Corporations

Front 1

De facto corporation

Back 1

1) statute under which the corporation could have validly been incorporated
2) colorable compliance and good faith attempt to comply
3) conduct business in the corp name and exercise corporate privileges
4) RMBCA--did not know that was not incorporated

Front 2

Express authority

Back 2

Authority which is actually contained within the four corners of the agency agreement.

Front 3

Implied authority

Back 3

Authority which the agent reasonably believes she has as a result of the principal's actions.
- necessity
- custom
- prior dealings

Front 4

Apparent authority

Back 4

1) principal agent with the appearance of authority
2) third party relies on appearance of authority

Front 5

Duty of care for directors

Back 5

1) good faith
2) due care of ordinary person in position
3) best interest of corporation
4) Best judgment rule

Front 6

Best judgment rule

Back 6

If perform in a manner he reasonably believes is in the best interests of the corporation, then won't be liable for poor decisions.

Front 7

Duty of loyalty

Back 7

1) Self dealing (remedy is recission)
2) Corporate opportunity doctrine
3) Insider trading

Not: competing with corp in unrelated business

Front 8

Corporate opportunity doctrine

Back 8

Dir. gets unfair benefit by usurping an opportunity which the corp would have pursued. Interfered with corporation's interest or expectancy.

Remedies:
- recover profits from transaction
- force director to convey opportunity to corp

Front 9

Requirements for directors' meetings

Back 9

1) quorum
2) majority vote
3) OR unanimous written consent

Front 10

Misrepresentation of fact (torts)

Back 10

1) misrepresentation about a material aspect of the quality or use of a good
2) intended to induce reliance on the misrepresentation

Front 11

Rule 10b-5

Back 11

Illegal for person to use interstate commerce to
1) employ any scheme to defraud
2) make an untrue statement of material fact
3) or engage in any practice that operates as a fraud in connection with a purchase or sale of any security

Fraudulent conduct:
- may be overt act or omission
- material: a reasonable investor would consider it important in making an investment
- scienter: with intent to deceive, manipulate, or defraud

Front 12

Insider trading--Rule 10b-5

Back 12

Prohibition against insider trading (or abstaining form trading) on basis of inside information or disclosure of inside information

1) Fiduciary relationship--duty of trust and confidence
2) Tipper liability--improper purpose and receive personal gain
3) Tippee liability--if tipper breached and tippee knew
4) misappropriation--brought my govt for breach of duty of trust and confidentiality to any source of information

Front 13

Section 16(b)

Back 13

1) Large corp (over $100mil, over 500 shh. or on national exchange)
2) D is director, officer, or owns more than 10%
3) purchase and sale within 6 mo