Gen Bus 302 Exam

Records that must be kept by LLC

- List of members and their contributions - Copies of tax returns and financial statements - Copies of organizational documents such as articles of organization and operating agreement • Failure to keep these records does NOT impose liability on any person for debts or obligations to LLC

Formation of LLC

- Members: permit members to include individuals, corporations, general partnerships, limited partnerships, limited liability companies, trusts, estates, and other associations - Filing: generally require the central filing of articles of organization in a designated state office - Name: generally require the name of the LLC to include the words "limited liability company" or the abbreviation "LLC" - Contribution: may be cash, property, services rendered, a promissory note, or other obligation to contribute cash or property or to perform services - Operating Agreement: the basic contract governing the affairs of a LLC and stating the various rights and duties of the members - Foreign Limited Liability Companies: a LLC is considered "foreign" in any state other than that in which it was formed

Limited liability Partnership (LLP) Summary

- Perpetual life: no - Personal Liability: No - Management Control: No - Ease of Transfer: No (need 100% consent, can assign financial interest) - Tax: + (flow through entity) - Flexibility: + - Control: General Partners Rare: <1% as of March 2020

Trade Symbols

- Trademark - Service Mark - Certification Mark - Collective Mark Registration: - To be registered and thus protected by the Lanham Act, a mark must be distinctive and not immoral, deceptive, or scandalous Infringement: - occurs when a person without authorization uses a substantially indistinguishable mark that is likely to cause confusion, mistake, or deception Remedies: - the Lanham Act provides the following remedies for infringement: injunctive relief; profits, damages; destruction of infringing articles; costs; and in exceptional cases, attorneys' fees

The use of cash-out combinations has raised questions concerning both their purpose and their fairness to minority shareholders. In this context, fairness includes:

- fair dealing. - fair price.

Economic Espionage Act of 1996

- federal level prohibits the theft of trade secrets, as well as attempts and conspiracies to steal trade secrets, if the trade secret is related to a product or service used in or intended for use in interstate or foreign commerce. punishes individuals who knowingly violate the Act with fines of up to $500,000, imprisonment for up to ten years, or both The statute defines trade secrets to mean: - all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if a. the owner thereof has taken reasonable measures to keep such information secret; and b. the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

limited partnership (LP) Summary

- flow through entity - perpetual life : no - Personal liability: yes (general partners), limited partners to extent of contribution - Management Control: No - Ease of Transfer: no (need 100% consent, can assign financial interest) - Tax: + - Flexibility: + - Control: General Partners Rare: as of 2020 <1% - typically used for contacting entities - used as tax shelters

LLC Member Rights

- withdrawal - management - voting - derivative actions - information - assignment of LLC interest- can transfer economic benefits, but not management rights Financial Rights: - decided by members/managers - profit and loss sharing: based on relative contribution value - distributions

Function of the Board of Directors

1. Selection and Removal of Officers 2. Capital Structure 3. Fundamental Changes - the directors have the power to make, amend, or repeal the bylaws, unless this power is exclusively reserved to the shareholders 4. Dividends - directors declare the amount and type of dividends 5. Management Compensation 6. Election and Tenure of Directors - directors are elected at annual meetings of the shareholders and hold office for one year unless their terms are staggered 7. Vacancies in the Board may be filled by the vote of a majority of the remaining directors 8. Removal of Directors: the Revised Act - permits the shareholders to remove one or more directors with or without cause and - authorizes judicial removal of directors for cause

U.S Labor Law History

• 1800s - illegal for employees to organize • Employees gained more rights in the workplace as the 20th Century neared • Wisconsin was early leader in these workers' rights programs (e.g. Worker's Compensation) • Many laws passed during WWI to help employees 1925 - Railway Labor Act • Railroad and airline employees can form labor unions without employer interference

Remedies for Employment Law

• Affirmative Action • Protected: - Race - Gender - Religion - National Origin - Disability Compensatory and Punitive Damages

1973- Rehabilitation Act

• Assist handicapped persons in obtaining rehabilitation training, access to public facilities, and employment • Requires federal contractors and agencies to take affirmative action to hire qualified handicapped persons • Employers must make special accommodations for handicapped persons unless cost is unduly burdensome

Formation of LLC

• Comply with state's LLC statute, as they differ state by state • Once formed, LLC is separate legal entity from members who will not normally be liable for entity debts • Filing: must file articles of organization • Must include - LLC name - LLC address - Registered agent name and address for service for process • Chose whether the LLC will be managed by non-members • Members provide capital contributions • Member relative contribution value = owner percentage - contribution in form of cash, property, IP, sweat equity, etc

LLC Agent Liability

• Contracts entity liable if authorized within normal course of business • Torts entity liable if authorized with normal course of business but employee is still personally liable for his/her actions

LLC's Timing of Formation - WI

• Formed prior to Oct 1, 2002 - Technical dissolution upon death, retirement, resignation, bankruptcy, dissolution, or legal incompetence of a member of a partnership - Unanimous consent is required to continue LLC, although lesser requirement is possible at election of members • Formed after Oct 1, 2002 - no such technical dissolution - perpetual life

LLC Advantages over GP

• Limited liability for all members • Voting proportional to capital contributions • LLC members have no obligation to contribute toward LLC debts upon dissolution • Same operational ease with lack of formalities • New members admitted only with consensus of all current members

History of LLC

• Passed in Wisconsin in 1993, first effective January 1994 • By 1996 every state had enacted LLC acts • Expected updated WI law in 2020?

LLC Advantages over S-Corp

• Special allocations per IRC §704(b) possible • Flow-through not at risk based upon actions of co-owner • Inclusion of entity level debt in tax basis • Distributions of appreciated property, built-in gain and other tax accounting traps are not present

Limited Liability Company (LLC)

• Unincorporated organization with few formalities - Perpetual life - Limited liability for members - Centralized management optional - No easy transfer of interests • Allows all members to participate in management of business, and receive limited liability - usually owned and managed by members, but management may be non-members - member's liability limited to extend of capital contribution - normally taxed as partnership (flow-through entity) - interests are not freely transferable, but economic rights may be assigned - substantial member withdrawal rights at fair market value for member's interest

LLP Characteristics

• Unincorporated, few formalities • Personal liability limited to extent of partner's capital contribution - Exception: torts for which the member is personally responsible • Taxed similar to GP, LP, and LLC

Significant Deterioration Area (SDA)

•For areas with air above required standards •Limited increases in pollution are allowed Congress established a policy to keep air from deteriorating. PSD areas are allowed under the Clean Air Act. criteria: - To receive a permit, a new source must show it will use the best control technology available. - New construction of a major stationary source requires a permit from the state. - Only limited increase in air pollution is allowed.

Labor Laws

•Norris-La Guardia Act • National Labor Relations Act • Labor-Management Relations Act • Labor-Management Reporting and Disclosure Act

General Principles of LP

•Revised Uniform Limited Partnership Act (1985) •When in doubt, general GP rules apply •Foreign limited partnerships

Greenfield Development

•Site development on clean site •Storm water •Navigable water impacts •Wetlands •Local zoning and utility issues DNR turned old abandoned buildings into brewery and collective

Safe Drinking Water Act

•regulates contaminants •State regulations- groundwater quality standards

Clean Air Act

1970, Congress enacted Clean Air Act Amendments because state efforts proved inadequate to alleviate the pollution problem. - enacted to control and reduce air pollution Penalties imposed: - civil and criminal The Act establishes two regulatory schemes, one for existing sources and one for new stationary sources 1. Existing Sources: (state focus) - with respect to existing stationary sources and motor vehicles then in use, the federal government would set national air quality standards that the states would be primarily responsible for achieving National Ambient Air Quality Standards (NAAQS) - the Environmental Protection Agency must establish NAAQS for air pollutants that endanger the public health and welfare State Implementation Plan (SIP) - each state must submit a plan for each National Ambient Air Quality Standards detailing how the state will implement and maintain the standard 2. New Stationary Sources (federal focus) - Clean Air Act authorizes the federal government to establish national emission standards for new stationary sources, hazardous air pollutants, and new vehicles. - owner or operator must employ the best technological system of continuous emission reduction that has been adequately demonstrated - New construction of a major stationary source requires a permit from the state. - Only limited increase in air pollution is allowed. New Vehicles - extensive emission standards are established Hazardous Air Pollutants - to protect the public health, the Environmental Protection Agency administrator must establish for hazardous air pollutants standards that provide ample safety margins Acid Rain - standards are established to protect against acid rain (precipitation that contains high levels of sulfuric or nitric acid) Greenhouse Gases - air pollutant includes greenhouse gases and, therefore, the EPA has statutory authority to regulate such gases

Uniform Trade Secrets Act (UTSA)

1979 A model law to protect trade secrets, adopted by over forty states.

Plant patents have a duration of _____ years.

20 Utility: 20 years from application Plant: 20 years from application Design: 14 years from grant

Rights of LP

A general partner in an LP has all the rights and powers of a partner in a GP -Control: the general partners have almost exclusive control and management of the LP; a limited partner who participates in the control of the LP may lose limited liability - Voting Rights: the partnership agreement may grant to all or a specified group of general or limited partners the right to vote on any matter - Choice of Associates: no person may be added as a general partner or a limited partner without the consent of all partners - Withdrawal: a general partner may withdraw from a limited partnership at any time by giving written notice to the other partners; a limited partner may withdraw as provided in the LP certificate - Assignment of Partnership Interest: unless otherwise provided in the partnership agreement, a partner may assign his partnership interest; an assignee may become a limited partner if all other partners consent - Profit and Loss Sharing: profits and losses are allocated among the partners as provided in the partnership agreement; if the partnership agreement has no such provision, then profits and losses are allocated on the basis of the contributions each partner actually made - Distributions: the partners share distributions of cash or other assets of a limited partnership as provided in the partnership agreement - Loans both general and limited partners may be secured or unsecured creditors of the partnership - Information each partner has the right to inspect and copy the partnership records - Derivative Actions: a limited partner may sue on behalf of an LP if the general partners refuse to bring the action

LP formation

A partnership with at least one general partner and one limited partner •Person is the same as defined under general partnerships (all entities are considered persons) Primary differences to general GP formation •Statute providing for formation must be in effect for LP •LP must comply with the requirements of said statute •Limited liability for limited partner

misappropriation of a trade secret

A person misappropriates a trade secret of another: 1. by knowingly acquiring it through improper means or 2. by disclosing or using it without consent if his knowledge of the trade secret came under circumstances giving rise to a duty to maintain secrecy or came from a person who used improper means or who owed the owner of the trade secret a duty to maintain secrecy. Trade secrets most frequently are misappropriated in two ways: 1. an employee wrongfully uses or discloses such secrets or 2. a competitor wrongfully obtains them. In the absence of a contract restriction: - an employee is under no duty upon termination of her employment to refrain from working for a competitor - however, she may not use trade secrets or disclose them to third persons. - The employee is entitled, nevertheless, to use the skill, knowledge, and general information she acquired during the previous employment relationship. discovering another's trade secrets by any means other than independent research or personal inspection of the publicly available finished product is improper unless the other party voluntarily discloses the secret or fails to take reasonable precautions to protect its secrecy.

