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Corporations (Issuance of Stock (stock can only be issued by the vote of…
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Issuance of Stock
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shareholders preemptive rights: "right of existing shareholders to acquire unissued shares in the corporation in proportion to their holdings of the original shares when the corporation seeks to issue additional stock: not automatic, must be in Articles of Incorporation."
shareholders can get a distribution of cash or property of the corporation: - there is not a preemptive right for shareholder to receive a dividend. - Board of Directors can decide if a shareholder can receive a dividend.
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Formation
promoters? - a K can waive the promoter's liability but the promoter is liable until all parties agree that the promoter's liability is waived.
commencement - begins when you file the Articles of Incorporation. A corporation is not liable of pre-incorporation agreements unless it assumes liability after filing the articles of incorporation.
defective incorporations
de jure corp: complies with the statute in terms of incorporation but failed to comply with one of the statute provisions.
de facto corporation: statutory compliance is not enough. there needs to be good faith attempt to comply and the corporate principals need to acts in good faith as if they are a corporation
corporation by estoppel: if a creditor has always treated the corporation, the creditor cannot later alleged that the corporation is defective.
LLC: offers limited liability to its members but it has the attributes of a partnership for federal taxes purposes.
formation: articles of organization with secretary of state and can be organized with only one member. More members can be added with the consent of all other members unless the operating agreement states the contrary.
management: there is a presumption that the business is member-managed unless the agreement says the contrary. each member has equal rights to manage and conduct the company's activities, most members have the authority to bind LLC into K unless stipulated to the contrary. Any matters outside of the scope of the company's activities requires consent of all members.
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disassociation: member withdrawal and has no right to participate in the LLC and no right to distributions. Disassociation does not result from dissolution.
Federal Securities Law
Section 16(b) prohibits the use of internal information to manipulate price. Profit recoverable; it is necessary to have two transactions on stock; strict liability offense; damages
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