Corporations Law For Multistate Essay

Front 1

What does a promoter do before the corp is formed, and what business organization are two or more of them in?

Back 1

Enter into Ks for and on behalf of Corp and they are joint venturers

Front 2

What duties do promoters have once corporation is formed?

Back 2

Not to retain SECRET PROFIT. They have a duty of disclosure and fair dealing.

Front 3

Promoter can be liable to corp after formation by

Back 3

Breach Fiduciary duty
Fraud
Obtaining unpaid stock

Front 4

Promoter cannot benefit from sale of property to corp unless

Back 4

Full disclosure and approval by board

Front 5

Promoters remain personally liable to corp on K's after corp adopts. True or false?

Back 5

True. Promoters remain jointly and severally liable whether or not corporation is formed.

Front 6

Corporation formed by APAIN

Back 6

Document with
Authrorized shares
corporate Purpose
Agent (registered)
Incorporators
Name corporation

Front 7

Other facets of corporate formation are

Back 7

Articles can have corp purpose
Watch out for ultra vires
Corp existence begins with filing
Articles state something about charitable donations and corp purpose

Front 8

By Laws are adopted when and what do they contain?

Back 8

By laws are adopted at the first Board meeting and they contain rules on how to govern corp

Front 9

Describe the attributes of an exculpatory clause

Back 9

absolves directors in advance for actions which are merely negligent, not self dealing.

Front 10

Corp is an entity where

Back 10

Entity with shares
Liability ltd to investment shares
managed by Board and Directors not s/h
Shields directors from liability
Perpetual duration
Transferable shares

Front 11

Shares have these attributes

Back 11

Can issue any number up to what was set forth in articles
Classes there too
Voting rights
Dividend distribution

Front 12

Preferred stock

Back 12

gets priority in distribution and purchase

Front 13

Subscription agreement

Back 13

Agreement to buy stock made on corp formation with a Pay on Demand clause

Front 14

Stock dilution

Back 14

At CL s/h had right to maintain % ownership

Front 15

Directors are agents of the corp and they must

Back 15

Maintain duty of loyalty, and duty of care to corp and shareholders.

Front 16

Directors may be removed by S/H when

Back 16

annually

Front 17

When can director inspect books?

Back 17

When he wants to.

Front 18

Director's duty of loyalty to corp means that he cannot

Back 18

take opportunity, become creditor or compete with corporation.

Front 19

Director protected by

Back 19

Business judgment rule which says that he can rely on info supplied by others in executing corp duties and he can self deal if disclosed to the board and approved.

Front 20

Officers are

Back 20

Selected by the Board
Have duty of good faith and prudent care.

Front 21

Officers are also

Back 21

selected by the board
dischargeable at will

Front 22

Shareholders have the right to

Back 22

Inspect books on notice

Front 23

Shareholders can

Back 23

Vote by proxy
make agreements to vote for not >10yrs

Front 24

Derivative suits

Back 24

Shareholder (one share) vs. Corp, Board or director
After making demand of board who appoints investigating committee which invariably turns down

Front 25

To change major items in the corporate structure you must

Back 25

have BOD and S/h approval for changes (classes of shares, number of auth shares, change rights or distribution, disposition of assets)

Front 26

Statutory merger must be approved by

Back 26

acquiring corporation unless no change in voting rights.

Front 27

BOD and sh must approve when

Back 27

Stock sale, sale of assets
dissolution or dispostion of corp assets

Front 28

What is the duty of a director?

Back 28

Directors must discharge their duties in good faith and in a manner the Directors reasonably believe is in the best interests of the corporation.

Front 29

Directors have a duty to

Back 29

Have a duty to acquire knowledge about that which they are deciding

Front 30

What are the safe harbors for a director?

Back 30

The safe harbors are approval by a quorum of disinterested shareholders, disinterested directors (those not involved with deal)

Front 31

what is a voting trust?

Back 31

Voting Trust. (Think trust) Shareholders transfer their shares to a trust. Trustee must vote in accordance with the trust agreement. Not valid for more than ten years.

Front 32

Are restrictions on transfers of shares valid?

Back 32

Yes.Restrictions on Transfer of Shares. Permissible if reasonable, conspicuously noted on stock certificate and transferee has knowledge of the restriction.

Front 33

What is limited partnership?

Back 33

Limited Partnership. limited liability & cant participate in management. If they do then they become general partners. The LLP must comply with statutory requirements. General partner has unlimited personal liability and management duties.

Front 34

What is the duty of care for an officer, director or incorporator?

Back 34

Perform in good faith and in manner reasonably believed in corporation's best interest with care of ordinary reas pru pers

Front 35

What is the harbor created by the business judgment rule?

Back 35

Where party is entitled to rely on reports, opinions or info prepared under supervision of an officer, CPA, committee board

Front 36

Name instances where the Directors/Board can be liable

Back 36

improperly declared dividends
Purchasing corp shares
Distributions during liquidation
Director can seek contribution from others if guilty of above

Front 37

The duty of loyalty is different from the duty of care, and the business judgment rule. What does it state?

Back 37

Loyalty to corporation and don't promote your own interest over corporation in an injurious manner.

Front 38

What is the duty of loyalty in business dealings with the corp by a director?

Back 38

To act fairly in dealings with corp; to have corporate board approval of such dealings,

Front 39

What is a corporate opportunity?

Back 39

Taking advantage of a business opportunity with the corporation using corporate supplies or facilities, for corporate officer/director's personal benefit

Front 40

Remedy for usurping corporate opportunity

Back 40

Constructive trust

Front 41

Competition with corporation

Back 41

Not good for director, breaches FDuty

Front 42

Corp officer, director and controlling shareholder each has a duty to disclose. discuss

Back 42

Controlling shareholder has fiduciary duty to the corp and the minority s/h.

Front 43

How can action be enforced vs. controlling shareholder?

Back 43

Shareholder Derivative Lawsuit.

Front 44

Insider Trading of shares is a breach of fiduciary duty. What are the theories?

Back 44

1. Corp information is corp asset and cannot be exploited for personal gain
2. 10b-5 liability

Front 45

Amendments of Articles must be done

Back 45

Through shareholders meeting after written notice with a vote.

Front 46

To do a merger board of each corp must first

Back 46

Adopt plan of merger

Front 47

To do a merger, there must be a shareholder approval through what means?

Back 47

A vote, with 2/3 approving

Front 48

A short form merger merges a subsid corp into its parent, so long as

Back 48

parent corp owns 90% of subsidiary corp. this shortens and simplifies the merger process

Front 49

Shareholder deriv suit. Define

Back 49

Where SH alleges injury on behalf of the corporation when corp has failed to do so. Equitable action, Breach of Fiduciary Duty.

Front 50

Shareholder derivative suit involves procedures and they are:

Back 50

1. Demand on corporation
2.SH stands in corps shoes after board investigates claims and denies

Front 51

Shareholder deriv suit. Define

Back 51

Where SH alleges injury on behalf of the corporation when corp has failed to do so. Equitable action, Breach of Fiduciary Duty.

Front 52

Shareholder derivative suit involves procedures and they are:

Back 52

1. Demand on corporation
2.SH stands in corps shoes after board investigates claims and denies