Revised Uniform Limited Partnership Act (RULPA)

A revision of the ULPA that provides a more modern, comprehensive law for the formation, operation, and dissolution of limited partnerships. RULPA guidelines for Filing Certificate - name of limited partner - address of office - name and address of each General Partner - misc. matters deemed important by general partners

Administrative Dissolution

All LLC's must file annual reports • If annual report is not filed, the LLC faces dissolution

Management of LLP

All LLP members may participate in management and control of the LLP without losing statutory liability shield • Day to day decisions- majority vote • Unusual decisions- unanimous vote Limited liability protection similar to shareholders of Corporations and members of LLC's • Exception: protection does not extend to a partner for liability in negligence or other tortious conduct for which partner is personally liable while carrying out business of LLP

Solvency in Termination

All allocations of profit, loss, and distributions based on the relative value member contributions - Distributions deemed wrongful if LLC is insolvent - liability for wrongful distribution Once trigger event occurs, then determine solvency. - Can LLC pay all of its debts? - If so, do so and distribute residual to members based on his/her relative ownership - If not all debts can be paid, then it is insolvent and must not distribute any funds to its members or it is a wrongful distribution

Labor-Management Relations Act (Taft Hartley Act)

Amended the National Labor Relations Act by declaring activities to be unfair labor practices: 1. coercing an employee to join a union, 2. causing an employer to discharge or discriminate against a nonunion employee, 3. refusing to bargain in good faith, 4. levying excessive or discriminatory dues or fees, 5. causing an employer to pay for work not performed ("featherbedding"), 6. picketing an employer to require it to recognize an uncertified union, and 7. engaging in secondary activities. Prohibits Closed Shops - agreements that mandate that an employer can only hire union members Allows Union Shops - an employer can hire nonunion members, but the employee must join the union Right to work law: - state statute that prohibits union contracts - Most states allow union shop contracts and support the federal law Labor-Management Reporting and Disclosure Act - Landrum- Griffin Act - aimed at eliminating corruption in labor unions - Requires more union disclosures - Makes unions more democratic

Liability of Incoming Partner

Antecedent Debts - the liability of an incoming partner for antecedent debts (already existing debts) of the partnership is limited to her capital contribution Subsequent Debts - the liability of an incoming partner for subsequent debts of the partnership is unlimited

Amendments to the Articles of Incorporation

Authority to Amend - incorporation statutes permit the articles of incorporation to be amended Procedure - the board of directors adopts a resolution, which must be approved by the shareholders

ultra vires

Because a corporation has authority to act only within its powers, any corporate action or contract that exceeds these powers is ultra vires. - A corporation having received full performance from the other party to the contract is not permitted to escape liability by a plea of ultra vires - Almost all statutes, including the Revised Act, have abolished the defense of ultra vires in an action by or against a corporation.

Notice to a Partner

Binds Partnership - a partnership is bound by a partner's knowledge, notice, or receipt of a notification of a fact relating to the partnership Notice - a person has notice of a fact if the person 1. knows of it, 2. has received a notification of it, or 3. has reason to know it exists from all of the facts known to the person at the time in question

Conversion Taxes

C-Corp to LLC • Taxable S-Corp to LLC • Taxable; • built-in gains also an issue GP/LLP to LLC • Tax-deferred if properly structured LLC to any other business organization type • Relatively simple

LLC Governance

Can be Operated by Member or Manager - Does not have to be Legal Person - Could be a Corporation, Trust, or another LLC, etc If member managed: - governance much like GP If manager managed: - governance more like a corporation - some LLC's have a board - others pick a manager

Dissolution on LP

Causes - the limited partners have neither the right nor the power to dissolve the partnership, except by decree of the court; the following events trigger a dissolution: - the expiration of the time period; - the withdrawal of a general partner, unless all partners agree to continue the business; - a decree of judicial dissolution Winding Up - unless otherwise provided in the partnership agreement, the general partners who have not wrongfully dissolved the partnership may wind up its affairs Distribution of Assets 1. creditors, including partners who are creditors; 2. partners and ex-partners in satisfaction of liabilities for unpaid distributions; 3. partners for the return of contributions, except as otherwise agreed 4. partners for their partnership interests in the proportions in which they share in distributions, except as otherwise agreed

Dissolution of LLC

Causes: an LLC will automatically dissolve upon: - in some states the dissociation of a member if the remaining members do not choose to continue the LLC, - the expiration of the LLC's agreed duration or the happening of any of the events specified in the articles, - the written consent of all the members, or - a decree of judicial dissolution Dissociation - a member has ceased to be associated with the company and includes voluntary withdrawal, death, incompetence, expulsion, or bankruptcy Winding Up - completing unfinished business, collecting debts, and distributing assets to creditors and members(liquidation) Authority - the actual authority of a member or manager to act for the LLC terminates, except so far as may be appropriate to wind up LLC affairs; apparent authority continues unless notice of the dissolution is given to a third party Distribution of Assets Protection of Creditors - many LLC statutes establish procedures to safeguard the interests of the LLC's creditors, including - mailing notice of dissolution to known creditors, -publishing of notice - preserving claims against the LLC for a specified time

Classes of Shares

Common Stock - stock not having any special contract rights Preferred Stock - stock having contractual rights superior to those of common stock - Dividend Preferences: must receive full dividends before any dividend may be paid on common stock - Liquidation Preferences: priority over common stock in corporate assets upon liquidation Stock Options - contractual right to purchase stock from a corporation

The combination of two or more corporations into a new corporation is known as:

Consolidation

Defective Incorporation: Common Law approach

Corporation de Jure - one formed in substantial compliance with the incorporation statute and having all corporate attributes Corporation de Facto - one not formed in compliance with the statute but recognized for most purposes as a corporation Corporation by Estoppel - prevents a person from raising the question of a corporation's existence Defective Corporation - the associates are denied the benefits of incorporation

Corporate Attributes

Creature of the State - a corporation may be formed only by substantial compliance with a state incorporation statute Legal Entity - a corporation is an entity apart from its shareholders Limited Liability - a shareholder's liability is limited to the amount invested in the business enterprise Free Transferability of Corporate Shares - unless otherwise specified in the charter Perpetual Existence - unless the charter provides otherwise Centralized Management - shareholders of a corporation elect the board of directors to manage its business affairs; - the board appoints officers to run day-to-day operations As a Person - a corporation is considered a person for some but not all purposes As a Citizen - a corporation is considered a citizen for some but not all purposes

Liabilities in Termination of LLP

Creditors- LLP is not discharged from its liability when it dissolves Payment priority: • Outside creditors • Partners who have loaned money to LLP • Returns of LLP capital accounts • Surplus divided among partners equally Piercing the veil applies Statutory procedure to limit statute of limitations • Known claims: - Notify creditor with amount - Creditor has 120 days to challenge or accept • Unknown claims - File notice in newspaper - Creditor has 2 years to file

authority to issue debt securities

Debt Security - source of capital creating no ownership interest and involving the corporation's promise to repay funds lent to it Bond - a debt security Rule - each corporation has the power to issue debt securities as determined by the board of directors

Trade Secret

Defined by UTSA (uniform trade secrets act) information, including a formula, pattern, compilation, program, device, method, technique, or process that: - derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and - is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Ultra Vires Acts

Definition - any action or contract that goes beyond a corporation's express and implied powers Effect of Ultra Vires Acts - under the Revised Act, ultra vires acts and conveyances are not invalid Remedies for Ultra Vires Acts - the Revised Act provides three possible remedies Claire opened Claire's Beauty Parlor in her home. She solicited funds to begin the business from Jack, who believed that the business was incorporated. Claire had, in fact, never filed the papers. One day, Claire fell asleep while giving a customer a permanent and the solution caused her customer severe burns. The customer sued the Beauty Parlor for $500,000, an amount enormously in excess of the business assets. Under the Revised Act, what would be the result? a. Claire and Jack would not be personally liable. b. Claire would not be personally liable, but Jack would. c. Jack would not be personally liable, but Claire would. d. Both would be personally liable since there was no corporation formed. c

Liability for Improper Dividends and Distributions

Directors - the directors who assent to an improper dividend are liable for the unlawful amount of the dividend Shareholder - a shareholder must return illegal dividends if he knew of the illegality, if the dividend resulted from his fraud, or if the corporation is insolvent

Proving Discrimination under Title VII

Disparate Treatment. - An individual shows that an employer used a prohibited criterion in making an employment decision by treating some people less favorably than others. - Liability is based on proving that the employer's decision was motivated by the protected characteristic or trait. Using proscribed criteria to produce disparate treatment-a prima facie case is when the employee: • Is in the protected class • Applied for open position • Qualified for the position • Denied the position Present Effects of Past Discrimination. - Such effects result when an employer engages in conduct that on its face is "neutral"—that is, nondiscriminatory—but that actually perpetuates past discriminatory practices. - For example, it has been held illegal for a union that previously had limited its membership to whites to adopt a requirement that new members be related to or recommended by existing members. Disparate Impact - occurs when an employer adopts "neutral" rules that adversely affect a protected class and that are not justified as being necessary to the business. - employer may prevail if it can demonstrate that the challenged practice is "job related for the position in question and consistent with business necessity." - ex. height and weight requirements

Dissociation of General Partnership under RUPA

Dissociation: change in the relation of partners caused by any partner's ceasing to be associated in carrying on of the business - Term Partnership: partnership for a specific term or particular undertaking - Partnership at Will: partnership in which the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking Wrongful Dissociation - a dissociation that breaches an express provision of the partnership agreement or in a term partnership if before the expiration of the term or the completion of the undertaking 1. the partner voluntarily withdraws by express will, 2. the partner is judicially expelled for misconduct, 3. the partner becomes a debtor in bankruptcy, or 4. the partner is an entity (other than a trust or estate) and is expelled or otherwise dissociated because its dissolution or termination was willful Rightful Dissociation - all other dissociations are rightful, including the death of a partner in any partnership and the withdrawal of a partner in a partnership at will Effect of Dissociation - terminates the dissociating partner's right to participate in the management of the partnership business and duties to partnership

