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Corporations - Coggle Diagram

- - - - subject to limitations of the articles of incorporation, management of the corp.'s business and exercise of corp. power MUST be by and under direction of the board
      - What constitutes an act of the board?
        
        the board acts in the collective capacity - as such, the prerequisite of all board action is that it requires the participation of a quorum of the board
        
        a quorum refers to the minimal portion of the number of directors required to be present for the board action to occur
        
        unless provided otherwise by art of inc. or bylaws a majority of the (fixed or prescribed) directors constitutes a quorum
        
        assuming quorum is present at a duly held meeting of the board, an act of the board occurs upon the affirmative vote of a majority of directors present
        
        Unless, a greater number is required by the articles or bylaws
        
        Unless otherwise restricted by bylaws/articles, the board can transact business in the absence of a meeting so long as there is written consent to an action that is signed bey all board members
      - What constitutes a duly held meeting of the board
        
        unless articles/bylaws provide otherwise, regular meetings may be held w/o notice of date, time, place, or purpose of the meeting
        
        Special meetings of the board require at least 2 days notice of the date, time, and place of the meeting, unless a longer or shorter period is required by the arts/bylaws
        
        statutorily required notice for special meetings need not include its purpose
        
        However, any meeting at which removal of a director is being considered, notice must include this purpose even if notice would not otherwise be required
        
        Waiver of notice can occur before or after the date and time state in the notice by signed writing by director entitled to notice
        
        Waiver can also be effected by the director's attendance or participation in a meeting when the director makes no prompt objection
  - - - in good faith:
      - w/ the care that an ordinarily prudent person in a like position would exercise under similar circumstances; AND
      - in a manner they reasonably believe to be in the best interest of the corporation
      - The Business Judgement Rule:
        
        Creates a rebuttable presumption that, when making a business decision, directors and officers have acted:
        
        on an informed basis;
        
        in good faith; AND
        
        with honest belief their decision was in corporations best interest
    - - conflict of interest typically arise when directors or officers:
        
        transact business w/ the corporation (self-dealing);
        
        usurp a corporate opportunity; or
        
        directly compete w/ the corp.
      - Business Dealings w/ the Corporation (Self-Dealing)
      - Corporate Opportunity
      - Competition w/ the Corporation
- - - - Both the board and shareholders
        
        "Fundamental changes"
      - Shareholder action typically occurs at shareholder meetings
        
        Quorum Rules
    - - In cumulative voting
      - Removal
  - - - Generally
      - Proxy Voting
      - Consolidating Voting Power
    - - Direct Suits
      - Derivative Suits
- - - - promoters take preliminary steps in creating the corp.
        
        these steps often involve Ks that the promoters enter into for the benefit of the not-yet-formed corp.
      - Promoters are not agents of the contemplated corp.
        
        Because the corp. is not yet in existence, it cannot be a principal to any agency relationship w/ promoter
        
        Consequently, promoters have no power to bind the not-yet formed corp.
      - When there are more than one promoter, there is a mutual agency (or partnership-type relationship) among the promoter's themselves
        
        remember, agency is the building block of corporations
        
        In this case, Ks entered into w/in scope of the promotion would bind each promoter, and each promoted would become jointly and severally liable
    - - Promoters are not liable on pre-incorporation Ks if:
        
        the pre-incorporation K specifically disclaims the personal liability of the promoter; OR
        
        circumstances demonstrate that the other party agreed to look only to the corp. for performance
      - generally, promoters are personally liable on the Ks they enter for the benefit of the not-yet-formed corp.
    - - A corporation's liability of pre-incorporation K
        
        not liable, Unless, corp. assumes liability by adoption and novation
        
        Impact of Adoption or Novation
        
        If corp. adopts K promoter will remain liable on the K to the 3rd P, but will be entitled to indemnification form the newly created corp.
        
        adoption can be express or implied
        
        express
        
        implied
        
        Novation
  - - - Incorporation requires the proper execution and filing of article of incorporation
        
        execution: the article of inc. must be prepared and signed by an incorporator(s) and set forth the following:
        
        name and address of incorporator(s);
        
        the address of the corporations initial registered office and name of its initial registered agent at this office:
        
        the number of shares the corporation is authorized to issue; AND
        
        a corporate name
        
        must include word "corporation, incorporated, company, limited," of their abbreviations
        
        also must be distinguishable from other corporate names
        
        articles of inc. trump bilaws
        
        Filing: the articles of inc. must be delivered by an incorporator to the secretary of state's office for filing'; and its delivery should be accompanied by payment of the appropriate filling fee
        
        effective date of inc. is date of filing
        
        unless articles of inc. state a delated date that is NOT MORE THAN 90 days after filing
    - - Bilaws
  - - - if statutory compliance is insufficient for de jure (a corp. organized in compliance w/ statute), a de facto corporation may still have been formed if:
        
        good faith, colorable attempt
        
        acted as if there were a corporation
- - - - perpetual existence; survives death or replacement of its shareholders (owners)
      - Centralized managements of its assets and business through board of directors;
      - Limited Liability for its shareholders (owners), who are generally shielded from personal liability for corporations debts and obligations
        
        exc: piercing corporate veil - see bellow
      - free transferability of ownership interest (shares) - this is the default
    - - Advantage - raises significant amount of capital
      - Disadvantage - "double taxation"
        
        profits taxed both as corporate income, and then again when shareholders are distributed dividends on their personal income
        
        compare: Partnership income is not taxed
    - - Board of Directors
        
        responsible for governing the corporation - including appointing officers
        
        "big picture"
      - Officers
        
        responsible for managing the conduct of the corporate business and serve as agents of the corporation
        
        "dat-to-day"
      - Shareholders
        
        own the shares of the company - have a right to vote and elect the board of directors