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52 Cards in this Set

  • Front
  • Back

Formation of a Corporation

Incorporators


Articles of Incorporation


Filing

Articles of Incorporation

Name of Corp


Number of shares corp is authorized to issue


name and address of registered agent


address and name of each incorporator



Ultra Vires Acts

Acts outside corp's scope of business


Under RMBCA generally enforceable


Common law not enforceable


Arises:


SH may sue corp to enjoin proposed UVA


Corp may sue officer for damages for approving UVA


State may bring action to dissolve corp for committing UVA



Bylaws

Adopted by DIrectors


Modified Repealed by majority vote of either directors or SH

De Facto Corp Definition

Statute under which entity could have valdly incorporated


Colorable compliance with staute and good faith attempt to comply


Conduct of business in corp name and exercise of corp privlieges

Piercing Corporate Veil

Alter Ego


Inadequate Capitalization at Time of Formation


Avoidance of Existing Obligations, Fraud, or Evasion of Statutory Provisions


Pierced in Tort cases, much harder for K cases

Alter Ego

Where corp ignores corporate formalities such that it may be considered alter ego of SH. SH treat corporate assets as their own, and some business injustice results

Inadequate Capitalization

Corp is inadequately capitalized at time of formation (not enough unencumbered capital to reasonably cover prospective liabilities

Avoidance of Obligations

To prevent fraud or SH from using entity to avoid existing personal obligations

Debt Securities

Arise where a corp has borrowed funds from outside investors and promises to repay.





Authorized Shares

Number of shares the corp is authorized to issue

Issued and Outstanding Shares

Shares that have been sold

AUthorized but Unissued SHared

Shares that have been reacquired by the corp through repurchase and redemption

Preincorporation Subscriptions

Irrevocable for six months

Forms of Consideration for Stock

Shares can be paid with any tangible or intangible property or benefit to the corp

Promoters relationships between promoters

Promoters are joint ventures who occupy a fiduciary relationship

Promoter selling to Corp

A promoter who profits by seeling property to corporation may be liable for his profit unless all material facts of transaction were disclosed.

SH ANnual Meetings

Must hold


Notice not less than 10 or more than 60


State time date and place no purpose

SH special meetings

Notice 10-60


Time, date, place, and purpose

SH Voting Proxies

Valid for 11 months


Only irreveocable if it states so and is coupled with an interest or given as a security

SH Meeting Quorum

Majority of Outstanding shares entitled to vote. Cannot be broken by withdrawal of shares

Director Elections

Elected by Plurality of the votes

Voting Trust

Written agreement transfer right to vote to a trsutee who votes shares and dsitrbutes divdens in accordance with the provisions of the voting trust agreement.


Not valid for more than ten years

Voting Agreement

Written and signed agreement


May be perpetual

Restrictions on Transfer of Stock

Stock restrictions must be reasonable


third party bound if:


Conspicuously noted on the certificate or


third party had knowledge of the restriction at the time of the purchase

SH right to information

Five days written notice


Stating a proper purpose

SH Unqualified record to certain information

Corps articles and bylaws


Board resolutions regarding classification of shares


Minutes of shareholder's meetings from past three years


communication sent by corp to SH over past three years


a list of names and business addresses of corps current directors and officers

SH Preemptive Rights

Must be provided for in articles of incorporation


Also must not be:


for consideration other than cash


within six months after incorporation


without voting rights but having a distribtion preference

SH Derivative Actions

Must have been SH at time of wrong or through transfer by operation of law from one who was SH at time


Must make written demand that corp take action



SH Derivative Actions Director Cancel

If majority of non interested directors find not in corps best interest, after GF reasonable inquiry that suit is not in the corp best interest

Discretion to Issue Declaration

Solely within the directors discretion

Restrictions on Dividends

Corp would no be able pay its debts as they become due


COrps total assets would be less than sum of its total liabilities

Liability for Unlawful Distribution

Not liable if approved in GF


based on financial statements prepared according to reasonable accounting prospects


relaying on information for others



SH LIabilities

Generally no fiduciary duties





Board of Directors General Powers

Responsible for the management of the business and affairs of the corp

Removal of Directors

Can be removed without cause


Cumulative voting must be for cause

Directors Regular Meetings

May be held without notice

Directors Special Meetings

Two days notice

Director Quorum for Meetings

Majority of Board


Can break if directors leave

Director Duty of Care

Have duty to manage to best of their abilities in


good faith


with care that an ordinarily prudent person in a like position would exercise under similar circumstances


In a manner directors reasonably believe in the best interests of the corporation

Director's Reliance on Reports or Other Information

Can rely upon information opinions reports or statements if prepared or presented by corp officers, employees whom director reasonably believes to be reliable


legal counsel, accountants, or other persons as to matters within person's profession expriance


committee of board which director is not a member and director reasonably believes committee merits confidence

Director duty to disclose

Have duty to disclose material corporate information to other members of the board

Duty of Loyalty Conflicting Interest Standards for Upholding Self Dealing

Approved by majority of the directors w/o a conflicting interest after all material facts have been disclosed




Majority of the votes entitled to be cast by SH w/o conflicting interest after all material facts disclosed




It was fair to the corp

Director Compensation

Board can set own compensation

Corp opportunity doctrine

Opportunity must something corp have an interest in or expectancy




Closer the line of business, the better


Lack of financial ability the best



Mandatory Indemnification of Officers/Directors

Must if they prevail in defending a proceeding against O/D.

Discretionary Indemnification

May indemnifiy unsuccesful acton if O/D


Acting in good faith


Believed conduct was in best interests of corp


Not opposed to corp's best interests


Not unlawful

Indemnfication Exceptions

Cannot indemnify if:


direct or derivative action in which the director is found liable to corp


Action where director recieved improper benefit

General Procedure for Fundamental Changes

Board adopts a resolution


Written notice given to SH


SH approve changes


CHanges in form of articles are filed with state

Disposition of Property Outside Usual Course of Business

Has to sell at least 75% of assets.



Dissenting SH Rights

COrp give SH notice


SH give notice in writing before vote is taken of intent to demand payment


Corp notify dissenters within ten days of approval time and place to and terms of repurchase


SH must send demand of payment


Corp pay esitmates fair value

Dissenter Dispute over fair value

If SH mad send own estimate within 30 days.


IF Corp disagrees corp must file with court within 60 days of receiving SH demand