Termination in LLP

Dissolution • Causes: death or incapacity of a partner, bankruptcy of partner or partnership, violation of LLP agreement Critical difference to Corps: must vote to continue LLP upon dissolution • Options: Continuation or Termination

Causes of Dissolution

Dissolution by Act of the Partners - in a partnership at will - withdrawal of a partner; in a term partnership: 1. the term ends, 2. all partners expressly agree to dissolve, or 3. a partner's dissociation is caused by a partner's death or incapacity, bankruptcy or similar financial impairment, or wrongful dissociation if within ninety days after dissociation at least half of the remaining partners express their will to wind up the partnership business; in any partnership: an event occurs that was specified in the partnership agreement as resulting in dissolution Dissolution by Operation of Law - a partnership is dissolved by operation of law upon the subsequent illegality of the partnership business Dissolution by Court Order - a court will order dissolution of a partnership under certain conditions

Types of Dividends and Other Distributions

Distributions - transfers of property by a corporation to any of its shareholders in respect of its shares; - become debts of the corporation if and when declared by the board Cash Dividends - the most common type of distribution Property Dividends - distribution in form of property Stock Dividends - a proportional distribution of additional shares of stock Stock Splits - each of the outstanding shares is broken into a larger number of shares Liquidating Dividends - a distribution of capital assets to shareholders Redemption of Shares - a corporation's exercise of the right to repurchase its own shares Acquisition of Shares -a corporation's repurchase of its own shares

Domestic vs Foreign Corporation

Domestic Corporation one created under the laws of a given state Foreign Corporation one created under the laws of any other state or jurisdiction; it must obtain a certificate of authority from each state in which it does intrastate business

Employee Privacy

Drug and Alcohol Testing - some states either prohibit such tests or prescribe certain scientific and procedural safeguards - Protection differs depending on whether employee works in public or private sector - Federal laws permit testing to protect public safety and health Lie Detector Tests - federal statute prohibits private employers from requiring employees or prospective employees to take such tests Torts for privacy invasion • Unreasonable intrusion into the seclusion of another • Unreasonable publicity placing another in a false light • Unreasonable public disclosure of private facts • Appropriation of a person's name or likeness

Duties and Liabilities in LP

Duties - general partners owe a duty of care and loyalty (fiduciary duty) to the general partners, the limited partners, and the limited partnership; - limited partners do not Liabilities - the general partners have unlimited liability; - the limited partners have limited liability (liability for partnership obligations only to the extent of the capital that the limited partner contributed or agreed to contribute)

Duties of Directors and Officers

Duty of Obedience - must act within respective authority Duty of Diligence - must exercise ordinary care and prudence Duty of Loyalty - requires undeviating loyalty to the corporation Business Judgment Rule - precludes imposing liability on directors and officers for honest mistakes in judgment if they act with due care, in good faith, and in a manner reasonably believed to be in the best interests of the corporation Indemnification - a corporation may indemnify a director or officer for liability incurred if he acted in good faith and was not adjudged negligent or liable for misconduct Liability Limitation Statutes - many states now authorize corporations—with shareholder approval—to limit or eliminate the liability of directors for some breaches of duty

Site Development Considerations

Environmental Audits •Determine presence of environmental concerns •Phase I: Review records and site •Phase II: Follow-up on concerns raised in Phase I •Phase III: Remediate any problems

Issuance of Shares

Equity Security - source of capital creating an ownership interest in the corporation Share - a proportionate ownership interest in a corporation Treasury Stock - shares reacquired by a corporation Authority to Issue Shares - only those shares authorized in the articles of incorporation may be issued Preemptive Rights - right to purchase a pro rata share of new stock offerings Amount of Consideration for Shares - shares are deemed fully paid and nonassessable when a corporation receives the consideration for which the board of directors authorized the issuance of the shares, which in the case of par value stock must be at least par Payment for Newly Issued Shares - may be cash, property, and services actually rendered, as determined by the board of directors; under the Revised Act, promises to contribute cash, property, or services are also permitted

National Environmental Policy Act (NEPA)

Federal Regulation of the Environment to establish environmental protection as a goal of federal policy - imposes the responsibility for maintaining the environment on all federal agencies Council on Environmental Quality (CEQ) - three-member advisory group in the Executive Office of the President that makes recommendations to the President on environmental matters Environmental Impact Statement - Federal agencies must prepare statement concerning the environmental impact of a proposed federal action Scope - NEPA applies to a broad range of activities, including direct action by a federal agency as well as any action by a federal agency that permits action by other parties that will affect the quality of the environment Content - the environmental impact statement must contain, among other items, a detailed statement of the environmental impact of the proposed action, any adverse environmental effects that cannot be avoided, and alternative proposals

National Labor Relations Act (NLRA) (Wagner Act)

Federal protection to: - Right to self-organization - Right to form, join, or assist labor organizations - Right to collective bargaining Prohibits Unfair Employer Practices 1. to interfere with employees' rights to unionize and bargain collectively, 2. to dominate the union, 3. to discriminate against union members, 4. to discriminate against an employee who has filed charges or testified under the NLRA, and 5. to refuse to bargain in good faith with duly established employee representatives. National Labor Relations Board - created to administer these rights Threats of reprisals or promise of benefits to coerce employees in the exercise of their rights is an unfair labor practice.

Duties Among Partners

Fiduciary Duty - duty of utmost loyalty, fairness, and good faith owed by partners to each other and to the partnership; - includes duty not to appropriate partnership opportunities, not to compete, not to have conflicts of interest, and not to reveal confidential information Duty of Obedience - duty to act in accordance with the partnership agreement and any business decisions properly made by the partners Duty of Care - duty owed by partners to manage the partnership affairs without gross negligence, reckless conduct, intentional misconduct, or knowing violation of law

Title VII of the Civil Rights Act of 1964

Forbids discrimination on the basis of sex, race, color, religion, or national origin in all areas of the employment relationship - does not apply to sexual preference

General vs Limited Partner in LP

General Partner: - has all rights and powers of partner in partnership without limited powers - unlimited liability - agent of partnership - has fiduciary duty - has duty of care Limited Partner - no right to take mart in management control - limited liability, unless partner takes part in control or partner's name is used - not an agent - no fiduciary dity - no duty of care

Piercing the Corporate Veil

General Rule - the courts may disregard the corporate entity when it is used to defeat public convenience, commit a wrongdoing, protect fraud, or circumvent the law Pierce the veil when: - shareholders deceit - undercapitalize - shun obligations - ignore procedures - personal and corporate assets mixed Application most frequently applied to - Closely Held Corporations - Parent-Subsidiary Corporations

Operation of Limited Partnership

General partners have exclusive management powers Limited partner may, without forfeiting limited liability (safe harbor rules): •Be contractor, agent, or employee for general partner or limited partnership as a whole •Consult with and advise general partner on business of limited partnership •Act as surety for limited partnership •Approve/disapprove amendment of LP •Vote on fundamental changes to LP Duties and liabilities for a general partner is the same as for a GP •Limited partner's duties and responsibilities are very limited Voting and distribution •No agreement-based on capital contributions (limited partners only) •Profits, losses, voting, and distributions rules are the same as GP without an agreement outlining new rules

Environmental Protection Agency (EPA)

In charge of adopting standards and regulations to carry out the provisions of environmental statutes which agency

Enforcement Rights

Information: each partner has the right 1. without demand, to any information concerning the partnership and reasonably required for the proper exercise of the partner's rights and duties and 2. on demand, to any other information concerning the partnership Legal Actions - a partner may maintain a direct suit against the partnership or another partner for legal or equitable relief to enforce the partner's rights; - the partnership itself may maintain an action against a partner for any breach of the partnership agreement or for the violation of any duty owed to the partnership

United Nations Framework Convention on Climate Change (UNFCCC)

International Protection of the Ozone Layer - treaty sets an overall framework for intergovernmental efforts to address the challenge posed by climate change with the objective of preventing dangerous human interference of the climate system

Voting in LLC

LLC statutes usually specify the voting rights of members, subject to a contrary provision in an LLC's operating agreement

Registration of LLP

LLP created by filing registration statement within the Department of Financial Institutions • The parties may delay the effective date of filing by up to 90 days per new Section Registration statement must include the following: - A name that meets the requirements of new - The name of the state or country under whose laws the laws are formed (foreign LLPs only). - The mailing address of the LLPs principal office - The street address of the LLPs registered office - name and address of the registered agent - The statement that the partnership is registering as an LLP or a foreign LLP - Any other information that the partnership wants to include Must be signed by a partner authorized by the partnership • Non-partners such as attorneys may also sign as it is authorized in the partnership agreement A GP registering as an LLP is the same entity- The entity is identical to its status before registration Foreign LLPs are allowed - Name must include 'Registered Limited Liability Partnership', 'Limited Liability Partnership', 'L.L.P', or 'LLP' - Registered names must not conflict with name of any other corporation, limited liability company or limited liability partnership • Filing requirements for LLP's generally parallel those of Corporations and LLC's • Registration requirement results in public disclosure of the existence of the entity (not required for GP)

Dissolution of Limited Partnership

LP has same process as GP for the General partners • Dissolution, winding up/liquidation, termination Causes of dissolution that triggers liquidation: •Expiration of time period specified in agreement •Happening of events specified in writing in agreement •Unanimous written consent of all partners •Withdrawal of general partner* - limited partners have no right to dissolve partnership, unless court decree •Decree of judicial dissolution Winding-up is done by general partners •Distribution •Solvency •Insolvency- rules from general partnerships apply

LLC Disadvantages

Limited transferability • Occasional tax cost to convert LLCs to corporations • Fringe benefits may not be as attractive are C-Corps • IRC §1202 - not available (partial exclusion for gain from certain small business stock)

Duties in LLC

Manager-Managed LLCs - the managers have a duty of care and loyalty; - usually, members of a manager-managed LLC have no duties to the LLC or its members by reason of being a member Member-Managed LLCs - members have the same duties of care and loyalty that managers have in manager-managed LLCs

Exercise of Directors' Functions

Meeting - directors have the power to bind the corporation only when acting as a board Action Taken Without a Meeting - permitted if a consent in writing is signed by all of the directors Delegation of Board Powers - committees may be appointed to perform some but not all of the board's functions Directors' Inspection Rights - directors have the right to inspect corporate books and records

