corporations checklist

AGENCY CLOSELY HELD CORPORATION

1. P–A, A is fiduciary (Donahue)
2. Actual, Apparent, Inherent authority 1. Small number of stockholders
• A’s implied warranty of authority 2. No ready market for stock
3. K (fully [P only], partially, un—disclosed) 3. Substantial majority of SH participation in the
management, direction, and operation
LLC • Formation: File Articles of Incorporation
1. Formation: • Bylaws
• Articles of Organization &
• Operating Agreement (e.g., parties SH RELATIONSHIPS
agreed…) (freeze-out, deadlock, dissention, oppression)
2. Members (defaults) 1. SH agreement
• voting by % of contribution • Traditional role of SH, D, O
• profit/losses shared by % of contribution • McQuade—any impingement is void as
• Member-managed against public policy
• Clark v. Dodge—enforceable if slight
CREDITORS’ RIGHTS impingement or innocuous variance
1. Promoter liability (novation, adoption) • Long Park—unenforceable if complete
2. Defective incorporation sterilization
• de jure, de facto, estoppel • Galler—enforceable as long as 3rd party
3. Piercing the corporate veil not harmed
• alter ego, instrumentality, • Statutory close corporation
• undercapitalization  Zion—enforceable
• prevent fraud, unfairness, or injustice  Nixon—unenforceable
4. Reverse piercing 2. Pooling Agreement (generally valid)
5. Watered stock (bonus, discount, watered) 3. Fiduciary duties (Donahue for closed corp)
6. Improper consideration • Duty of Care (BJR, prudence, gross neg)
7. Thin capitalization (high debt/equity ratio) • Duty of Loyalty (intrinsically fair?)
8. Preferential, Improper distributions • Obligation of good faith and fair dealing
9. Constructive/De facto dividend (zero out) 4. Preemptive rights (opt-in v. opt-out)
10. Equitable subordination 5. Cumulative voting: S/(D+1) + 1 = # needed
6. Classification of board (staggered elections)
TERMS 7. Vote buying
1. Bond 8. Sale of office
2. Debenture 9. Sale of control
3. Preferred 10. Removal of D: cause
4. Common
5. Par value REMEDIES
6. Authorized 1. Dissolution
7. Issued 2. Provisional D
8. Outstanding 3. Custodian/Receiver
9. Treasury 4. Buy-out
10. Ultra Vires 5. Specific performance
11. Proxy voting 6. Injunctive relief
12. Security 7. Reformation
13. Internal affairs rule
14. Arm’s length transaction

David Hamilton[Type text] —1— Bus Orgs I (Dean Rubin)