Pa Corporations

Front 1

Revoking a Stock Subscription - Preincorporation

Back 1

Offer to invest is irrevocable preincorporation

Front 2

Revoking a Stock Subscription - Post-Incorporation

Back 2

Revocable until Board accepts your offer to invest

Front 3

Preemptive Rights

Back 3

The right to buy more stock to maintain ownership % - Only available for closely held corporations or if articles provide for it

Front 4

Dividend Test - Equity Test

Back 4

Corporation is able to pay its debts when they become due

Front 5

Dividend Test - Balance Sheet Test

Back 5

Assets are greater than total of its liabilities and liquidations

Front 6

Shareholder Votes When? (4)

Back 6

1. Annual Meeting

2. Special Meeting

Front 7

What Counts as Shareholder Approval

Back 7

Quorum of shareholders present, and majority voting of those present (so long as still quorum)

Front 8

Shareholder Rights to Inspect

Back 8

Shareholders can review books and records for any purpose, unless corporation can show improper purpose

Front 9

Direct or Derivative Action?

Back 9

If Principally harms shareholder then Direct

If action harms corporation as an entity then derivative

Front 10

Derivative Action Requirements

Back 10

1. Standing - Holding stock both at time of harm and until case is resolved

2. Written Demand - Unless futile (demand would cause irreparable injury)

Front 11

Piercing the Corporate Veil

Back 11

Available when shareholders abused the corporatet form, so creditors can seek to hold a shareholder responsible for a debt

Front 12

Piercing the Corporate Veil Test

Back 12

1. Alter Ego - Personal piggy bank or fails to hold meeting

2. Undercapitalization - Formed without enough assets to cover liability

3. Fraud - When a shareholder has engaged in fraud

Front 13

Piercing the Corporate Veil How to Prove

Back 13

1. Unity of Interest between shareholder and corporation

2. Adhering to the FICTION would amount to an INJUSTICE or FRAUD

Front 14

Duty of Care

Back 14

Duty to Act as a RPP - Rebuttable presumption that acted in best interests of corporation, unless:

1. Failure to Inform - Did not adequately inform before deciding

2. Self Interest - Stake in Outcome

3. Lack of Good Faith - Acted in bad faith

Front 15

Duty of Loyalty

Back 15

Duty of loyalty to Corporation, so no

1. Self-Dealing Transactions - Duty to disclose if have a financial interest

2. Corporate Opportunity - When Director usurps opportunity, unless offered opportunity to corp and it rejected

3. Competition with Corporation

Front 16

Duty of Loyalty - Self Dealing

Back 16

1. Is this a self-dealing transaction?

2. Any safeharbors available? - Disinterested directors approved the action or Tx is fair?

3. Even with Safeharbors, is it still unfair?

4. Remedy - Rescind K, enjoin Tx

Front 17

Duty of Loyalty - Corporate Opportunity

Back 17

1. What's the corporate Opporunity

2. Did Director DISCLOSE opportunity?

3. Did Corporation REJECT opportunity?

Remedy - Constructive Trust

Front 18

Procedural Requirements for Merger

Back 18

1. Directors Propose

2. Written Notice to Vote

3. Shareholders approve by majority vote

DOES NOT apply to Short form mergers (Corp owns 80% of stock its absorbing)

Front 19

Procedural Requirements for Dissenters Rights

Back 19

1. Written Notice of Intent to dissent before vote

2. Abstain or vote against

3. Written demand for FMV of stock once action has been approved