LLC Operating Agreement

Must be in writing in Wisconsin • Contract which governs affairs of LLC and dictates the various rights and duties of members • Unless otherwise provided by operating agreement, it may only be amended by unanimous consent of members • Minimum 1 member, no legal maximum • there may be multiple operating agreements

Name and Formality of LLP

Name: - usage conflicts result in similar consequences as Corporations and LLC's - Tradenames are not a substitute for trademark Formality - GP does not require a written partnership agreement, neither does a LLP - Do not need to value contributions for voting (one vote per partner unless otherwise stated)

LLC Advantages over C-Corp

New 20% deduction • Few mandatory provisions or procedural requirements regarding issuance of ownership interests, discrimination within classes or series of interests, or payment of distributions • Similar limited liability • Few corporate formalities

LLC Advantages over LP

No need for general partner • Participation in management and control by all members possible without limited liability • Manager need not have ownership interest and may easily be removed

Formation of a Partnership

Partnership Agreement - it is preferable, although not required, that the partners enter into a written partnership agreement Tests of Partnership Existence - the formation of a partnership requires all of the following: 1. Association: two or more persons with legal capacity who agree to become partners 2. Business for Profit 3. Co-ownership: includes sharing of profits and control of the business Partnership Capital - total money and property contributed by the partners for use by the partnership Partnership Property - sum of all of the partnership's assets, including all property acquired by the partnership

Nature of Partnership

Partnership as Legal Entity - an organization having a legal existence separate from that of its members; - the Revised Act considers a partnership a legal entity for nearly all purposes Partnership as Legal Aggregate - a group of individuals not having a legal existence separate from that of its members; - the Revised Act considers a partnership a legal aggregate for few purposes

Dissociations Not Causing Dissolution

Partnership at Will - a partner's death, bankruptcy, or incapacity; - the expulsion of a partner; or - the termination of an entity-partner results in a dissociation of that partner but does not result in a dissolution Term Partnership - if within 90 days after any of the following causes of dissolution occur fewer than half of the remaining partners express their will to wind up the partnership business, then the partnership will not dissolve - a partner's dissociation by death, bankruptcy, or incapacity; - the distribution by a trust-partner of its entire partnership interest; - the termination of an entity-partner; or - a partner's wrongful dissociation

Limited Liability Company (LLC) Summary

Perpetual life: yes Personal Liability: no Management control: ? (member-managed or manager-managed) Ease of transfer: No, need 100% consent, can assign financial interest Tax: + Flexibility: + Control: member-managed or manager-managed make up 90% of businesses formed in WI

Promoter

Person who takes the preliminary steps to organize a corporation Promoters' Contracts - promoters remain liable on preincorporation contracts made in the name of the corporation unless the contract provides otherwise or unless a novation is effected Promoters' Fiduciary Duty - promoters owe a fiduciary duty among themselves and to the corporation, its subscribers, and its initial shareholders

Partners' Liability

Personal Liability - if the partnership is contractually bound, each partner has joint and several unlimited, personal liability Joint and Several Liability - a creditor may sue the partners jointly as a group or separately as individuals

Subscribers

Persons who agree to purchase stock in a corporation Preincorporation Subscription - an offer to purchase capital stock in a corporation yet to be formed which under many incorporation statutes is irrevocable for a specified time period Postincorporation Subscription - a subscription agreement entered into after incorporation; - an offer to enter into such a subscription is revocable at any time before the corporation accepts it

LLC Termination Triggers

Prior to Oct. 1, 2002 • Voluntary withdrawal and assignment of membership interest and assignee becomes member • Removal of member • Bankruptcy, dissolution of a member • Death or legal incompetence • Very similar to GP since it was modeled on GP statute at that time for this purpose After Oct. 1, 2002 • LLC continues in event of disassociation unless there is unanimous agreement among members to dissolve or there is a triggering event from operating agreement • Now LLCs have perpetual life like corporations - Administrative dissolution

Nuisance

Private Nuisance - substantial and unreasonable interference with the use and enjoyment of a person's land Public Nuisance - interference with the health, safety, or comfort of the public In determining whether the injunction for of Nuisance is appropriate, the court will: - "balance the equities." - consider the gravity of harm to Brad and his family. - consider the public interest in the jobs created by Red Hot and the economic upturn in Libertyville.

Common Law

Private tort actions may be used to recover for harm to the environment - Private causes of action are costly and difficult to prove

Common Law Actions for Environmental Damage

Private tort actions may be used to recover for harm to the environment. In suing to recover for environmental damage, plaintiffs generally have relied on the theories of - nuisance - trespass, - strict liability

Profit vs Nonprofit Corporation

Profit Corporation one founded to operate a business for profit Nonprofit Corporation one whose profits must be used exclusively for charitable, educational, or scientific purposes

Resource Conservation and Recovery Act (RCRA)

Provides a comprehensive scheme for treatment of solid waste, particularly hazardous waste - provides that the states are primarily responsible for nonhazardous waste, and the EPA regulates all phases of hazardous waste—generation, transportation, and disposal.

Concentrations of Voting Power

Proxy - authorization to vote another's shares at a shareholder meeting Voting Trust - transfer of corporate shares' voting rights to a trustee Shareholder Voting Agreement - used to provide shareholders with greater control over the election and removal of directors and other matters - shareholders agree in writing to vote in a specified manner for election or removal of directors Restrictions on Transfer of Shares - must be reasonable and conspicuously noted on stock certificate A proxy, voting trust, and shareholder agreement are similar in: a. duration. b. revocability. c. degree of formality required. d. All of these are correct. d

Public vs Private Corporation

Public Corporation - one created to administer a unit of local civil government or one created by the United States to conduct public business Private Corporation - one founded by and composed of private persons for private purposes; has no government duties

Publicly vs Closely held corporation

Publicly Held - corporation whose shares are owned by a large number of people and are widely traded Closely Held - corporation that is owned by few shareholders and whose shares are not actively traded - The great majority of corporations are closely held

Labor law

Purpose: - to provide the general framework in which management and labor negotiate terms of employment

Formation of Limited Partnership

RULPA guidelines of Filing of Certificate •Name of limited GP •Address of office •Name and address of each general partner •Misc. matters deemed important by general partners Certificate must be amended when •New general partner is admitted •Previous general partner withdraws •A general partner becomes aware that the certificate is wrong in some way Defective formation •Certificate does not adhere to statutory requirements

Federal Tax Issues

Regulations as of 1997 simplify LLC tax rules • Permit LLC to be taxed as partnership without any other filings other than forming LLC • Automatically taxed as partnership unless elect C-Corp treatment All provisions of 'Subchapter K' relating to GP apply • Passive activity loss limitation is applicable • New 20% deduction for pass through entities • At-risk limitations apply • Availability of cash method of accounting - Problematic if not member-managed • Application of self-employment tax • S corporations: social security and Medicare tax

Enforcement Right of Shareholders

Right to Inspect Books and Records if the demand is made in good faith and for a proper purpose Shareholder Suits - Direct Suits: brought by a shareholder or a class of shareholders against the corporation based upon the ownership of shares - Derivative Suits: brought by a shareholder on behalf of the corporation to enforce a right belonging to the corporation Shareholder's Right to Dissent - a shareholder has the right to dissent from certain corporate actions that require shareholder approval If a shareholder sues in a derivative suit, the judgment will be paid to: a. the corporate treasury. b. the shareholders as a dividend. c. the board of directors. d. the shareholder brining the suit. a

Officers

Selection and Removal of Officers - the board of directors appoints and removes the officers Role of Officers - officers are agents of the corporation Authority of Officers 1. Actual Express Authority - arises from the incorporation statute, the articles of incorporation, the bylaws, and resolutions of the directors 2. Actual Implied Authority - authority to do what is reasonably necessary to perform actual authority 3. Apparent Authority: - acts of the principal that lead a third party to believe reasonably and in good faith that an officer has the required authority 4. Ratification: - a corporation may ratify the unauthorized acts of its officers

Formalities of Incorporation

Selection of Name - the name must clearly designate the entity as a corporation Incorporators - the persons who sign the articles of incorporation Articles of Incorporation - the charter or basic organizational document of a corporation Organizational Meeting - the first meeting, held to adopt the bylaws and appoint officers Bylaws - rules governing a corporation's internal management

Declaration and Payment of Distributions

Shareholders' Right to Compel a Dividend - the declaration of dividends is within the discretion of the board of directors and only rarely will a court substitute its business judgment for that of the board Effect of Declaration of a Distribution - once properly declared, a distribution is considered a debt the corporation owes to the shareholders

Legislation of LLP

Similar attributes to General GP • Flexible organization • Income and losses may flow through to partners for tax purposes No personal liability for partner in LLP • Debts, liabilities, or obligations of the partnership, including tort liability, for which the partner is not personally liable Main difference from General GP: Limited Liability

Brownfield Redevelopment

Site development on contaminated sites •Contractual allocation of liability •State funds •Insurance and third party actions •Flexible cleanup actions

Sources of Corporate Powers

Statutory Powers - typically include perpetual existence, - right to hold property in the corporate name, and - all powers necessary or convenient to effect the corporation's purposes Purposes - a corporation may be formed for any lawful purposes unless its articles of incorporation state a more limited purpose

Management Structure of Corporations

Statutory model: 1. officers: run day to day operations of corporation 2. Board of Directors: declare dividends delegate authority to officers, manage business of the corporation, select, remove and determine compensation of officers 3. Shareholders: elect and remove directors, approve fundamental changes Closely Held Corporation 1. shareholders = Directors = Officers Publicly Held Corporation 1. Shareholders: sign and return proxies, sell shares 2. Board of directors: delegate authority to officers, ratify actions of officers 3. Officers: control selection of directors , run day to day business, control proxy votes

Fair Use Doctrine

The Copyright Act provides that the fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research is not an infringement of copyright. In determining whether the use made of a work in any particular case is fair, the courts consider the following factors: 1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 2. the nature of the copyrighted work; 3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4. the effect of the use upon the potential market for or value of the copyrighted work.

Environmental Impact Statement

The NEPA's promotion of environmental considerations is effected through the EIS requirement. EIS is required if the proposed action 1. is federal, 2. is considered "major," and 3. has a significant environmental impact. Impact statements provide a basis for evaluating the benefits of a proposed project in light of its environmental risks and for comparing its environmental risks with those of alternatives Council for Environmental Quality (CEQ) require that a federal agency initially make an "environmental assessment," which is a short analysis of the need for an EIS - NEPA has been held to apply not only to the natural environment but also to the urban environment, including impact on crime, esthetics, and socioeconomics.

