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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. If the corporation is never formed, the promoter remains solely liable
      - A promoter owes a fiduciary duty to the corporation
    - - 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:
        
        Equal rights in the management and conduct of the company's activities
        
        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
    - - Managers owe the duties of care and loyalty similar to those owed by directors to a corporation
    - - The right to participate in the LLC, and
      - The right to distributions only if and when made by the continuing members
- - - - Duty of care - to act in good faith with the honest belief that one is acting in the 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
        
        Material facts of conflict were fully disclosed, or
        
        Transaction is fair
        
        Rebuttable presumption of conflict of interest
        
        Conflict of interest is inherent when director has a personal or financial interest in the transaction:
        
        Usurping corporate opportunity
        
        Competing with corporation
        
        Business dealings with the corporation
  - - - Challenger goes against the corporation and corporate assets first and then goes against the shareholders and their assets
      - Grounds (no litmus test here - it is the totality of the circumstances test)
        
        Alter ego
        
        Corporate form used fraudulently for improper purpose
        
        Injury or unjust loss resulted
        
        Corporation has no existence of its own
        
        Inadequate capitalization
        
        Not sufficient alone if corporate 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
      - Court disregards corporate entity and holds shareholders liable
    - - Annual - typically required in the bylaws
      - Special - requires written notice stating the place, date, hour, and purpose of the meeting
        
        Notice - typically no less than 10 and no more than 60 days prior to the meeting and may be waived in writing or by attending the meeting
      - Quorum - majority of the shares 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
- - - - States place, date, hour, and purpose of meeting
      - No less than 10 and no more than 60 days prior to the meeting
      - Written
      - Notice can be waived
    - - Dissenter must not vote their shares in favor of the proposed action
      - If corporation and dissenter fail to agree as to the value of the stock, the court makes a determination of value
      - Dissenting shareholder must file a written objection to the proposed action before the shareholders' vote