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What is required to be in the Articles of Incorporation?
- Name of the corporation
- Name and address of the corporation's registered agents
- Names and addresses of the incorporators
- Number of shares authorized to be issued
What is the purpose of the corporation's registered agent?
The person on whom process may be served if the corporation is sued.
What are some ways to fend off unwanted takeover attempts?
- Persuading shareholders to reject the offer
- Suing the person or company trying to takeover for misrepresentation or omission and obtain an injunction against the takeover
- Merging with a white knight
- Making a self-tender (offer to acquire stock from its own shareholders)
- Paying Greenmail - pay the person or company attempting the takeover to abandon its takeover attempt
- Locking up the crown and jewels - give a third party an option to purchase the company's most valuable assets
- Undertaking a scorched earth policy - sell off assets or take out loans that would make the company less financially attractive
- Shark Repellent - amending the Articles of Incorporation or Bylaws to make a takeover more difficult
What does the Bylaws contain?
The rules for running the corporation
Under the Revised Model Business Corporation Act - a corporation's initial Bylaws may be adopted by whom?
Either the incorporators or the board of directors
What are the types of Debt Securities (Bonds)
- Mortgage bonds
- Unsecured debentures
- Convertible bonds
What are bond holders to a corporation?
Define Right of Appraisal, also known as Dissenting Right
Shareholders who are dissatisfied with the terms are permitted to compel the corporation to buy their shares at fair market value.
When does the Appraisal Rights arise?
- Amendment of the Articles of Incorporation that can adversely affect the shareholders rights
- Merger, Consolidation, or Share exchange
- Sale of substantially all of the corporation's assets outside the ordinary course of business
What are the requirements to be an S corporation?
- Less than 100 shareholders
- Domestic Corporation
- Only 1 class of stock
- No foreign shareholders
- Shareholders must be individuals, estates, or certain trusts
What is the tax treatment of LLCs
Unless an LLC makes an election with the IRS to be treated as a corporation, the LLC will receive partnership-like treatment.
Define Preemptive Rights
It provides a shareholder with a right of first refusal to buy a share of newly issued shares sufficient to maintain the shareholder's proportionate share of rights in any newly issued shares.
What is the job of a Promoter
Promoters enter into contracts before the corporation is formed to obtain financing and things the corporation will need once formed.
Who is liable for contracts that are entered into by a promoter, prior to the incorporation of a company?
The promoter is liable
How can a promoter be released from contractual obligations?
Through the process of Novation
When is a Corporation bound on promoter's contracts?
The corporation adopts the contracts after the corporation is formed.
Define Cumulative Voting
- Each share is entitled to one vote for each director position that is being filled, and the shareholder may cast the votes in any way, including casting all for a single candidate.
- This helps minority shareholders gain representation on the board.
What is required for a corporation to dissolve?
The directors must adopt a resolution recommending dissolution.
Define the Business Judgment Rule
A director will not be liable to the corporation for acts performed or decisions made in good faith, in a manner the director believes to be in the best interest of the corporation, and with the care an ordinarily prudent person in a like position would exercise.
Directors are ______ of the corporation and must act in the best interest of the corporation.
TRUE or FALSE:
Upon the dissolution of the partnership, each of the partners continue to have liability for partnership debts.
How would apparent authority of a partner be negated after the dissolution of the partnership?
Notification to third parties.
How are profits from LLCs divided when an agreement is absent?
The profits are divided among the member sin proportion to their contributions.
How are losses from a Partnership divided when an agreement is absent?
Losses are divided in the same proportion as partnership profits.
In a Limited Partnership, who must consent to the transfer of interest and the admission of a new partner?
Requires unanimous consent, so limited partners have the right to vote on the transfer of interest and admission of a new partner.
How are General Partnerships dissolved?
- Partner gives notice of withdrawal
- Partners agree
- Court ordered
How are Limited Partnerships dissolved?
- Partnership agreement
- Consent of all partners
- Withdrawal or Death of the General Partner
- Judicial Decree
How are Limited Liability Partnerships dissolved?
