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12 Cards in this Set
- Front
- Back
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** Shareholders ** |
** Shareholders ** |
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Subscription |
Under BCL, a subscription is a written, signed offer to buy stock from a corporation. |
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Authorized stock
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Under BCL, authorized stock is the maximum number of shares the corporation can sell.
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Issued stock
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Under BCL, issued stock is the number of shares the corporation actually sells.
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Outstanding stock
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Under BCL, outstanding stock is the number of shares sold but not reacquired by the corporation.
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Watered stock
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Under BCL, watered stock is that issued for less than par value.
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Derivative actions |
Under BCL, a derivative action is a lawsuit brought by an existing shareholder on behalf of the corporation against the directors, management, or other shareholders. The cause of action is typically an alleged breach of duty.
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** Directors ** |
** Directors ** |
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Business judgement rule
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Under BCL, a court will not second guess a business decision made by a director if it was made in good faith, was reasonably informed, and had a rational basis. Directors are not the guarantors of success but must act prudently.
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Duty of loyalty
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Under BCL, a director must act in good faith and with the conscientiousness, fairness, morality, and honesty that the law requires of fiduciaries. This is a higher standard than the business judgement rule, which applies when there is a conflict of interest.
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Duty of care
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Under BCL, a director must discharge his 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.
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Breach of duty of care |
Under BCL, a director is liable if he breaches his fiduciary duty by failing to discharge his/her assigned duties and this failure causes a loss to the corporation. The failure may be in the form of misfeasance (acting improperly or negligently), or nonfeasance (failing to act at all where obligated). |
