Gonzaga hackney business law final exam

Define the fiduciary and consensual parts of partnerships.

Consensual means it was actively understood and agreed upon as a partnership and fiduciary is the duties that the partners owe to each including good faith, loyalty and fair dealing

what determines the existence of a partnership?

Shared control and sharing of the business' profits and losses are the biggest indicators of a partnership.

What is partnership by estoppel in an ostensible partnership?

an ostensible partnership is when the partnership is apparent but not yet officially declared, and apparent authority flows by estoppel

Charging orders

a court procedure for collecting an undivided debt of a partner from the partnership. creditor cant just reach into the entity itself for the debt.

is it ok for a partner to agree to a suretyship? T/F

False

rights of partners

management, inspection of the books, share of profit, compensation, loan repayment, payment of interest, contribution and indemnity, distribution of capital

End of partnership possibilities

Winding up (process), Dissolution (event), Termination (event)

What causes dissolution

Acts of partners (expulsion, withdrawal), By law (illegal activity, death, bankruptcy), or decree of court (insanity, incapacity)

Priority of distribution, who gets paid first

Firm creditors are paid first, followed by the advances of partners

what should you know about a limited partnership?

Formed by two or more people, includes one or more general partners and one or more limited. hybrid organization must get a certificate of Limited partnership signed by the state.

you have to file a certificate of Limited partnership signed by the state for a Limited partnership T/F?

True

what are the advantages of a limited partnership?

Partnership structure, limited liability and tax advantages

Who can be a general or limited partner

any living natural human, a general partner, limited partner, trust, estate, association or corporation

What should you know about becoming an LLC

You must file an article of organization with the secretary of state, its also a hubrid business structure created by statue, losses and profits are shared by members who may transfer dividend rights but not ownership rights. they dissolve for the same legal reasons as a partnership but also have the option to keep operating. they operate within the rules of a operating agreement with the state.

What are the advantages of an LLC?

Limited liability and taxed like a partnership

What are derivative actions and who can implement them?

Derivative lawsuits are available to LLCs but not to limited partnerships.

What are the rights of shareholders?

Vote, inspect the books at a reasonable time and to receive dividends

If a company does everything right to become a Corporation what kind of corporation is it?

"De jure," meaning rightfully such, a entity that meets all requirements of a corporation and therefore acts as one and is treated legally as one

What is corporation by estoppel?

it allows a nonregistered corporation to be recognized as one in the courts even if it didn't follow the proper steps of incorporation.

What is de facto

Company not registered as a corporation but acting as one and being allowed to do so as long as it continues operating in good faith

What are the 3 important corporate roles and the things you should know about them?

1. Shareholders- owners of the company

2. Directors - policy level managers and fiduciaries

3. officers - managers, agents and fiduciaries

Types of corporations (not on test as a list)

Specialized - Banking, Professional - doctors and lawyers, B corp - benefits corp half non profit half profit, S corp, non profit

what's the difference between a domestic and foreign corporation?

A domestic corporation was incorporated within the country where it operates, while a foreign corporation is operating in a country where it was not incorporated.

What does Closely held mean?

A small number of shareholders own over 50% of the company, usually family

S corporation

A unique corporation with one class of voting for common stock, restrictions on shareholders, 100 or less total shareholders and is elected to be taxed as a partnership through an s election.

Which type of corporation is taxed like a partnership?

S corporations

what are some Corporate powers?

Perpetual life, corporate name, corporate sale and by laws and stock

What are By-Laws?

Secondary laws governing the rules and regulation of a corporation

What is treasury stock?

When a company buys back its common stock

what happens when a corporation is acting outside of its powers?

Ultra vires - legal action can be taken to prevent the company from continuing to operate outside its powers.

Whats the difference between mergers and consolidations?

Mergers can leave both companies alive, making one the subsidiary of another but still under its own name, while with Consolidations, the fusing companies become one entity under an entirely new name. in both cases this does not free the companies from their previous debts.

Shareholders rights in common stock

Vote, collect dividends and inspect the books at reasonable times

What is preferred stock?

Not much different than common stock but usually has its own liquidation and dividend rights

Par price

The minimum aquisition price of a piece of stock

What is a sinking fund?

A savings account made to finance long term debts and keep creditors faith in the company

what is Bond indenture?

a legal document that details all the conditions relating to a bond issue

What are stock subscriptions and is it different pre or post corporation?

Stock subscription agreements must be in writing and can be post or pre corporation. they are an asset or sum of money agreed to be given to the corporation for a specific purpose.

what are the transfer mechanics? (not on test as list)

Negotiate the stock certificate, physically transfer the certificate, note it on the corporate minute book.

What is a proxy agreement?

Agreement for someone else to vote for you on stock, must be in writing and is single use

what is a voting trust?

Agreement for someone else to vote for you on stock, but this one can be extended for multiple years. also must be in writing

What should you know about stock transfers?

Limiting or restricting ability must be noted on the certificate

What is the best practice of voting?

Cumulative

What is a preemptive right?

The power for a current stockholder to buy an equivalent share of newly issued stock in order to keep their current ownership percentage the same

What is a minority shareholder lawsuit?

it allows a minority shareholder to sue when being oppressed by larger shareholders, allowing the seek remedy for damages

what is a shareholder derivative lawsuit?

A suit filed by a shareholder on behalf of the corporation against a third party, must be filed under state law and deals with misconduct.

What is piercing the corporate veil as a concept

When the corporate entity is ignored and the shareholders are directly held liable due to abuse of corporate form, alter ego theory or insufficient capitalization

how can you get in trouble as a shareholder?

Waige claims, stock subscriptions and unauthorized dividends

Shareholders rights and duties again

Shareholders are owners who vote on directors, and authorize extraordinary actions

Does bankruptcy require a shareholder vote?

No

What is a Quorum?

The necessary amount of present shareholders required to start a meeting

What's the difference between officers and directors?

Both are fiduciaries, however directors hire and supervise officer and are on the policy level

Who manages the corporations?

Officers

What is the business judgement rule?

Protects directors from personal liability for negligent acts or omissions of corporate governance.

if you're acting in a director capacity, can you be held liable for ordinary negligence?

No

what is the Responsible officer doctrine?

Should an officer fail to follow regulations or simply mess up something badly, they can and in most states often will be held personally and criminally liable for their mistake.

What is the purpose of the university?

To teach us to live and to teach us to make a living. Catholic tradition is about how to live

What is the logic behind science?

Inductive reasoning

How do we know something is true in the catholic system?

there is a twofold path of knowledge, faith and reason/intellect. Belief and thinking are how we know.

What is the purpose of the business school?

utilitarian arts, teaches us how to make a living in a meaningful profession

Two types of suites

Minority shareholder suite and shareholder derivative suite