SH may seek to compel the corporation to file a lawsuit to recover for harm suffered by the corporation itself
The corporation; SH benefits only to the extent the recovery increases value of stock
85
Derivative Actions; Standing
In order to commerce a derivative action, the claimant must:
Can a creditor bring a derivative action?
1. Be a SH at the time of the act or omission
or
2. Become a SH through a transfer by operation of law from someone who was a SH at the time of the act or omission
or
3. Become a SH before public disclosure and without public knowledge of the act or omission
and
4. The claimant must be able to fairly represent the interests of the corporation
NO, creditors cannot
86
Derivative actions must make a _____ upon the board to take action.
written demand
VA UNIVERSALLY REQUIRES THIS
87
When can a SH commence a derivative action after making a demand?
-If there is no response within 90 days from board
-SH does not need to wait after filing demand if waiting would lead to irreparable harm
- If the demand is rejected, the SH can still proceed by alleging with particularity in the complaint that the corp's review and evaluation procedures were not complied with
Court may stay the case if corp commences an inquiry
88
A court may dismiss a derivative claim upon motion by the corporation if disinterested directors take the following steps:
1. Conduct and adequately informed review and evaluation of the allegations made in demand or complaint
2. Determine in good faith that the continuing litigation is not in the best interests of the corp
3. Submit a short statement of the reasons for its determinations
The determination should be made by:
-A majority vote of disinterested directors (if there is a quorum)
or
-A majority vote of a special committee consisting of two or more disinterested directors appointed by a majority of the disinterested directors at a board meeting
89
Consequences of derivative actions:
Settlement agreement must be approved by ___
Who gets any recovery?
Can SH recover litigation expenses?
If the court finds that the litigation was without probable cause or for an arbitrary or harassment purpose then:
the court
the corporation
Yes, if the lawsuit resulted in a substantial benefit to the corp.
The SH may need to pay defendant's litigation expenses
90
Limited liability can sometimes be challenged in ____
If this happens, the existence of the corporation will be ignored and ____
this is only a possibility if the ____ would also be liable
an action to pierce the corporate veil
the SHs will be held personally liable
corporation
91
SH personal liability factors
-SH exercised impermissible control or domination over the corporation
-Wrongful, misleading, or fraudulent dealings with a corporate creditor
92
Are any players automatically liable in a piercing claim?
Will failure to hold SH meetings or keep records automatically lead to piercing?
Is a parent corporation automatically pierced when liabilities arise in a wholly owned subsidiary?
Will a court pierce the corporate veil on the basis of inadequate capitalization?
No to all
93
What to look for in piercing claims, two things you should analyze?
1. Was there respect for the corporate formalities;
-lack of required meetings
-lack of minutes
-inappropriate decision making
- commingling of personal and corporate funds
2. Was the corporation used to promote fraud or injustice?
- inadequate capitalization
-Lies
-SH abusing limited liability protection
94
Unless a corporation has formed a SH management agreement, it must ____
establish a board of directors
95
Board powers
Has ultimate authority for exercising corporate power; and manages and directs the decisions of the corporation
; can appoint and authorize officers and employees to carry out the corp's day-to day business
96
Number of directors established by
either articles or bylaws
firm can also set a range
can amend bylaws to change number
97
Do you need any qualifications to serve as a director?
No unless specified in articles or bylaws
98
The directors are selected by ___ at ___
SH vote at annual meeting
99
What is the longest permissible term for a director in VA?
A director whose term expires can generally still serve until:
A director may resign at ___ by:
# of directors is decreased
3 years
Successor îs elected and qualified, or
anytime; by delivering written notice to board, the chair, or its secretary
100
Can SH remove a director?
DO you need cause?
A director elected by cumulative voting can be removed unless:
Yes, at a meeting called for that purpose
If permitted by the articles of incorporation, a director may also be removed by written shareholder consent.
No cause need, unless specified in articles
votes sufficient to elect the director are cast against the decision
101
Removing a director by court order
Permitted if:
Director committed fraud against corp or SH
Grossly abused position of director
or
Intentionally harmed the corporation
Court must deem removal in the best interest of the corporation
102
Is there a provision in Virginia law for removal of a director by the board of directors without the initiation of a court proceeding?
No
103
The board may hold regular or special meetings; but notice is only required for ______ meetings
Wha type of notice is required?
A director may waive notice by:
A meeting may be held ___
Do the directors need to be physically present at meeting?
Can the board take action without meeting?
special
written notice is standard, but verbal is okay if articles or bylaws allow for this
explicitly waiving or attending meeting
anywhere unless articles say otherwise
No, as long as they can hear each other
yes, if each director signs a written consent (unless articles or bylaws require otherwise)
104
Voting requirements for a valid action by the board
To prevent liability for illegal or improper action taken by board at a meeting where the director is present:
-requires quorum of directors present at meeting (majority unless lower number in bylaws or articles but can't be less than 1/3 of board) (vacancies do not reduce quorum)
- An affirmative board decision typically requires a majority vote, but articles/bylaws could require higher
the director must dissent by:
-Promptly objecting to holding the meeting or the transaction of specific business at start of meeting; or
- Voting against or abstaining and having their dissent entered into minutes; or
-Delivering written notice of the dissent or abstention to the presiding officer of the meeting before its adjournment or to the secretary of the corporation immediately after adjournment
105
Are director voting agreements enforceable?
No
106
Whenever the board of directors must take any action or recommend or approve any proposed corporate act, this action, recommendation, or approval is not required if the proposed action or corporate act is adopted by the ______________________________ of shareholders.
unanimous
107
Director committees
* A board of directors may take action through committees of ___ or more directors.
