Ny Corporation

Front 1

What must be on the Certificate of Inc.?(6)

Back 1

1. Name of corporation
2. Incorporator
3. Registered Agents
4. Purpose Clause
5. Capital Structure
6. Must be filed with secretary of state

Hint 1

6 requirements

Front 2

What are bylaws?

Back 2

1. Internal document not filed with secretary of state

2. A corporation may exist w/o bylaws

Front 3

Is a corporation responsible for pre-incorporation contracts?

Back 3

No, unless it adopts contracts. Promoter remains liable too until novation by all parties

1. Express Adoption(BOD resolution)
2. Implied Adoption (Knowing acceptance of K benefits)

Front 4

What happens when one "Pierces the "Corporate Veil"?

Back 4

May hold shareholders personally liable if they have abused the privilege of incorporating and if fairness demands that the shareholders not have limited liability.

There is no PCV if the corporation has any mind, existence or will of its own.

Front 5

What is a De Facto Corp? (3 elements)

Back 5

[i] Where there is a relevant incorporation statute;
[ii] The parties made a good faith colorable attempt to comply with it; and
[iii] Some exercise of corporate privileges.

Front 6

What is a Corporation by Estoppel Concepts

Back 6

one dealing with a business, treating it as a corp., may be estopped from denying the business’s corporate status. Thus, Π cannot sue individual proprietors.

Front 7

What is a Subscription?

Back 7

A subscription is a written, signed offer to buy stock from the corporation. One important consideration is whether a subscription can be revoked.

Front 8

Is a pre-incorp subscriptions revocable? Why or Why not?

Back 8

No. A preincorporation subscription is irrevocable for 3 months UNLESS it EITHER says otherwise OR all subscribers agree.

Front 9

Are post-incorporation subscriptions revocable?

Back 9

Yes, until acceptance.

Front 10

Preemptive rights

Back 10

Preemptive right is the right of an existing shareholder to maintain her percentage of ownership by buying stock whenever there is a new issuance of common stock for money (which includes cash or checks).

Front 11

When does Preemptive Rights apply? (3)

Back 11

1. Newly authorized stock
2. Sold for cash
3. For corporations formed on or after 2/22/98, corporations whose certificate so provides

Front 12

What Dividends? (3) Where are they paid from?

Back 12

1. No right to them
2. Irrevocable once declared (with the exception of insolvency)
3. Payable out of:
Surplus--always
Stated capital--never

Front 13

What are Redemptions?

Back 13

are set in certificate, and must be done proportionately within each class of stock.

Front 14

What are SH Repurchases? (large vs. close)

Back 14

are individually negotiated, and can discriminate except in close corporation, where must give equal opportunity to all shareholders.

Front 15

Are Shareholders Liable? What are the exceptions? (3)

Back 15

1. Shareholders have no personal liability
Exceptions
1. Watered stock
2. When shareholders are fiduciaries (close corporations)
3. Piercing corporate veil (alter-ego doctrine)

Front 16

What are the only two ways the shareholders can take a valid act?

Back 16

(1) Unanimous written consent signed by the holders of all voting shares.

(2) A meeting.

Front 17

Who can call a special meeting of the shareholders? (2)

Back 17

(1) board
(2) anyone provided in the certificate.

Front 18

How do shareholders vote?

Back 18

There must be a quorum represented at the meeting.

Determination of a quorum focuses on the number of shares represented, not the number of shareholders.

Generally, a quorum requires a majority of outstanding shares.

Front 19

What are proxies?

Back 19

A proxy is a (1) writing,
(2) signed by record shareholder or authorized agent,
(3) directed to secretary of corporation,
(4) authorizing another to vote the shares.

Front 20

What is a voting trust?

Back 20

(1) written trust agreement controlling how the shares will be voted;

(2) copy to corporation (meaning it CANNOT be a secret);

(3) transfer legal title of shares to voting trustee; and

(4) original shareholders receive voting trust certificates and retain all shareholder rights except for voting.

