Vocab
What is a preemptive right
the right of a shareholder to buy their proportion (%) at the same price the corporation is offering it to others
Opt-out provision
Are preemptive rights opt in or opt out?
opt out
What are the 3 ways a company can become a 34 Act "Reporting Company"?
1) having its securities registered on a national exchange
2) has total assets exceeding $10 million and either (a) 2,000+ owners of record a class of its equity securities OR (b) 500+ non-accredited owners
3) by filing a registration statement under the 33 Act
In order to be an S- corporation, there are several qualifications, what are they?
1) less than 100 shareholders
2) shareholders have to be individuals and people who are not non-resident aliens
3) must have 1 class of stock for distribution
What is Equitable Subordination?
Where a court decides that a shareholder, director, or officer with a claim against the corporation must, in the money food chain, come behind other creditors in payment priority if there is facts showing "inside advantage"
Are raincoat provisions / exculpation clauses opt in or opt out?
opt in
Vail piercing and Successor liability outline: the Nissen court rejected what theory under Success liability?
Continuity of enterprise theory
EXPN: just bc you buy assets of a business doesn't make you automatically liable for pre-existing liabilities
Howey Test
nS/ D+1 ...then +1
charging order
Cumulative voting is opt in or opt out?
Opt -out
In a Partnership or LLC this is an economic scorecard that as a general proposition in a Biz Org context is adjusted from time to time as follows:
-Increased by the FMV of "contributions" made by the owner of the org
-decreased by the FMV of "distributions" made by the org to the owner
-increased by allocations of the owner of a share of the orgs "profits"
-decreased by allocaitons to the owner of a share of the org's "losses"
An Owners "Capital Account"
*sharing profits and losses outline pg 3*
Smith v Kelly (accounting business opened by 2 ppl and 1 came to join them) was not a partnership by estoppel case, what type of case did luppino state it was?
partnership -in -fact
The internal affairs doctrine
What is the term for when the other owners are buying out your ownership interest and they are at the same level as you?
Cross purchase
is the MO constituency statute opt in or opt out?
opt out
Income recognized when earned and payable and expenses recognized when obligation to pay has arisen (even if not paid)
Accurual Method of Accounting
In Roach v Mead, the lawyer borrowed the clients money and failed to advise client on the legal aspects of the loan, the court held it was a wrongful act within the scope of the business in the Law partnership. What case is distinguished from this?
(client loaned partner money and doesn't pay--similar to Roach but came to opposite conclusion bc the client was NOT seeking legal advice at the time the loan was made)
The case where the 2 parties did not reach how they would deal with losses but the court said the agreement between them overruled the default rule bc the agreement impliedly said that P agreed to get money back only out of sale of the house not from D.
This applies to directors of corporations when assets are lower than outstanding debt. it's a time when the shareholders interests have been wiped out and now have to care more about creditors
Zone of Insolvency
In MO, when it comes to selling shares in a statutory-close corporation, the right of first refusal is ...?
opt-out
How does one determine whether or not ownership interest in an unincorporated business org are securities for federal purposes under the investment contract case law?
by looking to the rebuttable presumptions
What test was applied in Radaszewski v Telecom (P was injured in car accident wehn he was hit by a man who was an employee of a subsidiary of Telecom) in order to pierce the vail of the parent company?
The Collet Test
the general names of This MO statute makes it ok for directors to look at the effects of things and factors such as exsiting politcal, economic factors, social and legal economic effects on employees that can be considered during acquisition or any other time
Constituency Statute
(MO 351.347 )