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19 Cards in this Set

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What is a voting trust?
When SHs transfer voting shares to a joint trust - and then the trust serves to vote on the shares
Can stockholders make binding agreements on how to vote their stock?
Yes. Helps solve problem of "empty core bargaining game"
Can shareholders agree to restrict a board's authority?
NO. McQuade. Shareholder agreements cannot control a BoD's exercise of judgment. When you constrain yourself as a board member - even if what you are constraining yourself to is a legitimate option - just the mere constraint is a problem.
Can shareholders agree to continue the employment of certain individual officers?
Yes but only if the directors are the sole SH. (Clark)
How do you make a homemade mcquade?
By adding additional shareholders: So say you have two shareholdesrs, and they agree to keep eachother in office. But then one of the shareholders creates minority shareholders by selling his shares. Then the Board would have to exercise Business Judgment, and the earlier agreement (to keep eachother in office) would be void according to McQuade.
How do you avoid Homemade Mcquade?
NOTICE> anyone buying the shares would have notice of the shareholder agreement and then would be bound to the shareholder agreement.
An LLC is like a combination of what?
Partnership and Corporation.
LLC v. Corp: Limited Liability
LLC: Yes
Corp: Yes
LLC v. Corp: Free Transferability
LLC: No, but may be allowed.
Corp: Yes, but may be restricted
LLC v. Corp: Longevity
LLC: Similar to RUPA rules
Corp: Default - Indefinite
LLC v. Corp: Contralized Management
LLC: Flexible. Default is like partnership, but can opt for mangers.
Corp: Yes, but may want to modify to prevent freeze-out.
Why would anyone stick with a corporate form when you have all teh benefits of an LLC?
1. network effects
2. LLCs are a newer form, so you're not sure what courts will do with it
Formation documents for an LLC
Articles of ORGANIZATION & Operating Agreement
Can you pierce the veil in an LLC?
Not explicitly. But if you use your own bank account as the corporate account you are likely liable under most state laws.
What are the membership (SH) interests in an LLC?
1. Management rights: they don't vote according to membership percentage - but one member one vote

2. Financial rights: right to dividends and liquidation: no direct rights to ownership in property: only right you can sell is distributional interest; duty to share in profits and losses equally
What are the fiduciary duties of managers (directors) in an LLC?
similar to those as directors
can members bring deriviative actions in an LLC?
Yes.
What happens with dissaciation in an LLC? with Dissolution?
In disassociation - the member's interest is purchased by the LLC
In dissolution - you wind up the whole LLC
What did the member do wrong in the New Horizons case when it came to dissolution?
She didn't go through the dissolution procedures - the corp just stopped functioning. She gets punished by court for keeping bad records.