Patents

The exclusive right to an invention for 20 years from the date of application for utility and plant patents; 14 years from grant for design patents Patentability: the invention must be: - novel, - useful, and - not obvious Issuance of Patents: - patents are issued upon application to and after examination by the U.S. Patent and Trademark Office Infringement: - occurs when anyone without permission makes, uses, or sells a patented invention Remedies: - injunctive relief; - damages; - treble damages, when appropriate; - attorneys' fees; and - costs

Election of Directors

The shareholders elect the board at the annual meeting of the corporation Straight Voting - directors are elected by a plurality of votes Cumulative Voting - entitles shareholders to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and to cast the product for a single candidate or to distribute the product among two or more candidates Removal of Directors - the shareholders may by majority vote remove directors with or without cause, subject to cumulative voting rights

Trademark Registration

To obtain federal protection, which has a ten-year term with unlimited ten-year renewals, the mark must be registered with the U.S. Patent and Trademark Office (USPTO). The registrant must either: - have actually used the mark in commerce or - demonstrate a bona fide intent to use the mark in commerce and actually use it within six months, which period may be extended. Federal registration is not required to establish rights in a mark, nor is it required to begin using a mark. Registration, however, provides numerous advantages - gives nationwide constructive notice of the mark to all later users - permits the registrant to use the federal courts to enforce the mark and - constitutes prima facie evidence of the registrant's exclusive right to use the mark.

Liability for Torts and Crimes

Torts - under the doctrine of respondeat superior, a corporation is liable for torts committed by its employees within the course of their employment Crimes - a corporation may be criminally liable for violations of statutes imposing liability without fault or for an offense perpetrated by a high corporate officer or its board of directors

Unfair Employer vs Union Practices

Unfair Employer Practices: - interfering with right to unionize - refusing to bargain in good faith - discriminating against union members - dominating the union - discriminating against an employee Unfair Union Practices: - Coercing employee to join union - Refusing to bargain in good faith - Causing employer to discriminate against nonunion employee - Featherbedding - Picketing employer to recognize uncertified union - Engaging in secondary activity - Levying excessive dues

Types of Debt Securities

Unsecured Bonds - called debentures - have only the obligation of the corporation behind them Secured Bonds - are claims against a corporation's general assets and a lien on specific property Income Bonds - condition to some extent the payment of interest on corporate earnings Participating Bonds - call for a stated percentage of return regardless of earnings, with additional payments dependent upon earnings Convertible Bonds - may be exchanged for other securities Callable Bonds - bonds subject to redemption

LLC Uses

Users • Professionals, such as lawyers • Accountants may utilize LLCs • When limited lability is important and freedom of planning distributions and allocations of income is desired • International ventures • Alternative to simple general partnership real estate or farming venture • Used in family businesses • Restrictions on free transferability, centralization of management, and continuity of life likely make LLC's inappropriate for widely- held entities

Wisconsin Revised Uniform Partnership Act

Very similar to RUPA • Specific language differences for corporations under Chapter 180 • Section 178.0102(9) outlines LLP definition

dissolution

Voluntary Dissolution - may be brought about by a resolution of the board of directors that is approved by the shareholders Involuntary Dissolution - may occur by administrative or judicial action taken 1. by the attorney general, 2. by shareholders under certain circumstances, and 3. by a creditor on a showing that the corporation has become unable to pay its debts and obligations as they mature in the regular course of its business Liquidation - when a corporation is dissolved, its assets are liquidated and used first to pay its liquidation expenses and its creditors according to their respective contract or lien rights; - any remainder is proportionately distributed to shareholders according to their respective contract rights

State Tax Issues

Wisconsin income tax follows federal income tax treatment Minor modifications required for • Sales tax • Real estate transfer tax

going private transaction.

a combination that makes a publicly held corporation a private one and includes cash-out contributions and management buyouts

Dissociated Partner's Power to Bind the Partnership

a dissociated partner's actual authority to act for the partnership terminates; - apparent authority continues for 2 years unless notice of the dissolution is given to a third party

Withdrawal in LP

a general partner may withdraw from an LP at any time by giving written notice to the other partners a limited partner may withdraw as provided in the LP certificate

Foreign Limited Partnership

a limited partnership doing business in a state other than the one in which it was formed

Limited Liability Limited Partnership

a limited partnership in which the liability of the general partners has been limited to the same extent as in an LLP

Withdrawal in LLC

a member may withdraw and demand payment of her interest upon giving the notice specified in the statute or the LLC's operating agreement

Rights of members of LLC

a member's interest in the LLC includes the financial interest (the right to distributions) and the management interest (which consists of all other rights granted to a member by the LLC operating agreement and the LLC statute)

Limited Liability Company (LLC)

a noncorporate business organization that provides limited liability to all of its owners (members) and permits all of its members to participate in management of the business

Crimes

a partner is not criminally liable for the crimes of her partners unless she authorized or participated in them

Authority to Bind Partnership

a partner who has actual authority (express or implied) or apparent authority may bind the partnership Actual Express Authority - authority set forth in the partnership agreement, in additional agreements among the partners, or in decisions made by a majority of the partners regarding the ordinary business of the partnership Actual Implied Authority - authority that is reasonably deduced from the nature of the partnership, the terms of the partnership agreement, or the relations of the partners Apparent Authority - an act of a partner for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership, so long as that third person has no knowledge or notice of the lack of actual authority

Dissociated Partner's Liability to Third Persons

a partner's dissociation does not of itself discharge the partner's liability for a partnership obligation incurred before dissociation; - a dissociated partner is liable for a partnership obligation incurred within 2 years after a partner dissociates unless notice of the dissolution is given to a third party

Limited Partnership

a partnership formed by two or more persons under the laws of a state and having one or more general partners and one or more limited partners

proxy

a shareholder's authorization to an agent to vote his shares at a particular meeting or on a particular question - in large, publicly held corporations, virtually all shareholders who vote for the directors do so through the use of proxies.

Council on Environmental Quality (CEQ)

a three-member advisory group - not a separate administrative agency but rather is part of the Executive Office of the President - makes recommendations to the President on environmental matters and prepares annual reports on the condition of the environment.

Compulsory Share Exchange

a transaction by which a corporation becomes the owner of all of the outstanding shares of one or more classes of stock of another corporation by an exchange that is compulsory on all owners of the acquired shares; - the board of directors of each corporation and the shareholders of the corporation whose shares are being acquired must approve

Purchase of Shares

a transaction by which one corporation acquires all of, or a controlling interest in, the stock of another corporation; - no change occurs in the legal existence of either corporation and no formal shareholder approval of either corporation is required

Which of the following is correct regarding a foreign corporation?

a. A foreign corporation is incorporated in a foreign country. b. Failure to obtain a certificate of authority to transact business in the state impairs the validity of a contract entered into by the corporation. c. A foreign corporation transacting business within a particular state without having first qualified cannot use the state court to maintain a lawsuit until the corporation obtains a certificate of authority. d. All of these are correct. c

Which of the following is NOT a basis for involuntary dissolution?

a. A proceeding by the secretary of state, if it is established that the corporation failed to pay its franchise tax. b. The directors are deadlocked and the shareholders cannot break the deadlock. c. The shareholders dissent to a merger and are asserting their appraisal rights. d. None of these are correct. c

Which of the following is the basic governing document of a corporation?

a. A subscription. b. A certificate of authority. c. A promoter's contract. d. Articles of incorporation. d

What are the principal sources for corporate financing?

a. Debt. b. Equity investment securities. c. Retained earnings. d. All of these are correct. d

Which of the following is not one of the three types of patents available under U.S. law?

a. Design. b. Utility. c. Plant. d. Product. d

Shareholders normally have the right to do all but which one of the following?

a. Elect directors. b. Meet at least once a year. c. Approve the sale of a major division. d. Elect the officers d

Which of the following is NOT a characteristic of the corporate form of doing business?

a. Informal organization. b. Limited liability. c. Perpetual existence. d. Transferability of corporate shares. a

Which of the following uses of copyrighted material may be permitted as "fair use"?

a. Making multiple copies for teaching in a classroom setting. b. Parodies and caricatures of another's work. c. Comment and criticism of another's work. d. All of these are correct. d

The incorporators would typically do which of the following?

a. Purchase outstanding shares. b. Assemble the assets. c. Sign the charter. d. All of these are correct. c

In the field of employment discrimination what federal law preempts others in the United States?

a. The Equal Pay Act. b. The Fair Labor Standards Act. c. Title VII of the Civil Rights Act of 1964. d. The United States Constitution. c

Which of the following determines when to declare dividends and in what amount?

a. The officers of the corporation. b. The board of directors. c. The stockholders. d. The state in which the corporation was chartered b

Which of the following is an exclusive right of the holder of a copyright?

a. To prepare works that are derived from the original work. b. To reproduce the work. c. To distribute copies of recordings of the original work. d. All of these are correct. d

Assuming no special provision in the articles of incorporation, special shareholder meetings may be called by:

a. any individual director. b. the president of the company. c. any individual shareholder. d. holders of at least 10% of shares. d

A promoter of a corporation has a fiduciary duty to:

a. any other promoters of that corporation. James, a promoter of Unobtainium Corporation, has a fiduciary duty to: a. any other promoters of Unobtainium Corporation. b. only Unobtainium Corporation. c. the initial shareholders of Unobtainium Corporation. d. both the other promoters and the initial shareholders of Unobtainium Corporation. d

A copyright bestows upon the creator of an artistic or literary work a federal statutory right to protect all of the following except:

a. architectural works. b. musical works. c. lettering or coloring. d. maps. c

Federal regulation is not required to establish rights in a mark; however, it:

a. constitutes prima facie evidence of the right to use the mark. b. gives nationwide constructive notice of the mark to all users. c. permits the registrant to use the Federal courts to enforce the mark. d. All of these are correct. d

The Revised Act was amended in 2002 to provide:

a. domestication procedures permitting a domestic business corporation to become a foreign business corporation.

