Title 12 Flashcards
(17 cards)
An impartial person who is neither a stockholder nor a creditor of the corporation or of any subsidiary or affiliate of the corporation, and whose further qualifications, if any, may be determined by the SEC.
Provisional director
Any stockholder of a close corporation may, by written petition to the SEC, compel the dissolution of such corporation whenever:
I. Any of acts of the directors or officers is illegal, or fraudulent, or dishonest, or oppressive or unfairly prejudicial to the corporation or any stockholder.
II. Corporate assets are being misapplied or wasted.
Both are true
The following are corporations that cannot incorporate as a close corporation, except:
Industrial companies
The following are characteristics of a close corporation, except:
Where the articles of incorporation provide that the business of the corporation shall be managed by the stockholders themselves rather than by the board of directors, then the stockholders shall be deemed to be the directors with all the liabilities imposed by the Corporation Code on directors. The stockholders shall not be personally liable for corporate torts.
(This is incorrect because stockholders managing the business are liable for corporate torts unless the corporation has adequate liability insurance.)
The following are characteristics of a close corporation, except:
Pre-emptive right does not extend to all stock issuances
(This is incorrect because pre-emptive right does extend to all stock issuances, including treasury shares, unless stated otherwise in the articles.)
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The articles of incorporation of a close corporation may provide the following, except for:
B. A lesser quorum or voting requirements in meetings of stockholders or directors
(This is incorrect; the law allows greater, not lesser, quorum or voting requirements.)
An action by the directors of a close corporation without a meeting shall not be deemed valid if:
Before or after such action is taken, written consent thereto is signed by a majority of the directors
(This is incorrect because the law requires written consent by all directors, not just a majority.)
.
I. The pre-emptive right of stockholders in close corporations shall extend to all stock to be issued, excluding reissuance of treasury shares.
II. A close corporation may, at its option, refuse to register the transfer of stock in the name of the transferee if the person is not qualified to be a stockholder and has notice thereof.
Only II is true
(I is incorrect because the pre-emptive right includes reissuance of treasury shares.)
I. A provisional director is not a receiver of the corporation and does not have the title and powers of a custodian or receiver.
II. A provisional director shall have all the rights and powers of a duly elected director of the corporation, including the right to notice of and to vote at meetings of directors, until such time as he shall be removed by order of the Commission or by all the stockholders.
Both are true
Any person to whom stock of a close corporation has been issued or transferred has, or is conclusively presumed to have notice:
A. That he is a person not eligible to be a holder of stock of the corporation
B. That transfer of stock to him would cause the stock of the corporation to be held by more than the number of persons permitted by its articles of incorporation to hold stock of the corporation; or
C. That the transfer of stock is in violation of a restriction on transfer of stock.
All of the above
Corporation with few stockholders, often managed directly by them with restrictions on share transfers.
Close Corporation
Right of stockholders/corporation to buy shares before they’re sold to outsiders.
Right of First Refusal
Right of existing stockholders to purchase new or treasury shares before others.
Preemptive Right
When decision-making is stalled due to equal votes or inability to agree.
Deadlock
Stockholders may voluntarily give up their right to buy offered shares first.
Waiver of Right of First Refusal
When directors or stockholders are so divided that the corporation can’t operate effectively.
Deadlock
