Tex Corps

Front 1

What Cert of Form must have:

Back 1

1. names and addresses
2. statement of purpose
3. Capital Structure

Front 2

Info in Cert of Formation: Names and Address

Back 2

1. Corporate name
2. name and address of each organizer
3. number of initial directs
4. name of each initial director (or names of those who will manage if not Dirs)
5. Name of corp agent (registered agent) and post office address for the corp agent

Front 3

Effect of S.o.S. filing the certificate

Back 3

Corporate existence begins--> De Jure Corp

Front 4

"Act" of forming

Back 4

1. Organizr sign cert and deliver to SoS and pay fee. If in order, SoS files it and sends acknowledgement of filing to corp
2. Bd holds organizational meeting: Dirs: A) select officers; B) adopt any bylaws; and C) transact other company business.

• Should give 3 days notice of the meeting.

Front 5

De Facto Corps (anyone asserting must be unaware of failure to form de jure)

Back 5

Reqs:

1. relevant incorp statute (TBOC)
2. Parties made a good faith, colorable attempt to comply with it; AND
3. some exercise of corp privilege (acting like we have a corp)

• Organizers personally liable unless Ct. applies DFC.
• May have been abolished.

Front 6

Corp by Estoppel (anyone asserting must be unaware of failure to form de jure)

Back 6

one who treats a business as a corp may be estopped from denying that it is a corp.

• generally applies to K, not tort.
• May be abolished

Front 7

Pre-incorporation Contract

Back 7

• Corp is not liable until it adopts the K. Express by board action or implied if Corp accepts a benefit of the K.
• Liability of the promoter: unless K says otherwise, promoter is liable until there is a novation.

Front 8

When foreign corp does business and consequences of not.

Back 8

• Foreign corps transacting business in Texas must qualify and pay fees.
• Transacting Business: intrastate transactions on a recurring basis (regular course of business in texas, not sporadic).
  
• to qualify, must get cert of authority form Texas SoS. Apply by giving basic information from certificate and providing good standing in home state.
• If transacting w/o qualifying: 1) civil fine; 2) company cannot sue in Texas from a claim arising from business in Texas (but can be sued and defend).

Front 9

Subscriptions (Written, signed offers to buy stock from corps)

Back 9

1. Pre-incorp subscriptions: irrevocable for 6months
2. Post-incorp subscriptions revocable until accepted by the corp.
3. Corp and subscriber obligated under subscribe agreement when: Bd. accepts offer and Corp notifies the subscriber in writing (subscriber cannot revoke).
4. Subscriber becomes a sh when she pays for it

Front 10

What is an issuance?

Back 10

Corp sells its own stock.

Front 11

T/S status

Back 11

• authorized and issued, not outstanding.
  
• If corp reselling T/S: treat T/S as no par. not an initial issuance.

Front 12

Issuance for prop/services: bd valuation on consideration rec'd conclusive

Back 12

yes, absent fraud

Front 13

Pre-emptive rights

Back 13

• Sh maintains percentage of ownership by buying stock whenever there is a new issuance of stock FOR MONEY.
• New issuance: includes T/S
• No pre-emptive rights if CoF is silent
• No rights if issuance w/in 6 months of formation unless cert says otherwise

Front 14

Bd. must act as a group. 2 ways to make a valid act.

Back 14

1) unanimous written consent to do something (email/fax ok); or 2) meeting that satisfies quorum and voting requirements.

If not valid through 1) or 2), an act is void unless ratified by a valid act.

Indiv. Dirs. are not agents of the corp.

Front 15

Quorum Req's for Dirs

Back 15

• For any meeting of the board, there must be a quorum.
  
• Quorum: majority of all Directors
• If quorum, to pass resolution: reqs only a majority vote of those Dirs who are present.
• If quorum broken, Bd. cannot act

Front 16

Duty of Care (burden on p)

Back 16

• Dr owes corp a duty of care. She must act in good faith and exercise ordinary care and prudence. She must do what a prudent person would do in similar circumstances.
• Liable for nonfeasance if the breach actually caused a loss to corp.
• Misfeasance: causation and dmg clear here. Director is not liab if she meets the BJR.

Front 17

BJR (exception to DoC)

Back 17

A ct wll not second guess a business decision if it was made in good faith, was informed, and had a rational basis.

Front 18

Duty of Loyalty (burden on D)

Back 18

She must act in good faith and with a reasonable belief that her act is in the corp's best interest.

BJR does not apply when there is a CoI

Front 19

duty of loyalty: interested director trans.

Back 19

Will be set aside UNLESS the director shows: 1) deal was fair to corp when approved; OR 2) her interest and the material facts were disclosed or known and the deal was approve in good faith by either: A) Shs; or B) majority of disinterested Dirs

Front 20

Competing ventures

Back 20

Dir cannot complete w/ her corp w/o approval of a disinterested majority of Dirs.

Remedy: constructive trust on profits

Front 21

Corporate Opportunity

Back 21

• Dir cannot usurp a corporate opportunity.
  
• Dir cannot take the opportunity UNLESS HE: 1) tells the Bd.; AND 2) waits for the Bd to reject the opportunity.
• Corp Opportunity: anything the Dir has reason to know the corp would be interested in.

Front 22

Which Dirs are liable?

Back 22

A Dir is presumed to have concurred w/ Bd action unless her dissent is noted in writing in corporate records.

Done by

1. putting in the minutes; or
2. sending a note to corp secretary at the meeting; or sending a registered letter tot he corp. secretary immediately after the meeting.

Front 23

Who hires and Fires what

Back 23

Shs H/F Bd of Dirs --> Bd of Dirs H/F Officers

Front 24

Indemnify of Dirs and Officers

Back 24

1. Prohibited: Dir or Officer held liable for willful or intentional misconduct in performing a duty to the corp.
2. Required: if she wins a judgment on the entire case on the merits or otherwise
3. Permitted: if no 1 or 2. if liable to corp or to have received improper personal benefit--> only get expenses and attys fees.

• to be eligibly for 3, she must show acted in good faith and with Reas. belief her actions were in corp's best interest.
• Who determines eligibility: 1) majority of disinterested Dirs, a disinterested committee or of disinterested shareholders; or 2) independent legal counsel.

Front 25

PCV if

Back 25

1) they have abused privilege of incorporating; and

2) limited liability would be unfair.

Front 26

PCV situations & when most likely

Back 26

Alter Ego Theory: treated corp like it was part of the shareholder in a corp.

Undercap Theory: High probability of injury, no insurance, low amount invested. (not exclusive)

• More likely in tort that K. (b/c can review books before K'ing)

Front 27

Reqs to bring a Sh Derivative Suit

Back 27

1. Stock ownership
   
2. must fairly and adequately represent corp's interest (owned stock throughout litigation)
3. Must make a written demand (nature of claim with particularity) on Dirs that Corp bring suit (Sh must wait 90 days unless demand rejected or waiting 90 days would cause irreparable dmg to the corp.
4.