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49 Cards in this Set

  • Front
  • Back
certificate of incorporation requirements
1. name of corporation (corp, inc., or lmt)
2. incorporator
3. Registered Agent
4. Purpose Clause
5. Capital Structure
6. Must be filed with Sec. of State
ultra vires act
outside of cirtificate purpose - D and O liable for losses

AND S can seek injunction
pre-incorporation K
promoter liabile until novation, C liabile if adoption (express or implied (benifits from K))
prevent fraud

alter ego (same entity, parent corp etc)

undercapitalization (only if illigal act too)
de jure, de facto,
de jure - all laws followed, insulates S liability

de factor - most laws followed, no S personal liability, but NY state can sue
subscription agreements
pre-incorporation offer is irrevocable for 3 months, unless expressly states otherwise, or others subscribers agree

post-incorporation - revokation allowed until corp. accepts

SUB default -
less than 50%, fails to pay 30 days from written demand, c keeps money and cancels SUB shares

50% or more - fails to pay 30 days from written demand, must try to sell (extra cash to SUB)
promise to pay or pay
cash or check
services (future or forming)

at least par value

Liability: BOD liable if knowing
purchaser of stock laible
GFP not liable (3rd party)
pre-emptive rights
NOT APPLY 1)tresury shares 2) authorized by original cirtificate sold w/in 2 years

must be issuance for $$$ not land

if silient cirtificate:
before 22298 YES rights
on or after 22298 NO RIGHTS
no right to them - unless declared

insolvency exceptions

payable out of surplus (A-L) less stated capital (par value + all capital received for no par value stock, unless allocated for surplus)
individually negotiated -

if closely held corp duty to fairly give S chance to sell
must be proportionately throughout effectd class
closely held corporation S liability
10 largest shareholders liable for wages and benifits

PLUS fiduciaries to protect minorities who cant "get out" (no public market)
S Voting Rights: Meeting
1) record date (10, 60 days before meeting)

3) annual meeting
4) special meetins
S Voting Rights: Proxies
1) writing
3) expires after 11 months or specified date (if shorter)
4) revoke unless proxy has interest
S voting rights: effective shareholder action
i) need quaram (usually simple majority)

cirtificate or bylaws can make 1/3 floor

based on # of voting shares reprosetned

Need majority of shares voted (abstaining shares dont count)
S Voting Rights: Cumlative voting
ONLY for electing officers

must be expressly provided for in cirtificate

for each share get # of votes equal to number of canidates can use votes however choose
S Voting Agreements: Voting Trust
1) writing explaining how shares voted
2) copy sent to C
3) legal title transfered to trustee
4) S get trust cirtificate and retain rest of rights

10 year max
S voting Agreements: Voting agreements
only need signed writing

can be irrevocable proxy

can agree on BOD voting

No max time limit - legal title kept with S
stock transfer restrictions
general rule: must be reasonable and in cirtificate

Transforer S liable to C

BFP w/out notice not liable for breaking restriction
S inspections
1) can inspect all paper docs with 5 days notice

2) "not against purpose of corp" affidavit can be required
S Derivative Suits:
1) shareholder at time of and when suit is brought
2)prior demand for BOD to sue, unless futile (if good faith denial of demand thats it)
futile if: majority of board is interested (or under control of interested D) OR BOD refused to inform self OR so egregious sound judgment impossible on face.

SHAREHOLDER JUST GETS $$ for litigation costs

court must approve settlement
D effective board action
1) quaram - majority of "entire board" - can decrease to 1/3 (cirtificate or bylaw) for quarem
2) majority of quarem present
3) can only increase voting and quarem requirements (supermajority) if in cirtificate

OR agreement in writing (unanimous consent)
Board Vacancy
filled by remaining BOD, unles removed without casue by the S (then shareholders vote)

S can only remove D without cause if in cirtificate or bylaws
Duty of Care Standard
discharge duties:

in good faith and

with the degree of diligence, care and skill that an ordinarily prudent person would exercise under similar circumstances
Duty of care nonfeasance
doing nothing cause loss to C

causation required to show breach
Duty of care misfeasance
do something that harms C

must violate BJR (made in good faith, reasonable informed, rational basis)
cirtificate limits liability of directors to S for breach of duty if breach not:
1) in bad faith

