Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Corporations > Shareholders > Flashcards

Shareholders Flashcards

1
Q

Only type of corp where SH manage?

A

Closely held corp (few SH, not publicly traded)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Requirements for PA’ Statutory Close Corp.? (2)

A

No more than 30 SH

Stock not publicly traded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Can a close corp eliminate the need for a BOD?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

In a close corp that has eliminated the BOD, who owes duties of care and loyalty to the corp?

A

Managing SHers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

In a close corp, SHers owe a fiduciary duty to . . .

A

Each other.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Are the oppressive acts of controlling SHers in a close corp actionable? Why?

A

Yes, breach of fiduciary duty to minority holders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When and only when can a SH be liable for corporate acts?

A

If the court pierces the corp. veil

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A corporate veil will only be pierced for what type of corp?

A

Close

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Is there a precise test to pierce the corp veil?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A court might pierce the CV of a close corp if these two things are true:

A

SHers abused the privilege of incorporating; and

Fairness requires that they be held personally liable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

PA courts may pierce the the CV to avoid _____ or ______

A

Fraud or unfairness.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

In answer a PCV question start with the general rule that . . . .

Then give the PCV standard, which is . . .

A

SHers are not liable for the acts or debts of a corporation.

Courts can pierce the CV if the SHers abused the privilege of incorporating AND fairness requires that they be held personally responsible.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Is undercapitalization grounds to PCV?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Courts are more willing to PCV for a ____ ____ than for a ____ ___

A

Tort victim

Contract claimant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

In a ______ suit, the SH is suing to enforce the corporation’s claim.

A

Derivative suit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What happens in a SH derivative suit?

A

SH is suing to enforce the corporation’s claim.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a pre-req for a SH to bring a derivative suit?

A

Corp must be able to bring the suit itself.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

SHer C sues the other 2 SH is a close corp. for oppessive behavior. Derivative suit? Explain

A

No. This is a breach of duty owed to the SH, not to the corp. This is a direct suit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

If SH wins derivative suit, who gets the judgment?

A

Corp.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

If SH wins a deriv. suit, she gets . . .

A

Costs and fees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

If SH LOSES a deriv. suit, can she recover costs and fees?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

If SH loses a deriv suit, is he liable to D for costs and fees

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

If SH loses a deriv. suit, can other SHer bring a claim later?

A

No. Collateral Estoppel.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Three reqs for bringing a SH deriv suit?

A

Stock ownership (at the time claim arose OR inherited from someone who did)

Must fairly and adequately represent the SHers’ interests

Must make a written demand on directors that the corp bring suit (unless demand would be futile OR would cause injury to the corp–i.e., directors would be defendants)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

In a deriv. suit, P must plead with particularity . . .

A

Her efforts to get to corp to sue OR why the demand was futile.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Can parties to a SH deriv suit settle or dismiss?

A

Only with court approval.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

How can a corp get involved in the SH deriv suit>

A

Can move to dismiss on grounds that the suit is not in the corp’s BI.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

A ___ SH as of ___ date has right to vote

A

Record x2

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

C corp sets its annual SH meeting for 7/7, with record date of 6/6. S sells B her stock on 6/25. Who is entitled to vote?

A

S

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is a Proxy? (4)

A

Writing

Signed by a record SH

DIrected to secretary

Authorizing another to vote the shares.

31
Q

A proxy must be in ____

A

Writing

32
Q

A proxy authorizes . . .

A

another to vote the shares.

33
Q

For how long is a proxy good?

A

3 years

34
Q

Are proxies revocable?

A

Yes

35
Q

Is proxy revoked by death?

A

Yes

36
Q

A proxy will only be irrevocable if it is coupled with . . .

A

Interest.

37
Q

For a proxy to irrevocable, it must be coupled with interest, meaning . . . (2)

A

Proxy says its irrevocable

The proxyholder has some interest in the shares other than merely voting.

38
Q

S sells B her shares after the record date but before the annual meeting. S gives B an irrevocable proxy to vote the shares at the annual meeting? Can S revoke?

A

No. In writing AND coupled with an interest.

39
Q

4 requirements for a voting trust?

A

Written trust agreement as to how shares will be voted

Copy sent to corp

Transfer legal title of shares to trustee

Original SH receive trust certificates and retain all rights except voting.

