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CORPORATIONS Organization & formation: Person, articles, filed w/SoS, organizational meeting. Promoters: Liable until novation (not adoption), Corp not liable until express or implied adoption. Liable for secret profits. Articles: K btwn corp and SH, corp and state. Name (corp, co, inc, ltd), directors, purpose, capital structure. De facto: Good faith attempt to comply w/corp statute. Estoppel: TP dealing w/corp as corp can't deny corp status and vice versa Pierce corporate veil: Fraud, undercapitalization, alter ego; makes SH personally liable Ultra vires: Act outside of purpose specified in K (usually broad). SH can get injunction; person who caused act pers liable. Watered Stock: issuing for less than par value; Director liab if knowingly authorize; Buyer liab if had notice of par value Capital stock structure Authorized: Max # shares corp can issue; Issued: shares sold; Outstanding: sold and not reacquired. Subscription agreements: Preincorporation: irrevoc for 6 mos; Post-inc: revocable until acceptance by BoD. Consideration: Any except promissory notes & future servcs [modern OK]. Stock transactions Controlling shareholder can sell at premium, but not to looters, can't sell corporate office, can't sell corporate asset. CL duty: Fraud, or Special Facts Doctrine: Nondisclosure of inside facts that reasonable person would consider important. 10b5: Misrep: IC + FMSPRD: Fraudulent conduct, Material, Scienter to deceive/defraud, Purchase/sale by plaintiff; Reliance, Dmgs Insider Trading:
1. Insiders, who breach duty to not use info for personal gain (Dir/Off/control SH/EE/CPA/Atty/Banker)
2. Tipper/Tippee: Tipper: Breaches Fiduciary Duty & Improper Purpose (get reputation, kickback etc) Tippee: if Tipper breached & tippee knew he breached
3. Misappropriators, that the government can prosecute if breached a fiduciary duty by misappropriating info 16b: Large corp (500 SH/$10M); D is Dir/Off/10% SH before both purch+sale; purchase and sale w/in 6 mos period (high-low) Shareholders: Liability limited to price of stock, unless corporate veil is pierced. Management only if close corp. Controlling SH: duty to not use his control to Unfairly Prejudice the Minority SHs (sell to looters) SH owe fiduciary duties to other SHs/Corp only if Close Corp Meetings: 100% written consent to no meeting vote; annual meeting required; special meeting called by BoD or 10% SH. Notice. Voting Trust: Trustee holds the shares; votes; distributes acc to agmt; give copy to corp; expires in 10 yrs Proxies: Written, signed, 11 month expiration unless says otherwise, revoke unless coupled w/interest
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