2) be due to intentional or knowing violation of law

3) no director gain not entitled to

4) violate law
Duty of Loyalty standard:
must act in good faith with the conscientiousness, fairness, morality & honesty the law requires of fuduciaries
Duty of Loyalty: Self Dealing
Rule: set aside (recession) of act of self dealing, unless:
1) fair and reasonable when entered
2) AFTER DISCLOSURE of material facts, approved by unanimous uniterested D approval(interested D can mae quarem) or approved by S vote
duty of loyalty: corporate oppurtunity doctrine
is C opp if something 1) C needs, 2) has interest in, 3) logically related to C
1) inform board of existance, 2) wait for board to reject

REMEDY: Damages, constructive trust on profit, C gets oppurtunity at cost
duty of loyalty: compete with C
REMEDY: Damages(constructive trust on profits) and/or injunctive releif
director liability loans to Ds
on or before 22298: board and Ss must approve unless cirtificate allows only board

after 22298: no S approval required
D liability exceptions
presumed approve B action unless:
1) dissent in writing in C records
2) if absent, if file written dissent within reasonable time
3)good faith reliance/action
owe same duties of care and loyalty

selection and removal is BOD, unless cert. says S does it

Agents of C
FUNDAMENTAL CHANGE: Mergers: voting requirements
both BOD and all shareholders of both C's must approve:

on or before 22298: 2/3 of S

after 22298: simple majority of S

ONLY BOD approval is "short form merger" (90% ownership)

all rights and liabilities assumed
FUNDAMENTAL CHANCE: appraisal rights of dissenting S
triggered by: major cert. amendment, consolidation, merger, sale of assetts

entitled to payment for fair value or shares if:
1) written objection before meeting
2) vote against merger
3) file written claim

NOT for
1)short form merger, surviving Cs, Ss
2)if regular merger, surviving company Ss unless merger fx amendments to cert.
3) listed on a nation exchange or NASDAQ
FUNDAMENTAL CHANGE: sale of all assetts
majority of D must approve of both Cs (no quarom concept)

on or before 22298: 2/3 of Selling Cs Ss

after 22298: simple majority of selling Cs Ss

No apprasal rights for buying Cs Ss

No Tort Liability if: 1) deal provides otherwise, 2)buyer is mere continuation of seller, 3) sale is fraud to aviod liability
FUNDAMENTAL CHANGE: amendment to certificate
majority of shares ENTITLED TO VOTE must approve

director approval
Amending Cert. Special Rules: baord voting/super-majority quarom requirements OR restricting B authority to act
need BOD approval AND

2/3 of S if on or before 22298

majority if after 22298
amending cert special rules: S supermajority voting/quarom requirements
BOD AND 2/3 of Ss
amend bylaws
Ss can amend repeal any bylaw (in manner set forth in bylaws)

BOD can ONLY if in cert. or bylaws
dissolution and liquidation
2/3 of S on or before 22298

majority of S after 22298

if C has insufficent assetts or dissolution benifits S

pay outside creditors first if liquidation

20% or more voting shares in non publically traded C may petition on grounds
a) BOD or managing Ss oppressive conduct
b) wasing, diverting, or looting assetts
c) court may deny if another way to get fair return to S (buyout, etc)
revocation by physical act of another: allowed if
1) t's resqust
2) in ts presence
3) with 2 witnesses to act
4) 4 ppl total
revokation presumptions
if last seen with T then found mutalated or lost, then assumed T revoked by physical act
changes on face of will after executed
cant partially revoke will by marks after duly executed (or add words)
dependant relative revokation:
argue both sides

can revive revoked will if show mistake of law and revokation would not be made but for mistake of law.

Cant be used to defeat testators intent
No revival of revoked wills except:
codicil that incorporates will by reference (proper execution) (redates as to codicil exec.)

Lost wills:
must show:

due execution

must establish will not properly revoked (presumption of revokation)

all provisions must be clearly shown by 2 witnesses OR duplicate copy (draft is not enough)
death of Beneificary during T lifetime: NY anti-lapse
B must be Ts: 1)issue(child, grandchild), 2)brother or sister


B leaves issue that survive T

B's own will irrelevent

applies to residuary beneficiaries