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Corporations - Coggle Diagram

- - - - Usually they become shareholders, officers, and directors of the new corporation
    - - Contract can specifically disclaim a promoter's personal liability
      - Personal liability continues until a novation–the corporation adopts the contract and all parties agree that the promoter will be discharged from the contract
    - - Can be express or implied
  - - - Good faith, colorable attempt to comply; and
      - Corporate principals, in good faith, acted as if they were a corporation
    - - Creditor who has always dealt with the principals as if they were a corporation is estopped from later alleging that the corporation is defective
      - Defendant who has held himself out as a corporation cannot avoid liability by claiming there is no corporation
  - - - Each member In a member-managed LLC has
        
        Authority to bind the LLC in contracts for carrying on the ordinary business of the company unless the member lacks authority to do so and the other party to the contract has notice that the member lacks such authority
        
        Equal rights In the management and conduct of the company's activities
      - Matters outside the ordinary course of the company's activities require the consent of all members
    - - Managers owe the duties or care and loyalty similar to those owned by directors to a corporation
    - - Right to participate in the LLC
      - Right to distributions only if and when made by the continuing members
- - - - Court disregards corporate entity and holds shareholders liable
      - Challenger goes against the corporation and corporate assents first and then goes against the shareholders and their assets
      - Grounds
        
        Alter ego
        
        Corporation has no existence of its own
        
        Corporate form used fraudulently for improper purpose
        
        injury or unjust loss resulted
        
        Inadequate capitalization
        
        Not sufficient alone if corporates formalities observed
        
        Failure to comply with corporate formalities
        
        Only those active in corporate management are held liable
        
        Corporate veil more likely pierced for a tort action
    - - Annual
      - Special: requires written notice stating the place, date, hour, and purpose of the meeting no less than 10 and no more than 60 days prior to the meeting
        
        Notice may be waived in writing before or after the meeting
      - Quorum: majority of the shares are entitled to vote
    - - Often used to ensure election of certain directors
    - - Must be a shareholder at the time of the transaction
      - Must make a demand upon the corporation unless futile
  - - - Duty of care: to act In good faith In the honest belief that one is acting in best interests of the corporation on an informed basis
      - Duty of loyalty: must not promote own interests in a manner injurious to the corporation
        
        Transaction Is voidable by the corporation unless
        
        Transaction is fair
        
        Material facts of conflict were fully disclosed or
        
        Rebuttable presumption of conflict of interest
        
        Conflict of Interest is inherent when director has a personal or financial interest in the transaction
        
        Competing with corporation
        
        Usurping corporate opportunity
        
        Business dealings with the corporation
      - Indemnification: Corporation must indemnify a director who was successful In the defense of any proceeding to which he was a party because he was a director
        
        Ultra Vires: Board of directors is not permitted to undertake action that is beyond the corporation's authority, Corporation cannot be obliged to undertake a contract or activity that Is beyond the scope of its powers