- Consent of all members
- Death or Retirement or Resignation or Bankruptcy or Incompetence of a member
- Judicial decree
How are Corporations dissolved?
- Director and Shareholder approval
- Court order
Define Dissociation of a General Partnership
- A change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business.
- A partner is dissociated from the partnership when the partner gives notice of withdrawal, dies, becomes bankrupt, or is expelled.
- His rights to participate in management ceases.
- His apparent authority to bind the partnership will continue until third parties are given notice of the dissociation.
- He still remains liable for the debts incurred by the partnership prior to dissociation, unless they release him through novation
- He still has a right to the partner's share of distributions
- The General Partnership will dissolve if 90 days pass and the remaining partners do not wish to continue the partnership
What is the order of distribution of assets for a Limited Partnership
- Former Partners
- Return of contribution
- Distribute profits
What is the order of distribution of assets for a General Partnership
- Return of contribution
- Distribution of profits
Define Guarantor of Collectability
A surety who agrees to perform only if the creditor first exhausts all remedies against the principal debtor.
Court order demanding the Debtor or co-sureties to pay or pay their pro rata share (before the surety pays)
Gain creditor's rights once surety makes full payment
Surety recover from debtor (after the surety pays the creditor)
Demand pro rata payment from co-sureties after one surety pays the creditor
What rights does a Surety have against the principal?
What rights does a Surety have against co-sureties?
What is the difference between a Gratuitous Surety and a Compensated Surety
Gratuitous Surety is not compensated and a Compensated Surety is paid
How are Gratuitous Sureties released from obligation?
- Creditor commits fraud (debtor commits a fraud and creditor knew)
- Duress or breach
- Surety lacks capacity or goes bankrupt
- Material change without surety consent
What is the Federal Fair Debt Collection Practices Act (FDCPA)?
They give parties injured by unfair collection practices the right to sue for damages.
Define Creditors' Composition
- An agreement between the debtor and at least two creditors that the debtor pays the creditors less than their full claims in full satisfaction of their claims.
- The debtor is discharged in full for the debts of the participating creditors after the debtor pays the agreed amount.
Define Assignment for the Benefit of Creditors
- The debtor transfers some or all of his or her property to a trustee who disposes of the property and uses the proceeds to satisfy the debtor's debts
- The debtor is not discharged from unpaid debts by this procedure since creditors do not agree to any discharge.
Define Writ of Attachment
An order by the court to a sheriff to seize a person's property. The writ can apply to personal property and to real property, and so the writ can be used even when a person owns no real property.
An order to a third person who holds property of the debtor to run the property over to a creditor. The property involved usually are wages and/or other property owed by the third person to the debtor.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
- Employers with 20 or more employees
- Allows certain individuals to continue the group health insurance coverage that they have through an employer after employment ends by paying up to 102% of the cost of the insurance.
- Same benefits as when employed
- Includes family
- Usually covers 18 months
Employee Retirement Income Security Act (ERISA)
- If an employer does have a pension plan, ERISA seeks to protect retirement plan participants by establishing rules for management and participation in the retirement plans.
- Standards for the funding and investing of pension plans.
- Employees and beneficiaries receive basic information regarding the plan
- Requirements for vesting
Fair Labor Standards Act (FLSA)
- Federal minimum wage
- Base of pay - hourly, weekly, monthly
- Overtime rate
- Restrictions on child labor
Occupational Safety and Health Act
- All businesses affecting "interstate" commerce
- Set safety standards
- Conduct worksite inspections
- Without advance notice
- Without search warrant
- Employees request OSHA inspections
- Fines and Civil penalties
- Jail - up to 6 months
- Most employers must participate in workers' compensation
- Exceptions for agriculture workers, domestic workers, and casual workers.
- State-run programs designed to enable employees to recover for injuries incurred while on the job.
- Employers are strictly liable regardless of fault.
- The injury occurred while acting in the scope of employment
- Workers cannot sue the employer
- Exceptions to workers' compensation is fighting, intoxication, and self-inflicted wounds.
