Directors' Duties & Liabilities
Distributions of earnings or gains from the activities of the corporation.
What are dividends?
Dividend rights are
What are shareholders' rights to a current return on their investment?
The director's right to declare a dividend is limited by two main restrictions:
What are The equity insolvency test and the balance sheet test?
The majority shareholders have the right to control but in doing so, they owe a fiduciary duty to the..
Who are the corporation and the minority?
State law governing insider trading in corporate securities has largely been eclipsed by this.
What is federal law?
Dividends are ordinarily paid using this method of payment
What is cash?
Liquidation rights are
Rights to a share of the corporate assets at the end of the corporation's existence
A shareholder who knowingly receives a dividend in violation of statutory restrictions on distribution (when the corp is insolvent or is rendered insolvent by its payment)..
What is liable to the corporation for the amount of the dividend, or for the amount of the dividend in excess of what could lawfully have been paid?
In selling their control, controlling shareholders owe the corporation fiduciary duties and duties of due care because control is....
What is a corporate asset in which all shareholders have an interest?
Under Rule 10-b5, the federal anti-fraud rule, the elements of a 10b5 action are this.
A distribution may not be made if, after making the distribution, the corporation would be unable to pay its debts as they become due.
What is the equity insolvency test?
Voting Rights are
Rights to a voice in the management of the corporation.
A shareholder sues on behalf of a corporation to redress a wrong to it when the corporation fails to enforce its right.
What is a derivative suit?
The right to the fair value of his shares at the time of the merger.
What is a minority shareholder's dissenter's rights?
There is not duty to disclose if the person who has traded on inside information was not the corporation's...
What is agent, a fiduciary, or a person in whom the sellers of the securities had placed their trust?
A distribution may not be made if, after making the distribution: the total assets of the corporation would be less than the sum of its total liabilities plus the amount necessary to satisfy preferential rights of shareholders upon dissolution.
What is the balance sheet test?
This may be imposed by the articles of incorporation or the bylaws or by agreement among the shareholders or between the shareholders and the corporation
What are Restrictions on the transfer of shares?
In a derivative suit, the plaintiff must allege the following in his complaint?
What is: 1. That he was a shareholder at the time of the transaction complained on, that his shares thereafter devolved upon him by operation of law who was a shareholder at that time. Under Pa law, contemporaneous ownership is not required if there is a strong prima facie case in favor of the corporation or serious injustice will result if the action is dismissed.
The minority shareholder's dissenter's rights is exclusive absent any fraud or fundamental unfairness and shall have no right to what?
What is an injunction against the proposed merger transaction?
Under this theory, a person may be prosecuted by the government under Rule 10b5 even when he has no duty to the issuer or shareholders of the issuer when he has traded on market information in breach of the duty of trust and confidence owed to the source of the information.
What is misappropriation theory?
A director who votes for an improper dividend or distribution is jointly and severally liable to the company for what amount?
The amount of the dividend or the amount that exceeds what would have been a proper dividend.
The law regards a corporation as an entity distinct from its...
Who are shareholders?
Since a derivative suit is based on a corporate cause of action, a shareholder must first attempt to do this.
What is to persuade the board to enforce the corporation's right by making a demand on the directors to enforce the corporation's rights.
Other than eliminating the minority for the sole purpose of continuing the business for the benefit of the majority, majority shareholders must provide this when approving a merger..
What is some independent business rationale?
A per se rule of invalidity is applied to short swing profits made by insiders on in and out transactions within this time frame.
What is six months?