lean sheets

Authorized shares

(number, classes and series).

SH MTG

Annual mtg, 1 D slot must be elected OR specially noticed special mtg called by BOD, President, or 10% of voting shares re: fundamental corp change or proposal. Special mtg ltd to stated purpose.

STEPS

BOD resolution; notice of special mtg of SHs; approval by maj of all shares entitled to vote and by a maj of any voting group adversely effected; file notice with State, e.g. Art of Merger. EXCEPT: no SH approval for short form merger (parent corp owns 90% of sub).

SARBANES OXLEY

CEO/CFO of reporting corps must certify that filing doesn't contain material misrepresentations or omissions & fairly presents financial position. Willfully cert a false report - $5 mil fine and 20 yrs. If false report restated,

Usurping Corp Opportunities

D receives unfair benefit by usurping an opp corp would have pursued.

Self Dealing

D receives unfair benefit in transaction with corp.

REPURCHASED AND REDEMPTIONS

Decision lies solely with BOD. SH can't force corp to repurchase. CL: only from earned surplus/retained earnings. Mod: not allowed if corp is insolvent.

APPRAISAL RTS

Dissenting SH can force corp to buy shares at fair value. Req'ts: before vote, file written notice of objection and intent to demand payment; vote objecting to change; prompt written demand to be bought out. Ct - appoint expert appraiser to value.

DIRECT ACTION

Ds breached fiduciary duty owed to individual

ANTI-FRAUD (RULE 10(B)(5))

Elements: Interstate Com/Use of Nat'l Exchange; Scienter - intent to deceive; Deception - material misrep or misapprop of material non-public info; In connection w/ actual purchase or sale of securities.

DUTY TO OTHER SHS

Generally none. Controlling SHs: duty not to unfairly prejudice minority. If selling to looter, corp will be liable for damages unless reasonable measures taken to investigate buyer. Liability also for selling shares at premium in exchange for corporate office.

PROFESSIONAL CORPS

Licensed pro's. Req'ts: Organizers file w/ name as PC; SHs must be licensed pros; only practice one designated profession; Pro liable personally for own malpractice, but not for other malpractice or obligations.

FUNDAMENTAL CORPORATE CHANGES TYPES

Merger; consolidation; dissolution. Fundamental

Priority

Preferred share ($ dividend preference payable at $ amt stated; participating preferred paid as preferred and common share; cumulative preferred paid at rate of preferred each year). Common paid last and equally.

Who Liable?

SH active in operation of corp. or D&O. Courts more willing to pierce for tort victim than K claimant.

DERIVATIVE SUITS

SH suing to enforce the corp's own cause of action. Req'ts: contemporaneous stock ownership when claim arose and throughout litigation and demand on BOD that they cause corp to bring suit. Demand must be rejected or lapse 90 days.

Requires

SHs treat corp as their alter ego by failing to observe sufficient corp formalities OR corp is undercapitalized (fail to maintain sufficient funds for foreseeable liabilities).

INSIDER TRADING

Tipper: improper purpose + benefit. Tippee: tipper breach and tipee knew. Misapprop: gov't prosecution for trading on mkt info in breach of duty of trust/confidence owed to source of info.

BJR

presumption thatDsmanage corp in good faith and in best interest of corp.

CLOSELY HELD CORPS

agmt amongst SHs to eliminate corporate formalities. Req'ts: unanimous SH agmt in Articles, By-Laws or filed, written agmt. Must be reasonable share transfer restriction. Result: no piercing. May be S-Corp: P tax treatment if < 100 SHs who are indiv, U.S. residents and only one class of stock.

DISSOLUTION/LIQUIDATION

approval by maj of Ds and shares entitled to vote

SH ACTION FOR INVOLUNTARY DISSOLUTION

ask ct for liquidation if Ds are deadlocked & corp is threatened w/ irreparable injury, or oppression, or waste is occurring.

PIERCING THE CORPORATE VEIL

avoid fraud or unfairness and to render SHs liable to 3rd party victim.

STAT REQ'TS

bod must have 1 member; SHs elect Ds; SHs can remove d for any reason.

DE FACTO CORP

business that doesn't fulfill filing formalities may nonetheless be treated as a corporation if organizers have made a good faith, colorable attempt to comply with the corporate formalities and have no knowledge of the lack of corp status.

FOREIGN CORPS

corp incorporated outside of st engaging in intrastate business must file certificate of authority, including all "A PAIN" info.

