FL Corporations Flashcards

Question

Directors

Answer 1

At least one Natural Person and 18+ *Non-Profit Corporation: at least 3

Answer 2

Elected by: Shareholders at Annual Meeting by Plurality + Straight Voting - Exception: Cumulative Voting: Number of Shares x Number of Directors to be Elected = Can vote them anyway Grounds for Removal by Circuit Court: (1) Fraudulent Conduct, Gross Abuse of Position, or Intentional Infliction of Harm on Corporation, AND (2) Removal is in the Best Interests of the Corporation Removal by Shareholders: with or without cause

Answer 3

Board fixes compensation of: (1) Board, and (2) Officers * unless AOI/Bylaws Florida courts will generally address issues of executive compensation by balancing various factors, including: (1) the amount paid to comparable executives, (2) the amount of time and energy needed to perform corporate responsibilities, and (3) the executive's professional background. *Compensation for FUTURE services may be voidable if it is not conditioned on remaining with the corporation for a reasonable amount of time. A court will normally NOT inquire into the fairness of an officer's compensation. - However, a court will REVIEW an officer's compensation for FAIRNESS if the compensation was NOT APPROVED by informed, disinterested, independent directors (or by a majority of informed, disinterested shareholders).

Answer 4

Regular or Special Meetings: in or out of the state Adjourned by: a Majority Vote of Director’s Present Called by: Chair of the Board or President - unless AOI/Bylaws Can be by Conference Call: if all directors can simultaneously hear each other Regular Meetings: NO NOTICE REQUIRED - unless AOI/Bylaws Special Meetings: 2 Days’ Notice + Time + Date + Place - No Purpose Needed

Answer 5

Quorum: Majority of Number of Authorized Directors as specified in AOI/Bylaws (Unless AOI/Bylaws) - Amount AUTHORIZED - not the actual amount of directors there are - *Vacancies – directors or shareholders can fill a vacancy Voting: Majority of the Quorum - Majority of the Director’s Present - No Proxy or Agreement

Answer 6

DUTY OF CARE: act with the care of an ordinarily prudent person (unless professional) - Reasonably informed of general nature/operation + provide general supervision over top management Nonfeasance: doing nothing – liable if consistent + actual injury Misfeasance: does something causing loss BUSINESS JUDGMENT RULE: - Rebuttable Presumption that Directors and Officers are better equipped than courts to make business judgments, because they are more intimately familiar with the corporation's affairs. - Mere errors in business judgment are NOT ACTIONABLE in themselves; - NO Personal Liability or Judicial Review (1) Disinterested + (2) Acted in Good Faith + (3) With Reasonable Diligence + (4) Reasonable Belief in Best Interest of Corp. * Standard: Gross Negligence * Presumption Applies to Directors/Officer – unless: (1) Fraud, Illegal, or Personal Interest, (2) Lack of Rational Business Purpose, or (3) Grossly Negligent and Uninformed DUTY OF LOYALTY: act in good faith with reasonable belief that actions are in best interests of corporation (1) INTERESTED DIRECTOR TRANSACTION: (voidable) can be set aside unless director shows it was fair to corp. - Burden Shifts: if approved by majority of disinterested directors or a majority of disinterested shares - Must Give: Full Disclosure of Material Facts + Conflict of Interest (2) COMPETING VENTURE (3) CORPORATE OPPORTUNITY – cannot usurp an opportunity acquired as a result of their position for personal gain corp. might be interested in - unless: corporation declines after full disclosure or the corporation is clearly unable to exploit the opportunity Officers may not exploit an opportunity acquired as a consequence of the officer's corporate position for personal gain unless the corporation declines, after full disclosure, to pursue the opportunity, or is clearly unable to exploit the opportunity.

Answer 7

Directors are NOT LIABLE for DAMAGES of breach of fiduciary duty, unless they also: (1) Violated Criminal Law, (2) Received an Improper Personal Benefit, (3) Authorized an Unlawful Dividend, or (4) Reckless, Willful, or Intentional Misconduct

Answer 8

May be removed at any time with or without cause, by: (1) Board of Directors, (2) Appointing Officer (unless AOI/Bylaws), or (3) Any other officer if authorized by bylaws or board

