Business Law - Chapter 20

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Author:
chanthalyxay
ID:
250611
Filename:
Business Law - Chapter 20
Updated:
2013-12-09 21:56:27
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Business Law
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Description:
Chapter 20 - Corporations
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  1. Who elects the board of directors in a coorporations
    shareholders
  2. Who hires the corporate officers and other employees to run the corproation's daily business
    The board of directors
  3. What does the doctrine of respondeant superior for a corporation do
    • holds the corporation liable for the torts committed by its agents or officers within the course and scope of their employment
    • holds the corporation liable and be fined for the criminal acts of its agents and employees
  4. Who can form a public corporation?
    The government
  5. What is a a close corporation
    • Corporation owned by a family or a relatively small number of individuals 
    • Transfer of shares is usually restricted
  6. What is the general procedure to incorporate a corporation
    • select a state of incorporation
    • secure the corporate name
    • prepare the articles of incorporation
    • file the articles with the secretary of state
  7. What is included in the articles of incorporation
    • corporate name
    • number of shares of stock the corporation is allowed to issue
    • registered office and agent
    • names and addresses of the incorporators
    • the state's filing of the articles authorizes the corporation to conduct business
  8. What is corporation by estoppel
    if a firm is not incorporated but represents itself to be a corporation and is sued as such by a third party, it may be held to be a corporation by estoppel
  9. What power does corporations have
    • express power granted to them
    • implied power to do acts reasonably appropriate and necessary to accomplish its corporate purposes
  10. Define piercing the corporate veil
    • courts will hold shareholders personally liable to avoid an injustice 
    • when the corporation form is used for an illegitimate or fraudulent purpose
    • when controlling shareholders commingle his/her own interests with those of the corporation to such an extent that the corporation no longer has a separate identity
  11. How does a corporation finance its activities
    • bonds
    • stocks
  12. Define bonds
    • Securities representing corporate debt
    • funds borrowed by a corporation
  13. Define Stocks
    Equity securities issued by a corporation that represent the purchase of ownership in the firm
  14. What are the duties of a director of a corporation
    policy making decisions necessary to the management of corporate affairs
  15. What are the rights of a director
    • participation
    • inspection 
    • indemnification
  16. What are the duties and liabilities of directors and officers of a corporation
    • duty of care - act in good faith
    • Business judgment rule - immunizes directors and officers from liability when they acted in good faith, acted in the best interests of the corporation, and exercise due care. informed, reasonable, and loyal decision
    • duty of loyalty - fiduciary duty to subordinate their own interest to those the corporation in matters relating to the corporation
    • Conflict of interest - to fulfill their duty of loyalty, must make a full disclosure of any potential conflicts between the personal interests and those of the corporation 
    • Liability of directors and officers - personally liable for their own torts and crimes. may be held liable for torts and crimes committed by corporate personnel under their supervision
  17. What powers do shareholders have
    • approval of all fundamental changes affecting the corporation 
    • election of the board of directors
  18. What rights do shareholders have
    • voting rights
    • to a stock certificate
    • preemptive rights
    • obtain a dividend
    • inspect the corporate records
    • right to transfer shares
    • sue on behalf of the corporation if the board of directors fail to do so
  19. What is the duty of the majority shareholders
    fiduciary duty to minority shareholders and will be liable if that duty is breached
  20. What are the different ways to merge or acquire a corporation
    • Merger - combination of two or more companies with the surviving corporation acquiring all assets and obligations of the other corporation 
    • Consolidation - each corporation ceases to exist and a new one emerges 
    • Share Exchange - some or all the shares of one corporation are exchanged for some or all of the shares of another corporation 
    • Procedures - 
    • Short-form merger - possible when the parent corporation owns 90% of the outstanding shares of each class of stock

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