All of the following are characteristics of a corporation EXCEPT:

a. it is a legal entity of its own. b. it is able to be sued and to sue. c. it has perpetual existence. d. it is usually managed by its owners. d

In order to protect themselves from disclosure of proprietary or confidential information, businesses must do all but the following:

a. limit disclosure of such information to those with a need to know. b. confidentially share or communicate the information for a special purpose. c. implement security measures to prevent access by outsiders. d. enforce contractual nondisclosure agreements against departing employees. b

Courts have responded by piercing the veil when the shareholders have:

a. not followed the formalities of corporate procedures. b. not provided an adequate financial basis for the business. c. used the corporation to defraud. d. All of these are correct. d

The most customary type of dividend is a:

a. property dividend. b. liquidating dividend. c. stock dividend. d. cash dividend. d

The Pregnancy Discrimination Act is an amendment to Title VII of the Civil Rights Act to:

a. require employers to treat pregnancy as other disabilities are treated. b. require women disabled by pregnancy to be provided with the same benefits as other disabled workers. c. protect job reinstatement rights of women returning from maternity leave. d. All of these are correct. d. Once an employee has been employed by a covered employer for at least 12 months and have worked at least 1250 hours during the 12-month period preceding the leave, they are eligible for 12 weeks of unpaid leave during any 12 month period

A corporation's proportional distribution of additional shares of the corporation's capital stock to its shareholders is a:

a. stock or share dividend.

All states impose a "cash flow test" on the payment of dividends or other distributions. The "cash flow test" is also known as the:

a. surplus test. b. net assets test. c. balance sheet test. d. equity solvency test. d

Which copyright law changed in 1989, so that it is no longer mandatory that works published contain a notice of copyright?

a. the Berne Convention. b. the Lanham Act. c. the Economic Espionage Act. d. All of these are correct a

State laws that regulate the issuance and sale of securities are known as:

a. the Uniform Commercial Code. b. the MBCA. c. Blue Sky Laws. d. None of these are correct. Hide Feedback c

Whether a corporation is a de facto corporation may be challenged by:

a. the state in which the business attempted to incorporate. b. an individual. c. another corporation. d. All of these are correct. a

The possible consequences of a defective incorporation include all of the following except:

a. the state may bring an action against the association for involuntary dissolution. b. the associates are held personally liable to a third party. c. a third party asserts it is not liable to the association. d. the association always being liable for an obligation. d

Plaintiffs have a choice of how to sue to recover for environmental damage under the common law, generally they file:

a. trespass. b. nuisance. c. strict liability. d. All of these are correct d

2015 United Nations Climate Change Conference (Paris Agreement)

adopted the first-ever universal, legally binding global climate agreement

Wisconsin Chapter 183, the Limited Liability Company Law ("Act")

adopts "flexible" approach. - The default provisions of the "Act" will be followed in most cases - can be altered by the written operating agreement

reverse discrimination

affirmative action that directs an employer to consider an individual's race or gender when hiring or promoting for the purpose of remedying underrepresentation of that race or gender in traditionally segregated jobs

Federal Trademark Dilution Act of 1995

amended the Lanham Act to protect famous marks from dilution of their distinctive quality

Trademark Cyberpiracy Prevention Act of 1999

amended the Lanham Act to protect the owner of a trademark or service mark from any person who, with a bad faith intent to profit from the mark, registers, traffics in, or uses a domain name which, at the time of its registration, 1. is identical or confusingly similar to a distinctive mark, 2. is dilutive of a famous mark, or 3. is a protected trademark, word, or name

Defend Trade Secrets Act of 2016

amends the Economic Espionage Act to provide a federal civil remedy for the misappropriation of trade secrets that have an interstate or foreign connection, thus bringing the rights of owners of trade secrets into alignment with those rights conferred on owners of other forms of intellectual property, including trademarks, copyrights, and patents. remedies available under the DTSA are similar to those under the UTSA and include injunctive relief and damages.

Public Nuisance

an activity must somehow interfere with the health, safety, or comfort of the public - Generally, only a public representative may sue to stop a public nuisance

General Partnerhsip

an association of two or more persons to carry on as co-owners a business for profit

Sexual Harrassment

an illegal form of sexual discrimination that includes unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when: 1. submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment, 2. submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or 3. such conduct has the purpose or effect of reasonably interfering with an individual's work performance or creating an intimidating, hostile or offensive working environment. employer will be held liable for sexual harassment committed by one of its employees if it does not take immediate action when it knows or should have known of the harassment.

Trespass

an invasion of land that interferes with the right of exclusive possession of the property - plaintiff must show an invasion that interferes with the plaintiff's right of exclusive possession of the property and that is the direct result of an action by the defendant. - differs from private nuisance in that trespass requires an interference with the plaintiff's possession of the land

Trade Names

any name used to identify a business, vocation, or occupation Protection: - may not be registered under the Lanham Act, but infringement is prohibited Remedies: - damages and injunctions are available if infringement occurs

Superfund (CERCLA)

authorizes the President to issue funds to be used for the cleanup of areas that were once disposal sites for hazardous wastes. establishes: 1. a National Contingency Plan for responding to releases of hazardous substances and 2. a trust fund to pay for removal and cleanup of hazardous waste Money for the CERCLA trust fund for clean-up comes from - surtax on businesses with annual incomes over $2 million. - tax on chemical feedstocks. - tax on petroleum. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) - Under CERCLA, when the EPA determines that an environmental cleanup is necessary at a contaminated site, the agency has four options: 1. enter into a settlement with potentially responsible parties (PRPs); 2. conduct the cleanup with Superfund money and then file suit to obtain reimbursement from the PRPs; 3. file an abatement action in a federal district court to compel the PRPs to conduct the cleanup; or 4. issue a unilateral administrative order instructing the PRPs to clean the site. Liability - IF YOU OWN THE LAND YOU ARE LIABLE - current owner is typically first target

The consolidation of AB Corporation and ZX Corporation requires the affirmative majority vote of

b. the boards of directors and shareholders of both corporations.

The 1999 Amendments to the Revised Act eliminate the appraisal remedy for:

b. virtually all charter amendments.

Loans in LP

both general and limited partners may be secured or unsecured creditors of the partnership

The board of directors cannot declare dividends when the corporation:

c. is insolvent.

The directors of Premier Glass Company authorize the issuance of 100 shares of common stock for $25 per share to Justin for property the directors value at $2,500. The valuation:

c. under the Revised Act, depends on the directors' determination of the consideration's "adequacy."

Formation of LP

can be formed only by substantial compliance with a state limited partnership statute - Filing of Certificate: two or more persons must file a signed certificate of limited partnership - Name: inclusion of a limited partner's surname in the partnership name in most instances will result in the loss of the limited partner's limited liability - Contributions: may be cash, property, or services, or a promise to contribute cash, property, or services - Defective Formation: if no certificate is filed or if the one filed does not substantially meet the statutory requirements, the formation is defective and the limited liability of the limited partners is jeopardized - Foreign Limited Partnerships: a limited partnership is considered "foreign" in any state other than that in which it was formed

Trade Secrets

commercially valuable, secret information Protection: under state and federal law, the owner of a trade secret may obtain damages or injunctive relief when the trade secret is misappropriated (wrongfully used) by an employee or a competitor; under federal law, criminal penalties are imposed for the theft of trade secrets trade secret law protects a trade secret as long as it is kept secret. - historically have been protected by state law.

Workers Compensation

compensation awarded to an employee who is injured in the course of his or her employment - to provide speedier and more certain relief to injured employees The only requirement is that the employee be injured and that the injury arises out of and in the course of his employment Wisconsin became the first state to pass this law

Unemployment Compensation

compensation awarded to workers who have lost their jobs and cannot find other employment

Winding Up

completing unfinished business, collecting debts, and distributing assets to creditors and partners; also called liquidation Winding Up Required - A dissolved partnership must be wound up and terminated when the winding up of its business is completed unless all of the partners, including any rightfully dissociating partner, waive the right to have the partnership's business wound up and the partnership terminated Participation in Winding Up - any partner who has not wrongfully dissociated may participate in winding up the partnership's business Distribution of Assets - the assets of the partnership include all required contributions of partners; - the liabilities of a partnership are to be paid out of partnership assets in the following order: 1. amounts owing to nonpartner and partner creditors and 2. amounts owing to partners on their partners' accounts

The Copyright Act

copyright protection lasts the duration of the author's life plus an additional seventy years. - gives the owner of a copyright the exclusive right, and the right to authorize others, to reproduce the copyrighted work, prepare derivative works based upon the copyrighted work, distribute copies or recordings of the copyrighted work, perform the work publicly, and display the work publicly.

Professional Corporation

corporate form under which duly licensed individuals may practice their professions

If The Raintree Company has accumulated earnings each year but the directors have not declared dividends for five years, the shareholders may:

d. ask for an injunction requiring a dividend to be declared.

Collective Mark

distinctive symbol used to indicate membership in an organization - the union mark that indicates a product's manufacture by a unionized company.

Trademark

distinctive symbol, word, or design on a good that is used to identify the manufacturer

Service Mark

distinctive symbol, word, or design that is used to identify a provider's services - titles, character names, and other distinctive elements of radio and television shows may be registered as service marks

Certification Mark

distinctive symbol, word, or design used with goods or services to certify specific characteristics - The marks "Good Housekeeping Seal of Approval" and "Underwriter's Laboratory" are examples of certification marks

Management

each partner has equal rights in management of the partnership unless otherwise agreed

Subchapter S Corporation

eligible corporation electing to be taxed as a partnership under the Internal Revenue Code - more than 70% of all corporation in US - make up only 40% of revenues Requirements - it must be a domestic corporation; - it must have no more than one hundred shareholders; - each shareholder must be an individual, or an estate, or certain types of trusts; - no shareholder may be a nonresident alien; and - it may have only one class of stock, although classes of common stock differing only in voting rights are permitted.

Occupational Safety and Health Act

enacted to ensure workers a safe and healthful work environment Established the Occupational Safety and Health Administration (OSHA) - to develop standards, conduct inspections, monitor compliance, and institute enforcement actions against those who are not in compliance. Enforcing the Act generally involves OSHA inspections and citations of employers, as appropriate, for 1. breach of the general duty obligation, 2. breach of specific safety and health standards, or 3. failure to keep records, make reports, or post notices required by the Act.

