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21 Cards in this Set
- Front
- Back
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Requirements for Corporation formation - in general
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People
Paper Acts |
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Information required on the certificate
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1. name of corp and address
2. designation of NY Secretary of State as agent for process 3. name and address of each incorporator 4. corporate purpose 5. capital structure |
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If no statement of duration is mentioned, then...
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the corp has perpetual existence
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When are initial by-laws and BOD adopted?
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organization meeting of incorporators
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What happens if a subscriber who defaults on payments and has paid less than half of the purchase price fails to pay the rest within 30 days of written demand
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Corp can keep the money paid and cancel the shares. The shares then become authorized and unissued.
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What happens if subscriber has paid half or more and fails to pay the rest within 30 days of written demand
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the corp must try to sell to someone else for cash.
If no one will pay, the defaulting subscriber forfeits his money and shares are canceled. If someone will pay more than remaining balance due, the defaulter recover any excess over what he agreed to pay. |
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What is Treasury Stock
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T-stock
stock that was previously issued and reacquired by the corp. always no par |
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when can s/h fill a vacancy on the Board
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if the vacancy was caused by s/h removing a director w/o cause
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ways to remove director
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1. s/h can always remove director for cause
2. BoD can remove for cause only if permitted by Cert or Bylaws 3. S/h may remove director w/o cause ONLY if permitted by Cert or Bylaws |
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How does a Board take action?
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Either by:
1. unanimous written consent w/o meeting OR 2. meeting If neither of these are met, then the act is void until later ratified by valid act |
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What can a Board Committee NOT do?
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Amend, repeal or adopt bylaws.
Submit a fundamental change to S/H Fill in BoD vacancies Set director compensation |
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duty of care standard for directors
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A director must discharge her duties in good faith and with that degree of diligence, care and skill that an ordinarily prudent person would exercise under similar circumstances in like position
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duty of loyalty standard for directors
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a director must act in good faith and with the conscientiousness, fairness, morality and honesty that the law requires of fiduciaries
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interested director transactions will be set aside unless...
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1. deal was fair and reasonable to the corp when approved, OR
2. material facts and her interest were disclosed or knowns AND the deal was approved |
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Requirements for bringing S/H derivative suit
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1. stock ownership when claim arose and when action is brought
2. adequate representation of the interests of the corp and other s/h 3. bond 4. PL must make a demand on DEF unless it would be futile |
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When is demand futile?
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1. Majority of BoD is interested or under control of interested directors
2. BoD did not inform itself of the txn to the extent reasonable under circumstances 3. Txn is so egregious on its face that it could not be result of sound business judgment |
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When would demand be futile?
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1. Majority of the board is interested or under the control of interested directors
2. board did not inform itself to the transaction to the extent reasonable under the circumstances 3. the transaction is so egregious on its face that it could not be result of sound business judgment |
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What is a s/h right of appraisal?
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right of a s/h to force the corporation to buyer her shares at fair value
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when does the dissenting s/h right of appraisal kick in?
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1. some amendments to cert.
2. consolidation 3. corp merges into another corp. 4. corp transfers substantially all of its assets, or 5. corp's shares are acquired in a share exchange |
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how does s/h perfect his appraisal right?
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1. before vote, file written objection and intent to demand payment
2. abstain or vote against change, AND 3. after the vote, make written demand to be bought out |
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Factors to look for to spot freeze-out mergers
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1. whether the deal is tained by self-dealing or fraud
2. whether minority s/h are dealt w/fairly 3. whether there is a legitimate business reason for the merger |
