LLC
What a person(s) must file with the Secretary of State to start an LLC.
Certificate of organization (§201). This certificate must contain the name, address, and, if the company will have no members when filed, a statement to that effect.
Oversight is a breach of this fiduciary duty.
Loyalty
Any lawful purpose (§101(b))
Where directors receive their power/authority.
Statute
The 2 avenues for a successful Caremark claim.
(1) Directors utterly failed to implement any reporting or information system or controls, or (2) having implemented such a system or controls, the directors consciously failed to monitor or oversee its operation. (Stone)
If you become a member of an LLC, you will automatically be bound by this document that governs the relations and activities of the company.
Operating agreement (§110 & §111). A person that becomes a member of an LLC is deemed to assent to the operating agreement.
None
When a corporation acts beyond its corporate purpose.
Ultra Vires Act (§124)
Amount of members needed to vote in a director.
Plurality (§216(3))
One criticism of shareholder primacy.
Strategy based on short-term goals
Induces a lack of willingness to take on risks
Causes increase in dividends and share buybacks v. investment in the long term needs of the business.
Duties that cannot be eliminated by an LLC's operating agreement.
Loyalty, care, any other fiduciary duties, and good faith and fair dealing (§110(c))
A shareholder who may owe fiduciary duties to other shareholders.
Controlling shareholder
1 share = 1 vote
Straight voting (§212(a))
Provision in the certificate of incorporation that eliminates or limits liability for directors.
Exculpatory clause (§102(b)(7))
Term of art for an anti-takeover mechanism that allows current shareholders to buy more shares at a low price.
Poison pill
In a member-managed LLC, the number of members needed to amend the operating agreement.
All (§407(b))
How a director or officer can "sanitize" themselves when they have a conflict of interest.
Make conflict known to the board of directors, committee, or shareholders (§144).
Where officers receive their power/authority.
Board of directors or the bylaws (§142)
The majority of total (authorized) director seats or the majority of shares entitled to vote.
Quorum (§216(1) and §141(b))
Type of director that has no relationship with the corporation.
Independent director
In a manager-managed LLC, a member owes these fiduciary duties to the company and to other members.
None (§409(g)(5)). A member does not have any fiduciary duty to the company or to any other member solely by reason of being a member.
Business Judgment Rule
Folks who can amend the bylaws.
Shareholders (default) and directors (through contract) (§109(a)). Any corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors.
The number of members in a manager-managed LLC needed to approve a merger.
All (§407(c)(4)