Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
9 Cards in this Set
- Front
- Back
|
Board of Directors Duty of Care
|
1. Act with good faith belief that it is in corp's best interests
2. Act as prudent person would in her own business 3. Not required to consider interest of any particular group as controlling |
|
|
Business Judgment Rule
|
Defense to breach of duty of care if DR:
1. Exercised due care/was informed 2. Acted in good faith 3. Had rational basis |
|
|
How DRs can resolve conflicts of interest
|
1. Material facts disclosed to disinterested DRs and approved through board action
2. Material facts disclosed to SHs and approved by vote of quorum 3. Transaction was fair (look at adequacy of consideration, corp need for transaction, alternatives available) |
|
|
Corporate Opportunity doctrine
|
Requires DR to give corp opportunity to act on business opp in which corp may have interest before personally taking advantage
|
|
|
Close corporation
|
30 or fewer SHs and stock not publicly traded
|
|
|
Piercing Corporate Veil
|
Only in CLOSE corporations, where (i) SHs have abused privilege of incorporating and (ii) fairness requires liability
|
|
|
Shareholder Derivative Suit requirements
|
1. Stock ownership at time claim arose and throughout lit
2. Fairly and adequately represent interests of SHs 3. Written demand on DRs to bring suit |
|
|
Shareholder Right of Appraisal definition
|
Right of SH to force corp to buy shares at FMV where she dissents to a fundamental corporate change (small corps only < 2000 SHs)
|
|
|
Shareholder Right of Appraisal requirements
|
Steps to claim appraisal
1. Before SH vote file w/ corp written notice of objection and intent to demand payment 2. Abstain or vote against proposed change 3. Within 30 days after notice that change was approved make written demand to be bought out |
