Corporations
Notice of Meetings, Quorum, and a Majority Vote
Requirements for valid action by shareholders or the board.
Under ____, the third party will not be placed under a duty of inquiry or be deemed to have notice from the facts and circumstances.
RUPA
If the third person has no notice that the agent is acting on behalf of a principal rather than on his own behalf then the principal is _____ .
undisclosed.
Owners are referred to as _____ who are frequently, but not always, the managers of the day-to-day operations
Members
Customarily they set forth the time, place and manner of giving notice of annual shareholders meeting. Most state statutes generally permit them to provide higher or lower quorum or voting requirements than the default rules in the statute. They also set forth express powers of the company officers.
By Laws
Has all power to manage the business of the corporation
Board of Directors
Under ____, the partnership will not be bound by the unauthorized actions of a partner if the third party had "knowledge" of the partner's lack of authority - whether determined by actual or inquiry notice.
UPA
when the Principal's words or conduct would lead a reasonable person in the Agent's position to believe that the Principal wishes the Agent to act.
Actual authority
The LLC is created by filing a form known as the _________ with the state, but the full rendition of member and manager rights and duties are laid out in the __________.
"Articles of Incorporation"
"Operating Agreement."
A requirement for valid action by shareholders.
Constitutes a majority of the full board that is authorized, not simply a majority who attend or a majority of those then in office.
Most statutes permit the articles or bylaws to set a higher number than a majority and DE permits a lower.
quorum
In a corporation, if there is a conflict between the bylaws and the certificate of incorporation - which will win?
The certificate of incorporation.
factors for determining if a business is a general partnership
when a shareholder cant be at a meeting and appoints someone to vote on their behalf - can also be terminated at will.
However, historically, the courts have allowed to be irrevocable when coupled with an interest.
Proxy
Any assumption of personal liability contrary to the business advantage reflected in the name LLC, must be: _______ .
stated clearly and in unequivocal language which leaves no room for doubt about the parties' intent.
Do modern state statutes permit a board of directors in a corporation to act upon unanimous written consent even in the absence of a meeting.
yes
are privately-held corporations that have only a small number of shareholders and typically have owners involved in management. As such, they often function like partnerships and tend not to observe all the formalities that publicly held corporations adhere to. Many states have adopted special legislation to give them special treatment and relieve them of certain formalities.
Close Corporations
adopts the aggregate theory of partnerships
UPA
The authority of the Agent from the perspective of the third person.
Apparent authority
Most statutes provide a default rule that will prevail unless otherwise agreed - that the LLC is to be managed by its members.
However, the most common statutory default rule regarding management of an LLC states that: ________.
management can be varied only by a provision in the LLC's Articles of Organization.
a device by which shareholders separate the voting rights in, and legal title to, their shares from beneficial ownership of the shares. This is accomplished by conferring the voting rights and legal title on one or more voting trustees, while retaining the ultimate rights to distribution and appreciation.
Voting Trust
to generate money for shareholders.
confers entity status on partnerships and thus drastically simplified many partnership rules.
RUPA
Where Agent acted within actual authority, Principal must ______ the Agent.
indemnify
Requirements of the Articles of Organization:
1. the name of the LLC,
2. the address of its principle place of business or registered office in the state, and
3. the name and address of its agent for service of process.
However, some states also require it to state:
- the purpose for the LLC,
- if it is to be member managed (if so the names of its initial members) or manager managed (if so the names of its initial managers), and
- the duration or latest date upon which it will dissolve.
What are Unified, New York and Model Act, and Statutory Close Corporations?
Three legislative strategies for dealing with close corporations.