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15 Cards in this Set
- Front
- Back
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Who is a promoter?
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A person acting on behalf of a corporation that has not yet formed.
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Who is a subscriber?
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A person makes a written offer to buy stock for a corporation not yet formed (irrevocable for 6 mo)
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What is a novation?
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An agreement between the promoter, the third party, and the corporation that the corporation will replace the promoter in the contract.
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When is the promoter liable for Ks?
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Until novation.
If the corporation never forms, the promoter alone is liable. |
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How does a corporation accept a pre-incorporation contract?
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-Expressly
-Impliedly (knowledge + acceptance) |
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What must the articles of formation include?
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1. Authorized # of shares
2. Preference (stock classes/rights) 3. Agent 4. Incorporators 4. Name of corp. |
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What is the term for the minimum stock issuance price?
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Par value
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What are the steps to make a fundamental corporate change?
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1. Board resolves
2. Special notice (25-60 days) 3. More than 2/3 of all shares approve 4. Dissenters right of appraisal 5. File notice with S.C.C. |
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What are the types of dividends?
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1. Common stock (pay last)
2. Preferred stock (pay first) 3. Participating preferred (pay 2x) 4. Cumulative (add up) |
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When will a court pierce the corporate veil of shareholders?
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To avoid fraud and unfairness:
1. Owners of stock failed to observe sufficient formalities (alter ego) 2. Undercapitalization |
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What are the general requirements for a meeting of directors?
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-Give notice
-No proxies -Majority of directors & majority vote |
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What requirements must a shareholder meet to bring a derivative suit?
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1. Contemporaneous stock ownership &
2. Demand to directors that corporation bring suit (in writing and denied/90 days) |
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What are the fundamental corporate changes?
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1. Charter amendments
2. Mergers 3. Consolidations 4. Sale of assets 5. Dissolution |
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What is a Virginia limited liability company (LC)?
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Investors have limited liability but entity has tax treatment of partnership.
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Are directors liable for unlawful dividends?
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Yes, but not if they acted in good faith reliance on a financial officer's representations.
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