Answer 9

President, VP, Secretary, Treasurer Appointed by: Board of Directors Additional/Minor Officer: Appointed by President Officers or Agents: Need EXPRESS or IMPLIED AUTHORIZATION to enter into transactions Officers: IMPLIED Authority to enter into transactions that are REASONABLY RELATED to PERFORMING the DUTIES for which they are RESPONSIBLE. President generally has the power to: (1) Purchase Assets (for example, equipment or inventory); (2) Sell Goods, Used Equipment, and Possibly Land, in the ORDINARY COURSE of BUSINESS; (3) Hire Employees; and (4) Establish Salary Levels. Corporation can Repudiate a transaction entered into by an officer or agent who Lacked Proper Authority. NO Authority to enter into contracts of Employment that extend BEYOND their own term of office - if no term specified – not beyond the CURRENT BOARD of directors’ terms of office

Answer 10

``` Voluntary Dissolution Involuntary Dissolution by Shareholders Appraisal Rights Amendment of Articles Failure to Have Certificate of Authority Annual Report Merger Share Exchange Sale of Substantially All Assets ```

Answer 11

(1) Board of Directors Approval (2) Absolute Majority (Majority of Shares Entitled to Vote) *or written consent of absolute majority of shares

Answer 12

Grounds: (1) Director Deadlock in Management of Corporate Affairs + Shareholders are Unable to Break Deadlock, and (a) Irreparable Injury to Corporation (b) Business/Affairs can no longer be conducted to advantage of shareholders because of deadlock (2) Shareholder Deadlock in Voting Power + Failed to Elect Successors to Directors whose terms have Expired or would have expired upon qualification of their successors; (3) Corporate Assets are being Misapplied or Wasted + Causing Material Injury; or (4) Directors (or those in control) are acting/acted/will act in Illegal or Fraudulent Manner Judicial Dissolution of a close corporation (corporation with 35 or less shareholders) is warranted if: (1) the corporate assets are being misapplied or wasted, causing material injury to the corporation; or (2) the directors or those in control of the corporation are acting or have or may act in a manner that is illegal or fraudulent.

Answer 13

Shareholders who don't approve of fundamental changes may have a right to compel corp. to buy their shares back at Fair Value NOT for: (i) Publicly Traded, or (ii) Marker Value of $10M+ and 2k shareholders Procedure: (1) Written Notice of Intent + (2) Abstain/Vote Against + (3) Written Demand for Payment

Answer 14

Approval by: (1) BoD + (2) Absolute Majority (Shares Entitled to Vote) NO SHAREHOLDER VOTE NEED FOR: (i) Extending duration of corporation, (ii) Deleting names of initial directors, (iii) Making changes to corporate name.

Answer 15

CANNOT sue or maintain an action or proceeding in FL until it obtains a COA CAN DEFEND a lawsuit in FL CAN CONTRACT in FL

Answer 16

Each FL + Foreign Corporation Authorized to Transact Business in FL has to file Annual Report If NOT FILED: - Cannot sue or maintain any action in FL until filed + all fees and penalties paid - Subject to Dissolution or Cancellation of Authority to Transact Business

Answer 17

One Corporation Absorbs Another Corporation (1) Directors of Both Corporations develop a Merger Plan (2) Majority Vote of Shareholders of Each Effective when: Articles of Merger are filed with DoS Short Form Merger: Parent and Subsidiary at least 80% owned by parent – don't need approval from subsidiary’s board or shareholders - only parent's board

Answer 18

One Corporation Acquires All Outstanding Shares of One or More Classes of Another Corporation (1) Directors of Both Corporations develop a Share Exchange Plan (2) Majority Vote of Shareholders of Each

Answer 19

Approved by: Shareholders of ACQUIRED (selling) Corporation Acquiring Corporation does NOT become liable for other’s debts – unless agreement to assume them

Answer 20

Officer, Director, 10% Shareholder Publicly Traded or 2k Shareholders with more than $10M in assets - Nexus to Interstate Commerce Must Return Profits to Corp from Trading Stock within 6-Month Period (Purchase + Sale)

Answer 21

Fraud + Deceit in Purchase or Sale of Any Security (Adequate Disclosure) - Minimum Nexus to Interstate Commerce Knowledge, Intent, or Recklessness

Answer 22

Fraud + Deceit in Purchase or Sale of Any Security DON’T NEED: knowledge, intent, or recklessness DON’T NEED: nexus to interstate commerce *FL Courts: Directors/Tippees are NOT liable to corporation for personal profits in trading on insider info

Answer 23

NOT a legal entity – unless for federal bankruptcy law CANNOT – engage in banking or a security business Created by: Deed or Declaration of Trust + Filed with Secretary of State Trustees Personally Liable to Trust Creditors - Shareholders NOT Personally Liable

FL Corporations Flashcards

(47 cards)