Federal Unemployment Tax Act (FUTA)
- All employers who have quarterly payrolls of at least $1,500 or who employ at least 1 person for 20 weeks in a year must participate in the system.
- A state-run system of insurance to provide income to workers who have lost their jobs.
- Employer pays
- Employers can get a credit against federal tax due for payments made on account of state unemployment taxes of up to 5.4% of the first $7,000
- Deduct as an ordinary business expense
Federal Insurance Contribution Act (FICA)
- All full-time and part-time employees must participate. Self-employed if net profits > $400/year
- Funded by employer and employee (even self-employed)
- Employer matches employee's contribution
- Deductible by employer
- Provides workers and their dependents with benefits in cause of death, disability, or retirement.
- Disability pay, Retirement pay, Survivor's benefit, and Medical benefits - MEDICARE
Title VII of the Civil Rights Act of 1964
- Employers having 15 or more employees.
- Prohibits discrimination in employment on the basis of race, sex, religion, color, or national origin.
What are the defenses against the Title VII of the Civil Rights Act of 1964?
- Bona fide seniority system
- merit - professionally developed ability tests
- Bona fide occupational qualification
National Labor Relations Act
Gives workers the right to bargain collectively for wages and other terms of employment
Fair Debt Collection Practices Act
- Curbs abuses by collection agencies in collecting consumer debts
- Prohibited Acts
- call third parties
- Contacting the debtor at inconvenient or unusual times
- Contacting the debtor directly if the debtor is represented by an attorney
- Harassing or abusive language
- Making false or misleading claims
- Contacting the debtor at her place of employment if the employer objects.
What are the four major benefit programs within Social Secuity
- OSIA - Old age and survivors insurance
- DI - Disability insurance
- SSI - Supplemental security income
What can FinCEN pursue?
Who can pursue criminal sanctions
Department of Justice
When must a CTR be filed and within how many days?
Within 15 days after a qualifying transaction: deposit or withdrawal of more than $10,000
When a bank sells a monetary instrument for $3,000 to $10,000, what must it do?
Obtain information regarding the identity of the purchaser and retain the information for at least 5 years
Define Tying Arrangement
A seller requires the buyer to purchase one product to obtain another
Define a exclusive dealing contract
A seller of goods requires the buyer to promise not to deal in goods of a competitor
Define horizontal merger
When one competitor merges with another competitor to establish market power or restrict competition
Define Vertical restraints
Agreements between industry players that are on different marketing levels
What is covered under the Orderly Liquidation Authority?
- Financial institutions
- Insurance Companies
- Securities companies
Define Official bond
- A type of Surety bond
- Many states require public officials to obtain bonds from a surety for faithful performance of their duties. Such bonds obligate a surety for all losses that the public official causes by negligence or nonperformance of required duties.
Principal's remedies in an agency agreement
- Tort Damages
- Contract damages - compensation was paid
- recovery of secret profits - constructive trust
- withhold compensation
When does an agency coupled with an interest arise
Wen the agent is given an interest in the subject mater of the agency. Sales commission is not a sufficient interest
Terminate the agency by the acts of the parties
When is notification to third parties not required when an agency relationship terminates
- Death of the principal or the agent
- Incapacity of the principal
- Bankruptcy of the principal
- Failure or acquire a necessary license
- Destruction of the subject matter
- Subsequent illegality
Common carrier duty of care
Highest standard of care - liable for all damages
What are the different types of document of title
- Warehouse receipt
- Bill of lading
- The proper document of title for items held in storage
- A wharehouse man has a duty to use reasonable care with respect to goods stored.
- Negligence breaches this duty, and makes the warehouseman liable for resulting losses
Bill of lading
- The proper document of title for items being transported by a carrier
- Under a nonnegotiable bill of lading, a carrier who accepts goods for shipment must deliver the goods to the consignee of the bill of lading
A document that represents fair market value of an item
Business Judgement Rule
The director is protected against liability if they act in good faith and in a manner they believe is in the best interest of the corporation
Cash dividend for a preferred stock the owner will become what to the corporation
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