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52 Cards in this Set
- Front
- Back
Formation of a Corporation |
Incorporators Articles of Incorporation Filing |
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Articles of Incorporation |
Name of Corp Number of shares corp is authorized to issue name and address of registered agent address and name of each incorporator |
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Ultra Vires Acts |
Acts outside corp's scope of business Under RMBCA generally enforceable Common law not enforceable Arises: SH may sue corp to enjoin proposed UVA Corp may sue officer for damages for approving UVA State may bring action to dissolve corp for committing UVA |
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Bylaws |
Adopted by DIrectors Modified Repealed by majority vote of either directors or SH |
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De Facto Corp Definition |
Statute under which entity could have valdly incorporated Colorable compliance with staute and good faith attempt to comply Conduct of business in corp name and exercise of corp privlieges |
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Piercing Corporate Veil |
Alter Ego Inadequate Capitalization at Time of Formation Avoidance of Existing Obligations, Fraud, or Evasion of Statutory Provisions Pierced in Tort cases, much harder for K cases |
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Alter Ego |
Where corp ignores corporate formalities such that it may be considered alter ego of SH. SH treat corporate assets as their own, and some business injustice results |
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Inadequate Capitalization |
Corp is inadequately capitalized at time of formation (not enough unencumbered capital to reasonably cover prospective liabilities |
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Avoidance of Obligations |
To prevent fraud or SH from using entity to avoid existing personal obligations |
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Debt Securities |
Arise where a corp has borrowed funds from outside investors and promises to repay. |
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Authorized Shares |
Number of shares the corp is authorized to issue |
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Issued and Outstanding Shares |
Shares that have been sold |
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AUthorized but Unissued SHared |
Shares that have been reacquired by the corp through repurchase and redemption |
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Preincorporation Subscriptions |
Irrevocable for six months |
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Forms of Consideration for Stock |
Shares can be paid with any tangible or intangible property or benefit to the corp |
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Promoters relationships between promoters |
Promoters are joint ventures who occupy a fiduciary relationship |
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Promoter selling to Corp |
A promoter who profits by seeling property to corporation may be liable for his profit unless all material facts of transaction were disclosed. |
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SH ANnual Meetings |
Must hold Notice not less than 10 or more than 60 State time date and place no purpose |
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SH special meetings |
Notice 10-60 Time, date, place, and purpose |
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SH Voting Proxies |
Valid for 11 months Only irreveocable if it states so and is coupled with an interest or given as a security |
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SH Meeting Quorum |
Majority of Outstanding shares entitled to vote. Cannot be broken by withdrawal of shares |
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Director Elections |
Elected by Plurality of the votes |
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Voting Trust |
Written agreement transfer right to vote to a trsutee who votes shares and dsitrbutes divdens in accordance with the provisions of the voting trust agreement. Not valid for more than ten years |
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Voting Agreement |
Written and signed agreement May be perpetual |
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Restrictions on Transfer of Stock |
Stock restrictions must be reasonable third party bound if: Conspicuously noted on the certificate or third party had knowledge of the restriction at the time of the purchase |
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SH right to information |
Five days written notice Stating a proper purpose |
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SH Unqualified record to certain information |
Corps articles and bylaws Board resolutions regarding classification of shares Minutes of shareholder's meetings from past three years communication sent by corp to SH over past three years a list of names and business addresses of corps current directors and officers |
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SH Preemptive Rights |
Must be provided for in articles of incorporation Also must not be: for consideration other than cash within six months after incorporation without voting rights but having a distribtion preference |
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SH Derivative Actions |
Must have been SH at time of wrong or through transfer by operation of law from one who was SH at time Must make written demand that corp take action |
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SH Derivative Actions Director Cancel |
If majority of non interested directors find not in corps best interest, after GF reasonable inquiry that suit is not in the corp best interest |
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Discretion to Issue Declaration |
Solely within the directors discretion |
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Restrictions on Dividends |
Corp would no be able pay its debts as they become due COrps total assets would be less than sum of its total liabilities |
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Liability for Unlawful Distribution |
Not liable if approved in GF based on financial statements prepared according to reasonable accounting prospects relaying on information for others |
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SH LIabilities |
Generally no fiduciary duties |
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Board of Directors General Powers |
Responsible for the management of the business and affairs of the corp |
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Removal of Directors |
Can be removed without cause Cumulative voting must be for cause |
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Directors Regular Meetings |
May be held without notice |
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Directors Special Meetings |
Two days notice |
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Director Quorum for Meetings |
Majority of Board Can break if directors leave |
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Director Duty of Care |
Have duty to manage to best of their abilities in good faith with care that an ordinarily prudent person in a like position would exercise under similar circumstances In a manner directors reasonably believe in the best interests of the corporation |
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Director's Reliance on Reports or Other Information |
Can rely upon information opinions reports or statements if prepared or presented by corp officers, employees whom director reasonably believes to be reliable legal counsel, accountants, or other persons as to matters within person's profession expriance committee of board which director is not a member and director reasonably believes committee merits confidence |
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Director duty to disclose |
Have duty to disclose material corporate information to other members of the board |
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Duty of Loyalty Conflicting Interest Standards for Upholding Self Dealing |
Approved by majority of the directors w/o a conflicting interest after all material facts have been disclosed Majority of the votes entitled to be cast by SH w/o conflicting interest after all material facts disclosed It was fair to the corp |
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Director Compensation |
Board can set own compensation |
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Corp opportunity doctrine |
Opportunity must something corp have an interest in or expectancy Closer the line of business, the better Lack of financial ability the best |
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Mandatory Indemnification of Officers/Directors |
Must if they prevail in defending a proceeding against O/D. |
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Discretionary Indemnification |
May indemnifiy unsuccesful acton if O/D Acting in good faith Believed conduct was in best interests of corp Not opposed to corp's best interests Not unlawful |
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Indemnfication Exceptions |
Cannot indemnify if: direct or derivative action in which the director is found liable to corp Action where director recieved improper benefit |
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General Procedure for Fundamental Changes |
Board adopts a resolution Written notice given to SH SH approve changes CHanges in form of articles are filed with state |
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Disposition of Property Outside Usual Course of Business |
Has to sell at least 75% of assets. |
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Dissenting SH Rights |
COrp give SH notice SH give notice in writing before vote is taken of intent to demand payment Corp notify dissenters within ten days of approval time and place to and terms of repurchase SH must send demand of payment Corp pay esitmates fair value |
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Dissenter Dispute over fair value |
If SH mad send own estimate within 30 days. IF Corp disagrees corp must file with court within 60 days of receiving SH demand |