Equal Employment Opportunity Commission

enforcement agency for federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex, national origin, age, disability, or genetic information The EEOC is empowered: 1. to file legal actions in its own name or to intervene in actions filed by third parties, 2. to attempt to resolve alleged violations through informal means prior to bringing suit, 3. to investigate all charges of discrimination, and 4. to issue guidelines and regulations concerning enforcement policy. Laura believes that her employer has fired her because she was pregnant. She wants to immediately file suit against her employer, but she learns that she must file a complaint with the Equal Opportunity Commission. What is the EEOC's role at this stage of Laura's potential claim? a. mediation. b. arbitration. c. litigation. d. investigation d. (first action usually takes)

comparable worth

equal pay for jobs that are of equal value to the employer - employers should measure the relative values of different jobs through a job evaluation rating system that is free of any potential gender bias

Norris-La Guardia Act 1932

established as U.S. policy the full freedom of labor to form labor unions without employer interference and withdrew from the federal courts the power to issue injunctions in nonviolent labor disputes - (any controversy concerning terms or conditions of employment or union representation) • Permits employees to form labor unions without employer interference

Copyrights

exclusive right, usually for the author's life plus seventy years, to original works of authorship Registration: - registration is not required but provides additional remedies for infringement Rights provides: - the exclusive right to reproduce the copyrighted work, - prepare derivative works based on the work, - distribute copies of the work, and - perform or display the work publicly Ownership: - the author of the copyrighted work is usually the owner of the copyright, which may be transferred in whole or in part Infringement: - occurs when someone exercises the copyright owner's rights without authorization Remedies: If infringement occurs after registration, the following remedies are available: - Injunction, - impoundment and possible destruction of infringing articles, - actual damages plus profits or statutory damages, costs, and (up to 500,000) - criminal penalties

Worker Adjustment and Retraining Notification Act (WARN)

federal statute that requires an employer to provide 60 days' advance notice of a plant closing or mass layoff

Genetic Information Nondiscrimination Act

forbids discrimination on the basis of genetic information with respect to any aspect of employment

tender offer

general invitation to all of the shareholders of a target company to sell their shares for a specified price. ex. DayDreaming, Inc. issued a general invitation to all of the shareholders of Napping Corporation to sell their shares for a specified price

Model Act

gives shareholders the right to view corporations minute book, accounting records and shareholder lists within good-faith - a. The Model Act does not permit a corporation to lend money to its directors without authorization in each instance by its shareholders. The Sarbanes-Oxley Act prohibits any publicly held corporation from making personal loans to its directors, with limited exceptions.

Partnership by Estoppel

imposes partnership duties and liabilities on a nonpartner who has either represented himself or consented to be represented as a partner

Management in LLC

in the absence of a contrary agreement, each member has equal rights in the management of the LLC; but LLCs may be managed by one or more managers who may be members

Partner's Interest in the Partnership

includes: 1. partner's transferable interest and 2. all management and other rights - Transferable Interest in Partnership: the partner's share of the profits and losses of the partnership and the partner's right to receive distributions - Assignability a partner: may sell or assign his transferable interest in the partnership; the new owner becomes entitled to the assigning partner's right to receive distributions but does not become a partner - Creditors' Rights: a partner's transferable interest is subject to the claims of creditors, who may obtain a charging order against the partner's transferable interest

Liability for __________ is based on proving that the employer's decision was motivated by a protected characteristic or trait used in making an employment decision

intentional discrimination a. reverse discrimination b. disparate impact c. disparate treatment d. affirmative action c.

Kyoto Protocol

international agreement linked to UNFCCC establishing a set of binding greenhouse gas emission targets for developed nations

Limited liability Partnership (LLP)

is a general partnership that, by making the statutorily required filing, limits the liability of its partners for some or all of the partnership's obligations

Liquidation of a corporation:

is carried out by the board of directors, serving as trustees, in a voluntary liquidation.

Par value:

is the minimum price at which the corporation may sell the stock at issuance.

Withdraw in Limited Partnership

leads to termination - General partner may withdraw at any time with written notice to other partners - If the withdrawal violates limited partnership agreement, the limited partner(s) may recover damages from withdrawing partner - Limited partner may withdraw according to certificate or agreement - if no notice is given, limited partner may do so upon giving general partner 6 months written notice •Does not lead to dissolution if: - At least one other general partner exists and provisions in agreement permit existing general partners to continue business - Within 90 days partners agree to continue business Withdraw includes: - retirement - assignment of general partnership interest - removal - bankruptcy - death - adjudication of incompetency Withdrawing partner is entitled to distributions that he is entitled to under partnership agreement •Also entitled to fair value of interest in LP at date of withdrawal, based on right to share distributions - Limited partners can withdraw and get fair value within 6 months -General partners may withdraw but at risk of violating partnership agreement

Strict Liability for Abnormally Dangerous Activities

liability without fault for an individual who engages in an unduly dangerous activity in an inappropriate location The requirement that the activity engaged in be 1. ultrahazardous and 2. inappropriate for its locale has limited the number of strict liability actions brought against polluters.

first sale doctrine

limits the copyright owner's exclusive right of distribution by allowing the owner of a particular lawfully made copy of a work to sell or otherwise dispose of possession of that copy without authority of the copyright owner.

The Federal Trademark Act grants protection for trade symbols known as:

marks

Members of LLC

may include individuals, Corporations, LLP's, LP, GP, companies, trusts, estates - minimum of one member, no legal maximum

Social Security

measures by which the government provides economic assistance to disabled or retired employees and their dependents The federal Social Security system, which has expanded to cover almost all employees, now contains four major benefit programs: 1. Old-Age and Survivors Insurance (OASI) (providing retirement and survivor benefits), 2. Disability Insurance (DI), 3. Hospitalization Insurance (Medicare), and 4. Supplemental Security Income (SSI).

The combination of two or more corporations' total assets, title to which is vested in one of them, known as the surviving corporation, is a:

merger

Formalities of LLP

most statutes require only a majority of the partners to authorize registration as an LLP; others require unanimous approval

Liabilities in LLC

no member or manager of an LLC is obligated personally for any debt, obligation, or liability of the LLC solely by reason of being a member or acting as a manager of the LLC unless: - a member or manager committed the wrongful act giving rise to the liability, - a member or manager personally guaranteed an LLC obligation, - a person assumed to act as an LLC prior to formation, - a member failed to make an agreed contribution, - the corporate veil is pierced, or - a member received a wrongful distribution or return of her contribution

Choice of Associates in LP

no person may be added as a general partner or a limited partner without the consent of all partners

A corporation is considered a citizen:

of the state in both where it has a principal office and its incorporation. Deer Haven, Inc. is a corporation incorporated in Arkansas and has its principal office in San Antonio, Texas. Which of the following is true of Deer Haven, Inc.'s citizenship status? a. Deer Haven, Inc. is a citizen of Arkansas and Texas, for the purpose of determining diversity of citizenship. b. Deer Haven, Inc. is a citizen only of Arkansas, for the purpose of determining diversity of citizenship. c. Deer Haven, Inc. is a citizen under the privileges and immunities clause of the Fourteenth Amendment. d. Deer Haven, Inc. is a citizen only of Texas, for the purpose of determining diversity of citizenship. a

Voting Trusts

one or more shareholders confer on a trustee the right to vote or otherwise act for them by signing an agreement setting out the provisions of the trust and transferring their shares to the trustee - designed to concentrate corporate control in one or more persons

Dissenting Shareholder

one who opposes a fundamental change and has the right to receive the fair value of her shares Availability: dissenters' rights arise in 1. mergers, 2. consolidations, 3. sales or leases of all or substantially all of the assets of a corporation not in the regular course of business, 4. compulsory share exchanges, 5. certain amendments to the articles of incorporation, 6. some conversions, and 7. some domestications Appraisal Remedy - the right of a dissenter to receive the fair value of his shares (the value of shares immediately before the corporate action to which the dissenter objects takes place, excluding any appreciation or depreciation in anticipation of such corporate action unless such exclusion would be inequitable)

Rights in Specific Partnership Property

partners have the right to use and possess partnership property for partnership purposes

Private Nuisance

plaintiff must show that the defendant has substantially and unreasonably interfered with the use and enjoyment of the plaintiff's land. - In an action for damages, the plaintiff need not prove that the defendant's conduct was unreasonable, only that the interference was unreasonable. - question in a private nuisance suit for damages is whether the defendant should pay for the harm it caused the plaintiff, even if the defendant's action was not unreasonable. - In determining whether an injunction against a nuisance is appropriate, a court will "balance the equities"

Profit and Loss Sharing in LP

profits and losses are allocated among the partners as provided in the partnership agreement; - if the partnership agreement has no such provision, then profits and losses are allocated on the basis of the contributions each partner actually made

Equal Pay Act

prohibits an employer from discriminating between employees on the basis of gender by paying unequal wages for the same work Equal work means "substantially equal" rather than identical. - burden of proof is on the claimant (employee) to make a prima facie showing that the employer pays unequal wages for work requiring equal skill, effort, and responsibility under similar working conditions. - Once the employee has demonstrated that the employer pays unequal wages for equal work to members of the opposite sex, the burden shifts to the employer to prove that the pay differential is based on 1. a seniority system, 2. a merit system, 3. a system that measures earnings by quantity or quality of production, or 4. any factor except gender.

Executive Order (1965)

prohibits discrimination by federal contractors on the basis of race, color, gender, religion, or national origin on any work the contractors perform during the period of the federal contract

Age Discrimination in Employment Act (AEDA)

prohibits discrimination on the basis of age in hiring, firing, or compensating • Prohibits mandatory retirement for most employees no matter what their age, unless retirement is justifiable by suitable defense forbids discrimination by employers, unions, and employment agencies against persons over 40 years of age, and prohibits discrimination in: 1. hiring. 2. firing. 3. compensating. The major statutory defenses include - a bona fide occupational qualifications - a bona fide seniority system; and - any other reasonable action, including the voluntary retirement of an individual.

Civil Rights Act of 1964

prohibits employment discrimination on the basis of race, color, gender, religion, or national origin Established Employment Opportunity Commission Enforcement Agency (EEOC) Created Pregnancy Discrimination Act - extends the benefits of the Civil Rights Act to pregnant women Created Affirmative Action - the active recruitment of a designated group of applicants Discrimination: the Act provides four defenses: 1. a bona fide seniority or merit system, 2. a professionally developed ability test, 3. a compensation system based on performance results, 4. a bona fide occupational qualification -Reverse Discrimination - sexual harassment - comparable worth

Americans with Disabilities Act (ADA)

provide assistance to people with disabilities in obtaining rehabilitation training, access to public facilities, and employment Americans With Disabilities Act (ADA) - Forbids an employer from discriminating against any individuals with a disability regarding hiring, discharging, compensating, advancing, job training, and other terms and conditions of employment - Applies to employers with 15 or more employees - Employers must use qualification tests and related means to assure compliance with the law Reasonable accommodations may include all but: a. Making an accommodation that would constitute an "undue hardship" for the employer. b. Restructuring jobs. c. Modifying work schedules. d. Making existing facilities accessible by purchasing a cart for the transfer. a.