(10 year max)

Front 21

What Shareholder inspection rights? (2)

Back 21

Statute gives a right to inspect and copy

(1) minutes of shareholder proceedings and

(2) the record of shareholders.

Any SH can inspect w/ 5 days written demand

Front 22

What is a Derivative suit(s)?

Back 22

A DS is when a shareholder is suing to enforce the corporation's claim, not her own personal claim.

It's a case in which the corporation is not pursuing its own claim, so a shareholder steps in to prosecute the claim.

Front 23

To bring a Derivative Suits...what is required? (3)

Back 23

1. SH at time of and when suit brought
2. Prior demand on board of directors unless this would be futile (if demand turned down in good faith--that's it!)
3. Corporation must be a party to the action

Front 24

There are only two ways in which the board can take a valid act...they are

Back 24

(1) Unanimous written consent to act without a meeting.
(2) A meeting.

Front 25

Quorum for a meeting (BOD)

Back 25

To do business, we must have a majority of "entire board" (duly constituted board - that means the number of positions if no vacancies (i.e. we ignore vacancies).

Once we have a quorum, though, passing a resolution (which is how the board takes an act at a meeting) requires majority vote of those present.

Front 26

Filling a vacancy on the board: who selects the person who will serve the remainder of the term? (2)

Back 26

General rule: The remaining directors.

Special rule: who selects the person who will serve the remainder of the term when a director is removed by shareholders without cause?
Shareholders.

Front 27

Duty of Care Standard:

Back 27

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.

Front 28

Duty of Loyalty Standard

Back 28

a director must act in good faith and with the conscientiousness, fairness, morality and honesty that the law requires of fiduciaries.

Front 29

How is a valid MERGER completed?

Back 29

Each company's board of directors adopts a plan of merger (or consolidation) and

Shareholder approval -- each corporation

(SH must be by 2/3 vote of each class of hares before 2/22/98, majority of all outstanding shares after 2/22/98)

Front 30

What actions by corporation trigger the shareholder's right of appraisal? (5)

Back 30

(1) some amendments to the certificate;
(2) consolidation;
(3) your corporation merges into another corporation;
(4) your corporation transfers substantially all of its assets; or
(5) your corporation's shares are acquired in a share exchange.

No right for a publicly traded company

Front 31

What actions are taken by shareholder to perfect the right of appraisal? (3)

Back 31

(1) Before the shareholder vote, file a written objection and intent to demand payment with the corporation.

(2) Abstain or vote against the proposed change.

(3) After the vote make written demand to be bought out.

Front 32

Sale of Assets (elements)(3)

Back 32

1. Maj of directors from both selling and buying corporations must approve sale

2. 2/3 approval need by SH selling corporation formed on or < 2/22/98.
Majority approval needed by SH selling > 2/22/98

3. No appraisal rights for shareholders of buying corporation

Front 33

What are the requirements for the AMENDMENT TO THE CERTIFICATE OF INCORPORATION? (minor v. other changes)

Back 33

1. Minor changes, such as those relating to office location, registered agent, etc. are made by Board.

2. Other amendments, such as change of name, purpose or duration, increase or decrease of shares or par, creation of new classes of stock, denial or grant or limitation of preemptive rights, must be approved by (1) director action AND
(2) a majority of the shares entitled to vote

Front 34

Who can Amendment Bylaws? (SH v. D)

Back 34

1. SH can amend/repeal any bylaw (in the manner set forth in the bylaws)
2. Directors can amend/repeal bylaws only if power provided in certificate of incorporation or the bylaws

Front 35

How does a proper Dissolution and Liquidation happen?

Back 35

1. 2/3 of SH must approve (no quorum concept) in corp formed <2/22/98; majority of all outstanding share for post 2/22/98 corp

2. If liquidation, pay outside creditors first