CORPORATIONS OUTLINE Furlow
1) INTRODUCTION TO THE CORPORATE FORM
a) Basic Attributes of a Corporation
i) Independent, perpetual existence
ii) Amalgamates Capital
iii) Stockholders last in line to be paid
iv) Limited liability for owners and managers
v) Management is separated from ownership
b) Corporation is primarily made-up of three groups
THE CORPORATION $ stock
BOARD OF DIRECTORS (2)
OFFICERS (3)
STOCKHOLDERS (1)
THIRD PARTIES
i) Shareholders/Stockholders
(1) Corporation is required to have stockholders (§6.01)
(a) A stockholder is the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the corporation(§1.40(21))
(2) The Basics (§6.01, §6.02)
(a) Three Main Powers
(i) Invest capital
1. “Own the company” in theory
a. actually own an interest
(ii) Vote
1. At shareholders meetings for directors, approve certain fundamental transaction (merger, change in articles of incorporation, to close up shop), or to approve bylaws
a. Gives an indirect power to govern
(iii)Sue
1. company, board of directors, controlling stockholders (always the plaintiff)
(b) Risk
(i) Limited to the amount of investment
1. Generally, no personal liability (§6.22)
(c) Return on Investment
(i) Residual claimants
1. last inline for
a. dividends
b. distribution on dissolution
c. sale of stock
(3) Stockholder Voting Rights
(a) Various Types of Voting
(i)
vi. Without either option, all business is null and void
3. Record date(§7.07)
a. Determines which shareholders are entitled to vote
i. Two groups
ii. “stock holder or record”
iii. names on the books won owns a particular stock
iv. not necessarily the beneficial owner
v. non-objecting beneficial owner (nobo)
b. Two ways to establish the record name
i. 70 days prior to the meeting AND fixed by the bylaws OR the board of directors OR
ii. by getting a proxy from the prior owner
c. Failure to set a record date
i. default: yesterday (§7.05)
ii. day before notice was sent out
4. Quorum
a. Required to take valid action/have meeting
b. May be defined in the AI (§7.25)
i. Delaware and Florida allow it is be as low as 1/3
c. Default: need majority of votes present (50% plus one share) (§7.25)
i. Can be changed (§7.27)