DUTY OF LOYALTY

d may not receive an unfair benefit to detriment of corp or SHs, unless there has been material disclosure and independent ratification.

DUTY OF CARE

d must act with care a prudent person would use w/r/t her own business, unless articles have ltd d liability for breach.

DIVIDENDS

declared solely at BOD discretion, ltd only if corp is insolvent. BOD personally liable for unlawful distributions, unless good faith reliance on financial officer's report re: solvency.

RATIFICATION

defend claim by a) maj vote of independent ds; b) maj vote of committee of at least 2 ind ds; c) maj vote of shares held by ind SHs. Interested D Doctrine: CL: transaction ("tx") with interested D voidable at corp's option. Mod: K invalid unless, BOD approves tx after disclosure and D doesn't vote; SH approve K after disclosure; or K is fair.

RECORD BOOKS

demand upon notice / proper time.

OFFICERS

duty of care and loyalty. Os are agents of corp and bind corp by auth acts. Req'ts: Pres, Sec, and Treas. Selected and removed by Ds.

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INDEMNIFICATION

for costs, atty fees, fines, judgment or settlement in the course of corp business.

POOLED OR BLOCK VOTING TRUST

formal delegation of voting power to voting trustee enforceable for 10 yrs. Req's written trust agmt; filed with corp; transfers shares to voting trustee; SH gets trust certs; SH retains all rts but voting.

Purpose

gen purpose w/ perpetual duration valid and presumed, unless specific stmt of purpose or ltd duration expressed. If spec purpose, activities beyond scope are Ultra Vires activities. Ultra vires Ks are valid. Shareholders ("SHs") can seek injunction. Corp can sue responsible D&O for losses b/c of UV acts.

PROXY VOTING

i) a writing; ii) signed by record SH; iii) directed to corp. secretary; iv) authorize another to vote their shares; v) valid for 11 months. Revocable unless proxy says irrevocable and SH passed some interest.

Consequences

if < par value, Ds liable for signing off on below par issuance and Purchaser b/c SHs must pay full consid for shares.

May indem if

liability to 3rd parties or settlement w/ corp; D&O shows action in good faith and conduct in corp's best interest.

QUORUM

maj of outstanding shares at mtg's start. Vote: votes in favor > votes against.

QUOROM

maj. Vote: maj of votes present. Each D presumed to concur w/ BOD action unless dissent/abstention in writing.

SALE OF ASSETS

may be considered de facto merger and trigger recission and appraisal rts. Procedural steps must be followed.

Par Value

min issuance price. No par value means any valid consid BOD deems adequate.

Types

money, binding oblig to perform future svcs w/an agreed value, tangible/intangible prop; svcs already performed.

CUMULATIVE VOTING

must be expressly granted in Articles. Only available when voting for Ds.

CALIFORNIA BAR EXAM

na

Acquiring Prop w/ Par Value Stock

ok if BOD values prop in good faith as at least par value.

PROMOTERS

persons acting on behalf of unformed corp. Corp Liability for promoter's Ks: when corp adopts by express adoption by BOD resolution or implied adoption (knowledge & accepts benefits).

Duty

promoter is fiduciary, no secret profits. If prop acquired before formation & sold to corp → profit recoverable if sold for more than fair mkt value. If prop acquired after & sold to corp → any profit recoverable.

Req'ts

reporting corp - listed on nat'l exchange or >500 SHs and $10 mil in assets . Defendant must be D&O or >10% SHs. They may not buy then sell stock within a single 6 month period. In 6 months, look at highest sell and lowest buy price. Effect: profits recoverable.

PREEMPTIVE RTS

rt to maintain % of ownership each time new issuance is released. Must be expressly granted in articles.

LEGAL SIGNIFICANCE

separate legal person; SHs not liable for debts of corp b/c of limited liability. SH is liable only for price of their stock.

SECTION 16(B)

short swing trading profits.

Treasury stock

stock previously issued and reacquired re-sold as no par.

VALID MTG REQ'D FOR BOD ACTIONS

unless unanimous d consent in writing to act w/o mtg. Notice can be set in bylaws. No Proxies or voting agmts.

Promoter Liability

until novation; solely liable if corp never formed.

SUBSCRIBERS

written agmt to buy stock from unformed corp. Limitation: subscription agmt irrevocable for six months. FORMATION REQ'TS: DE JURE (A PAIN)

SH VOTING AGMT

written agmt to vote shares as req'd in agmt. Binding and enforceable; no time limit or filing.