Corporations 1
Virginia regards a New Zealand corporation selling its products/services here in Virginia as this.
Virginia regards a Texas corporation selling its products/services here in Virginia as this.
What is alien corporation?
What is foreign corporation.
A shareholder can use this to request a change of company policy IF that shareholder’s shares are valued at $1,000 or more.
shareholder proposal
These persons appoint a corporation's first board of directors.
What are incorporators? This initial slate of directors serves undisturbed until first annual shareholders meeting.
These persons can hire and remove officers at any time, with or without cause, and even breach employment contracts (but not without consequences).
What are the directors?
These persons make big-picture strategic decisions for a corporation, e.g., whether to create new markets or enter existing ones, etc., and hire officers
What is the board of directors?
This court ruling permits a court to ignore the corporate structure and expose shareholders to personal liability for corporate acts and debts.
What is piercing the corporate veil?
Factors:
Commingling funds
Tricking customers into dealing with the corporation rather than a person
Not following corporate formalities
A corporation having no assets or always being insolvent
This instrument, whether written or electronically transmitted, permits a shareholder to authorize another party (called "agent") to vote that shareholder's shares in a certain prescribed manner if that shareholder will not be present at the annual shareholders' meeting.
What is a "proxy"?
At the first annual meeting and thereafter, all subsequent board directors are elected, not re-elected, or removed for cause by a _____ vote of _____.
1. majority
2. shareholders
This shareholder right is very important in a private/close corporation because it allows a shareholder to buy the same percentage of new shares issued as the shareholder was already holding, to maintain proportional control.
Preemptive Buy Rights
If Jane is an owner of Microsoft Corporation, she is called __.
What is a shareholder?
Stocks are _____ securities, while bonds are _________ securities, but both are used by corporations to raise capital.
What are equity and debt securities?
This is the minimum level of interest or attendance required before an official corporate meeting or action can take place.
What is a quorum?
A quorum could be a simple 51% majority or some more specific or complex arrangement.
When a quorum is not met during a meeting, the existing attendees are still allowed to conduct certain actions according to Robert's Rules of Order.
This type of board of directors is a hostile takeover defense in which directors’ terms of no more than three years expire a few directors at a time instead of all at the same time.
A staggered board
True or false? The board of directors can remove any director for cause (incompetence, misconduct, etc.).
False.
Only the shareholders can remove the director. No state statute permits removal of a director by his/her peers.
Kaboom Corp. sold millions of shares of stock to the public in its IPO, which makes it a/n ____ corporation and means that the IRS will use letter ___ to distinguish it from other types of corporations.
1. What is a public corporation?
2. What is "C"?
This is the major benefit of becoming an S Corp instead of a C Corp.
What is being taxed as a partnership with pass-through status, and thus only once on distributions?
A court can apply this doctrine to exempt a corporate director or officer from liability to the corporation or shareholders if that person took reasonable steps to become informed, can articulate a rational basis for a decision, and did not have a conflict of interest.
What is the Business Judgment Rule?
Even if the decision caused the corporation to lose money, this rule can save a director or officer for honest mistakes of judgment underlying the decision.
This right permits a corporation to be reimbursed for damages, legal fees, and costs incurred defending a lawsuit caused by an agent's wrongful acts or contracts.
Indemnification
This shareholder right gives each of them a distribution of profits or income ordered by directors in proportion to their respective shares.
Right to Dividends
Dan sold a few shares of stock to select friends and family members. The corporation gave shareholders pass-through taxation, asset protection, and ownership restrictions, which makes it a/n ___ corporation, and the IRS will use letter ___ to distinguish it from other types of corporations.
1. What is a close/private corporation?
2. What is "S"?
A corporation's board of directors can access these as part of their right of inspection, which is an absolute right that cannot be restricted by articles, bylaws, or any act of the board.
What are the corporation's:
1. books and records AND
2. facilities, and premises?
These persons must approve fundamental changes affecting the corporation before it implements those changes.
What are shareholders?
Corporate officers' employment rights are determined by this.
What is their written employment contract?
These are the six powers of shareholders.
1. Voting rights (Elect directors, appoint an auditor, approve major transactions, amend articles of incorporation)
2. Transfer of shares, but could be freely or restricted
3. Dividend rights, if corporation board of directors chooses to pay them
4. Inspection rights (records, and premises) by making an appointment
5. Right to sue (for corporation's wrongful acts or a third-party's wrongful acts if the corporation chooses not to sue and does not respond appropriately to the shareholder's written demand to do so).
6. Preemptive rights, which gives them the opportunity to buy new shares before they are offered to the public to keep their proportional control.
This type of corporation must have 100 or fewer shareholders.
What is “S” corporation?