* Generally, a majority of the directors must vote for:
o The ________ of the committee; and
o The ______________of a director to the committee.
* Non-board members may be appointed to a committee, but may not ________________ on any matter for which the committee is performing a function of the board of directors.
2
creating
appointment
vote
108
A committee may take action on most proper matters, but a committee cannot:
-Authorize distributions
-Approve anything that requires SH approval
-Approve merger
-Fill vacancies on board or committee
-Amend articles
-Adopt, amend, or repeal bylaws
-Authorize or approve issuance of shares or contract for sale of shares
109
A publicly held corporation will typically have the following committees:
audit committee
compensation committee
Nominating committee
110
Under Sarbanes-Oxley (SOX), a corporation with stock listed on a national exchange _______________ have an audit committee with direct responsibility to select, compensate, and oversee the auditors.
o The members of this committee must also be _______________directors.
must
independent (not also officers)
111
Director duties
A director is also required to act in ____ in discharging these duties
The duty of loyalty
The duty of Care
good faith
112
A director is entitled to a rebuttable presumption under the statutory business judgment rule that:
A court will not normally second guess a ________ business decision that was shown to bad later on
A director can lose this presumption if:
protects decision made with good faith business judgment of the best interest of the corporation
reasonable
a plaintiff can show that a director engaged in self- dealing or fraud or acted in bad faith.
113
Director's duty of car
-Must not behave in grossly negligent or reckless manner in connection with business decisions
-Each director must gather information and take care when carrying out the business of the firm
- A director is often entitled to rely on the performance and opinions of officers, outside experts, and board committees, if the director believes them to be RELIABLE and COMPETENT
114
A director will not be liable for a duty of care breach if:
-they are absent from the meeting when the decision is made or
-if they dissent fro the decision
115
Director's duty of loyalty
Requires a director to act in an unselfish manner by not placing his interest ahead of the corporation
116
A director is in breach of their duty of loyalty when
engaging in a conflict-of-interest transaction with his own corporation.
The director must not profit at the firm's expense
117
Safe harbor exceptions for self-dealing
1. A committee of the board approves the transaction with knowledge of all material facts, including the director's personal interest
2. The SH approve transaction with knowledge of all material facts, including director's self interest
3. The transaction is fair to the corporation
118
VA specific test to determine if transaction is fair to corporation
1. Would the transaction have been approved by a disinterested director?
2. Would the same result have been accomplished between two parties of equal bargaining power who were not under distress?
119
May a director engage in a business venture that competes with the corporation?
May a director engage in an unrelated business venture?
May a director waste corporate assets by using resources in a way that is not in the corporation's best interest?
NO
YES
NO
120
A director may seek indemnification from the corporation for any ______________________________ and any ______________________________ if she is involved in a legal action as a consequence of her role as a director.
expenses
judgment
121
Mandatory indemnification
A corporation is required to indemnify a director for expense incurred in a wholly successful defense of a proceeding against the director
The director may even seek a court order compelling indemnification in this case.
122
Prohibited indemnification
A corporation may not indemnify a director against liability
-stemming from willful misconduct or a knowing violation of criminal law; or
-when a director is deemed to have received an improper personal benefit
123
General indemnification is permitted if authorized by:
Articles;
Bylaws made by SH; or
SH resolution
124
The corporation may indemnify an individual who is a party to a specific proceeding because the individual is or was a director if the director:
Satisfaction of these element must be determined by:
Can interested directors vote their shares for the indemnification?
-acted in good faith
-held a reasonable belief their conduct was in the best interests of corp
--in a criminal proceeding, did not have reasonable cause to believe that his conduct was unlawful
-A majority of disinterested directors
-Special legal counsel chosen by disinterest directors; or
-SHs
NO
125
Virginia’s statutory cap on director liability is the greater of:
Statutory cap applies if:
100k or
the cash compensation received by the director during the last 12 months
Corp has not adopted its own cap; or
The firm's cap is higher than statutory cap
126
Directors have inspection rights for ____ purpose related her duties as a director
If corporation refuses access; director may seek ___
any
court order
127
General procedure for statutory merger
1. Board for each corp must adopt resolution authorizing merger
2. Notice must be given to SH between 25-60 days before meeting and include summary of plan of merger
3. SH of each hope must approve
-In VA more than 2/3 of firm's SH must vote to approve merger (unless articles/bylaws state otherwise but can the below 50%)
128
Short form mergers
Applies when a parent and subsidiary ar emerging and the parent owns 90% of the voting power; permitted without approval by board or SH of subsidiary or parent corp unless articles say otherwise
*same rule applies for two subsidiaries merging when parent owns 90% voting power in each
129
Types of mergers
Statutory
Short form
Stock acquisition
Asset purchase
130
Look out for four situations that might lead to successor liability in an asset purchase:
-Purchasing Corporation agrees to assume liabilities
- Circumstances surrounding the transaction warrant a finding of a de facto merger or consolidation
-Transaction is fraudulent in fact
-Purchasing corporation is merely a continuation of the selling corporation
131
A SH who objects to a merger or acquisition may be entitle to file an
appraisal claim to force to the corporation to buy her shares at a judicially determined fair price
132
To perfect appraisal rights, the SH must
- not vote in favor of proposed action; and
-Make a written demand for payment after the action is approved by other SHs
133
Appraisal is an excessive remedy meaning that :
a SH cannot challenge the corporate action for any reason other than fraud or illegality