Toxic Substances Control Act (TSCA)

provides a comprehensive scheme for regulation of toxic substances - contains provisions on the manufacture of new chemicals, the testing of suspect chemicals, the regulation of chemicals that present an unreasonable risk of injury to health and the environment, and the inventorying of all chemicals - manufacturer must notify the EPA before it manufactures a new chemical or makes a significant new use of an existing chemical The Act authorizes the EPA to require the testing of any substance, whether existing or new, if 1. the manufacture or distribution of the substance may present an unreasonable risk of injury to health or the environment, 2. the data on the effects of the substance on health and the environment are insufficient, and 3. testing is necessary to develop such data.

Dissolution of a Pertnership

refers to those situations in which the Revised Act requires a partnership to wind up and terminate

Fair Labor Standards Act

regulates the employment of child labor outside of agriculture - prohibits the employment of anyone under 14 in nonfarm work, except for newspaper deliverers and child actors. - 14 and 15: may work for a limited number of hours outside of school hours, under specific conditions, in certain nonhazardous occupations. - 16 and 17: may work in any nonhazardous job, - 18+: may work in any job, whether it is hazardous or not. In addition, the FLSA imposes wage and hour requirements upon covered employers

Federal Insecticide, Fungicide, and Rodenticide Act (FIRFA)

regulates the sale and distribution of pesticides - requires that a pesticide be registered with the EPA before any person in any state may distribute it. - If a pesticide is registered and subsequent data reveal additional hazards, the EPA may cancel the registration after an administrative hearing - EPA may balance the economic and social costs of use of a pesticide in deciding whether to register it. - EPA may impose civil penalties

Family and Medical Leave Act

requires employers with 50 or more employees and governments at the federal, state, and local levels to grant eligible employees up to 12 weeks of leave during any twelve-month period for: - the birth of a child; - adopting or gaining foster care of a child; - the care of a spouse, child, or parent who suffers from a serious health condition. Employees are eligible for such leave if they have been employed by their present employer for at least 12 months and have worked at least 1,250 hours for their employer during the 12 months preceding the leave request. - The requested leave may be paid, unpaid, or both

Purchase or Lease of All or Substantially All of the Assets

results in no change in the legal personality of either corporation Disposition of Assets in Regular Course of Business - approval by the selling corporation's board of directors is required, but shareholder authorization is not Disposition of Assets Other Than in Regular Course of Business - approval by the board of directors and shareholders of the selling corporation is required

Approval of Fundamental Changes

shareholder approval is required for amendments to the articles of incorporation, most acquisitions, and dissolution

Shareholder Voting Agreements

shareholders may agree in writing to vote in a specified manner for the election or removal of directors or on any matter subject to shareholder approval Written shareholder agreements are an important means of enabling minority shareholders in a close corporation to maintain delectus personae (the right to choose who will become shareholders) and control as well as otherwise protecting their interest in the corporation.

Shareholder meetings

shareholders may exercise their voting rights at both annual and special shareholder meetings - annual meetings are required and must be held at a time fixed by the corporation's bylaws - Special meetings may be called by the board of directors, by holders of at least 10 percent of the shares, or by other persons authorized to do so in the articles of incorporation - Revised Act permits shareholders to conduct business without a meeting if all the shareholders consent in writing to the action taken Quorum - minimum number necessary to be present at a meeting to transact business

Liability Limitation in LLP

some statutes limit liability only for negligent acts; others limit liability to any partnership tort or contract obligation that arose from negligence, malpractice, wrongful acts, or misconduct committed by any partner, employee, or agent of the partnership; most provide limited liability for all debts and obligations of the partnership

Lanham Act

spells out what kinds of marks can be protected and the exact method of protecting them

A(n) __________ is a general invitation to all of the shareholders of a target company to sell their shares for a specified price.

tender offer

Profit and loss sharing in LLC

the LLC's operating agreement determines how the partners allocate the profits and losses; if the LLC's operating agreement makes no such provision, in most states, the profits and losses are allocated on the basis of the value of the members' contributions

conversion

the Revised Act permits (1) a domestic business corporation to become a domestic or foreign partnership, limited liability company (LLC), or other eligible entity and (2) a domestic or foreign partnership, LLC, or other eligible entity to become a domestic business corporation

Domestication

the Revised Act permits a corporation to change its state of incorporation - domestication procedures permitting a domestic business corporation to become a foreign business corporation.

Trade Dress

the appearance or image of goods as presented to prospective purchasers, part of a trademark - includes the distinctive but nonfunctional design of packaging labels, containers, and the product itself or its features. - Examples include the Campbell Soup label and the shape of the Coca-Cola bottle.

Mergers in LLC

the combination of the assets of two or more business entities into one of the entities Effect - the surviving entity receives title to all of the assets of the merged entities and assumes all of their liabilities; - the merged entities cease to exist

Mergers

the combination of the assets of two or more corporations into one of the corporations - requires approval by the board of directors and shareholders of each corporation Short-Form Merger - a corporation that owns at least 90 percent of the outstanding shares of a subsidiary may merge the subsidiary into itself without approval by the shareholders of either corporation - the surviving corporation receives title to all of the assets of the merged corporation and assumes all of its liabilities; - the merged corporation ceases to exist

Consolidation

the combination of two or more corporations into a new corporation - requires approval of the board of directors and shareholders of each corporation - each constituent corporation ceases to exist; the new corporation assumes all of the constituents' debts and liabilities

Distribution of assets in LLC

the default rules for distributing the assets of an LLC are 1. to creditors, including members and managers who are creditors, except with respect to liabilities for distributions; 2. to members and former members in satisfaction of liabilities for unpaid distributions, except as otherwise agreed; 3. to members for the return of their contributions, except as otherwise agreed; and 4 to members for their LLC interests in the proportions in which members share in distributions, except as otherwise agreed

Defective Incorporation: Statutory Apporach

the filing or acceptance of the articles of incorporation is generally conclusive proof of proper incorporation Revised Model Business Corporation Act (RMBCA) - liability is imposed only on persons who act on behalf of a defectively formed corporation knowing that there was no incorporation - the contract is permitted if it is fair and reasonable to both corporations, Gerhardt fully discloses all information relating to the transaction, and the contract is approved by either the board of disinterested directors or the shareholders. Model Business Corporation Act (MBCA) - unlimited personal liability is imposed on all persons who act on behalf of a defectively formed corporation

Control Rights in LP

the general partners have almost exclusive control and management of the limited partnership; a limited partner who participates in the control of the limited partnership may lose limited liability

When a company protects "the trade dress" against adoption they are protecting:

the image and packaging of the product.

Distributions in LLC

the members share distributions of cash or other assets of an LLC as provided in the operating agreement; if the LLC's operating agreement does not allocate distributions, in most states, they are made on the basis of the contributions each member made

Designation of LLP

the name of the LLP must include the words "limited liability partnership" or "registered limited liability partnership" or the abbreviation "LLP"

Distribution rights in LP

the partners share distributions of cash or other assets of an LP as provided in the partnership agreement

Voting Rights in LP

the partnership agreement may grant to all or a specified group of general or limited partners the right to vote on any matter

Torts of a Partnership

the partnership is liable for loss or injury caused by any wrongful act or omission or other actionable conduct of any partner while acting within the ordinary course of the business or with the authority of her copartners; - the partners are jointly and severally liable

Breach of Trust

the partnership is liable if a partner in the course of the partnership's business or while acting with authority of the partnership breaches a trust by misapplying money or property entrusted by a third person; - the partners are jointly and severally liable

Continuation After Dissociation

the remaining partners have the right to continue the partnership with a mandatory buyout of the dissociating partner; - the creditors of the partnership have claims against the continued partnership

Clean Water Act

to protect against water pollution Point Sources - any confined/discrete conveyance from which pollutants are or may be discharged - Act establishes National Pollutant Discharge Elimination System (NPDES), a permit system, to control the amount of pollutants that may be discharged by a point source into U.S. waters - effluent limitation is a technology-based standard that limits the amount of a pollutant that a point source may discharge into a body of water Nonpoint Sources - a land use that causes pollution, such as a pesticide runoff from farming operations. - Act requires the STATE use the best management practices to control water runoff from agricultural and urban areas requires each plant to obtain a permit from the EPA discharging anything into: 1. any pool or pond. 2. any river or lake 3. any stream or ocean.

A business device, compilation of information, or formula that is used in one's business to provide an advantage over competitors that do not have it is legally known as a:

trade secret

Distributions

transfer of partnership property from the partnership to a partner Profits - each partner is entitled to an equal share of the profits unless otherwise agreed Capital - a partner does not have a right to receive a distribution of the capital contributions in his account before his withdrawal or the liquidation of the partnership Indemnification - if a partner makes an advance (loan) to the firm, he is entitled to repayment of the advance plus interest; - a partner is entitled to reimbursement for payments made and indemnification for liabilities incurred by the partner in the ordinary course of the business Compensation - unless otherwise agreed, no partner is entitled to payment for services rendered to the partnership

Montreal Protocol

treaty by which US and 23 other countries agreed to cut production of chlorofluorocarbons (CFCs) by 50 percent - designed to prevent pollution that harms the ozone layer.

Employee Termination at Will

under the common law, a contract of employment for other than a definite term is terminable at will by either party Statutory Limitations - enacted by the federal government and some states - Against discriminatory discharge - Permitting the exercise of statutory rights - Discharge without adequate cause Judicial Limitations - based on contract law, tort law, or public policy Limitations Imposed by Union Contract

Choice of Associates

under the doctrine of delectus personae, no person can become a member of a partnership without the consent of all of the partners

Assignment of Partnership in LP

unless otherwise provided in the partnership agreement, a partner may assign his partnership interest; an assignee may become a limited partner if all other partners consent

Effects of Dissolution

upon dissolution, a partnership is not terminated but continues until the winding up is completed Authority - a partner's actual authority to act for the partnership terminates, except so far as may be appropriate to wind up partnership affairs; - apparent authority continues unless notice of the dissolution is given to a third party Liability - dissolution does not in itself discharge the existing liability of any partner; - partners are liable to the other partners for their share of partnership liabilities incurred after dissolution

patent exhaustion doctrine

when a patent owner sells one of its products, the patent owner can no longer control that item through the patent laws. - the purchaser and all subsequent owners are free to use or resell the product just like any other item of personal property, without being subject to a patent infringement lawsuit