Section 1
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general powers of a corporation
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Date created
Mar 1, 2020
Cards (52)
Section 1
(50 cards)
general powers of a corporation
all general capabilities that any business needs to do
Bear Stearns case
2008; sued by shareholders for breaching fiduciary duty for selling stock too low; judge deemed the corporation did not breach fiduciary duty since they sold the stock for $10/share instead of the alternative which was for the stock to lose all its value
foreign corporation
a corporation in any state in which it does business except the one in which it is incorporated
stock options
legal right to purchase # of shares at a given price at a date in the future
Proxy
voting long distance
inside directors
elected by shareholders; elect themselves to be corporate officers
stock split
the division of a single share of stock into more than one share
Diversification
invest in companies in different industries
board of directors
a group of persons elected by the stockholders to manage a corporation; see the big picture; are not day to day managers
dissolution
under state law how one shuts down a corporation
D+O
Insures directors and officers
loyalty
being loyal to the interests of the shareholders
Ease of Capital Formation
Sell shares to the public to raise more capital
CAO
chief accounting officer; skilled person in accounting; in charge of books
partnership
people coming together to run an enterprise
communal system
individuals in a community share responsibilities and resources equally
Amendment
changing a corporate charter
By-laws
rules of a corporation; corporate governance
CEO
chief executive officer; person in charge
good faith
honesty; making decisions honestly
corporate law
state law of the state where you start
preferred stock
A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.
Directors
people that act on behalf of the shareholders
specific powers of a corporation
things a corporation can do
domestic corporation
a corporation in the state in which it is incorporated
Shareholder Rights
1) Inspect Books and records 2) Right to elect CPAs 3) Right to go to meetings 4)Right to notice 5) Right to an agenda 6) Right to vote; 1 share=1 vote
sole proprietor
owner own boss; all decisions are yours/ runs out of money=runs out of business
breach
breaking fiduciary duty
Business Judgment Rule
never measures the result; it measures the process; how we judge fiduciary duty
common stock
the basic form of ownership in a corporation
Treasury Stock
common stock that a company reacquires from its stockholders
dividend
A distribution of profits of the corporation to shareholders
Life or death decisions of a corporation
decision whether or not to merge, acquire another corporation, or be acquired
Edgar v. MITE
corporations internal affairs is subject only to the state it is incorporated
Merger
Two companies of equal size combine to form a new corporation Ex: Exxon-Mobil
Acquisition
Big company buys a smaller company
articles of incorporation
things that aren't in charter and by laws are included
Charter
document from sovereign state that gives you permission to operate as a corporation
Free transferability of ownership
free from legal entanglements; easy to trade stock; transferring ownership not liability
limited liability
when you own stock the liability is limited to the amount you invest
cumulative preferred stock
Preferred stock on which undeclared dividends accumulate until paid; common stockholders cannot receive dividends until cumulative dividends are paid.
voluntary dissolution by shareholder vote
vote to dissolve corporation at a shareholder meeting
Disney Shareholders Litigation Case
Shareholders sue Disney for a breach of fiduciary duty for Michael Ovitz's severance package of $140 million. Judge deemed Disney did not breach fiduciary duty, but was critical of CEO Michael Eisner.
Corporation
A business owned by stockholders who share in its profits but are not personally responsible for its debts; artificial entity/legal fiction
outside directors
elected by shareholders; not officers
CTO
Chief Technology Officer; in charge of technology
care
officers and directors must be careful when making decisions on behalf of the shareholders
CFO
Chief Financial Officer; in charge of corporation's money
COO
Chief Operating Officer; 2nd in command; looks over operations
Fiduciary Duty
directors and officers are obligated to the shareholders
Section 2
(2 cards)