40
Q

What is required for a voting agreement?

A

A k (oral or written).

41
Q

Are voting agreements specifically enforceable in PA?

A

Yes! (but not everywhere)

42
Q

Between a voting trust and a voting agreement, pick ____ ___ because …

A

Voting agreement

Specifically enforceable in PA and less cumbersome

43
Q

Two types of SH meetings: Annual and Special. What is done at an annual meeting?

A

Elections

44
Q

Two types of SH meetings: Annual and Special. Special Meetings can be called by which three parties?

A

BOD

Holders of at least 20% of the voting shares

Someone else provided in the AI.

45
Q

20% of the voting shares call a special meeting to remove an officer. OK>

A

NO! SH do NOT remove officers. Even at a special meetings.

46
Q

Is noticed required for every meeting?

A

Yes

47
Q

Why is the purpose of the special meeting of SH important?

A

Scope of meeting is limited to the stated purpose

48
Q

SHers generally vote on these 3 things:

A

Election of Ds

Removal of Ds

Fundamental corp changes

49
Q

A vote of SH requires a _____

A

Quorum

50
Q

Determination of SH quorum is based on number of this represented and not that.

A

Number of shares

NOT number of SHers

51
Q

Can a quorum of SH be lost?

A

NO – DIFFERENT THAN BOD

52
Q

If a quorum is met, how many SH votes needed to elect a director?

A

Plurality

53
Q

If a quorum is met, how many SH votes needed to approve matters other than elections?

A

Majority

54
Q

Cumulative voting is only allowed for . . .

A

Elections

55
Q

In cumulative voting, a SH can do what?

A

Aggregate his votes normally reserved for each seat, and cast them all for one seat

56
Q

If AI is silent, does cumulative voting apply?

A

Yes, it is the default

57
Q

Stock transfer restrictions are OK is they are reasonable, meaning they do not place an undue . . . .

A

Restraint on alienation.

58
Q

is a right of first refusal an undue restraint on alienation?

A

No

59
Q

Under the BCL, who can demand access to books and records of the corp?

A

Any SH

60
Q

How does a SH demand access to books and records? What must be true of the request

A

Written request for a proper purpose (i.e., relating to your interest as a SH)

61
Q

Distributions are in whose discretion?

A

The BOD.

62
Q

A suit to force a distribution will fail unless plaintiff can show a . . .

A

GROSS abuse of discretion

63
Q

Dividends totaling $400k. 100,000 shares of common stock. How much?

A

$4/share

64
Q

Dividends totaling $400k. 100,000 shares of common stock. 20,000 shares of preferred with a $2 dividend preference? How much?

A

$40,000 to the preferred, then $360k left to the common, or $3.60/share

65
Q

Dividends totaling $400k. 100,000 shares of common stock. 20,000 shares of preferred with a $2 dividend preference that is CUMULATIVE. No dividends paid in last 3 years. How much?

A

Four years multiplied by $2/share is $8/share. 20,000 preferred, so $160k to preferred. $240k to common, so $2.40/share.

66
Q

Preferred stock gets paid ____

A

First.

67
Q

A cumulative preferred dividend accrues __ to ___

A

Y to Y

68
Q

*** A corporation can make a distribution even though it lost money money last year. T or F?

A

True

69
Q

** A corp CANNOT make a distribution if it is _____ or the distribution would make it _____.

A

Insolvent x2

70
Q

Insolvent means EITHER

A

A corp cannot meet its debt as they come due OR

Total assets are less than total liabilties

71
Q

A corp will be deemed insolvent if its total assets are less than its ______

A

Liabilities

72
Q

A corp will be deemed insolvent if its total assets are less than its liabilities. Liabilities include _____ ____

A

Liquidation preferences

73
Q

Directors are personally liable for unlawful distributions made _____ or in breach of their duty of _____

A

Intentionally

Care

74
Q

If a director incurs personally liability for an unlawful distribution, he may claim the “good faith” defenses. This requires what?

A

That the director placed good faith reliance ON

book value of assets

financial statements by auditors or accountants

opinion of an employee, officer, professional, or committee of which they are not a member.

Corporations (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions