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New York Bar Exam
All of the BarBri New York Conviser Review
50
Law
Professional
06/23/2014

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Cards

Term
Principal Characteristics of a Corporation
Definition
1) Limited liability
2) Entity Powers (can have contracts in corp's name)
3) Centralized Management (Board of Directors)
4) Continuity of Existence
5) Free Transfer-ability of Ownership Interests
6) Managers' Authority to Act Mainly derived from statutes
Term
What Do Corporation Incorporators Do?
Definition
1) Execute the Certificate
2) Deliver it to NY Dept. of State
3) Hold Organizational Meeting
Term
How many Incorporators Do Corporations Need?
Definition
1 or More
Term
Who can be an incorporator?
Definition
Adult Humans Only
Term
Purpose of Certificate of Incorporation
Definition
1) Contract between corporation and shareholders
2) Contract between corporation and state
Term
Information That Goes Into the Certificate
Definition
1) Corporate Name (Must have "corporation," "incorporated," or "limited" in the name)
2)Address (County in New York of the office of Corporation)
3) NY Secretary of State as designate for corporation's agent for service of process
4) Name and address of each incorporator
5) Statement of Duration (if no statement then corporation had perpetual existence)
6) Corporate Purpose Statement
7) Capital Structure (Stocks)
Term
How do we handle ultra vires acts today?
Definition
1) Ultra Vires contracts are valid
2) Shareholders can seek an injunction
3) Responsible managers are liable to corporation for ultra vires losses
Term
What must be included in the certificate about the corporation's stock?
Definition
1) Authorized Stocks
2) Number of shares per class
3) Info on par value, rights, preferences and limits of each class
4) Info on any series of preferred shares
Term
What actions must be taken to create corporation once certificate has been drawn up?
Definition
1) Each incorporator signs certificate and acknowledges it before a notary
2) Deliver it to the NY Dept. of State
3) Pay all fees
4) Hold Organizational meeting
Term
What must happen at a corporation organizational meeting?
Definition
1) Adopt any bylaws
2) Elect initial board of directors
Term
If corporation is formed in NY but only does foreign business, what law governs the internal affairs?
Definition
NY
Term
Can a corporation make political donations?
Definition
Yes. But no more than 5K per candidate/organization per year
Term
Can a corporation make charitable donations?
Definition
Yes. And there are are no statutory limits
Term
Can a corporation guaranty a loan if it is not in the furtherance of corporate business?
Definition
Yes if it is approved by 2/3 of the shares entitled to vote
Term
Are people who run the corporation liable for what the corporation does?
Definition
No
Term
Are the people who own the corporation liable for what the corporation does?
Definition
No, they have limited liability meaning they are only liable to pay for their stock
Term
Who is liable for what the corporation does?
Definition
The corporation itself
Term
What must be shown for a de facto corporation?
Definition
1) Relevant Incorporation Statute (BCL in NY)
2) Parties made a good faith, colorable attempt to comply with it.
3) Business is being run as a corporation
Term
What is the status of De Facto Corporations in NY?
Definition
Thought to be abolished by case law shows that it may be alive in very limited circumstances
Term
Corporation by Estoppel
Definition
Doesn't matter - abolished in NY
Term
Can we have a corporation without bylaws?
Definition
Yes, they are not necessary
Term
If bylaws conflict with the corporate certificate, what controls?
Definition
Certificate
Term
Are bylaws of corporation filed with state?
Definition
No.
Term
Are outsiders bound by corporate bylaws?
Definition
No
Term
Who adopts initial corporation bylaws?
Definition
The incorporators at the organizational meeting - they have the status of a shareholder bylaw
Term
Who can amend or repeal bylaws or adopt new ones?
Definition
The shareholders
Term
When does the board of directors get to amend/repeal/adopt the bylaws?
Definition
Only when the certificate or shareholder bylaws allow it
Term
Is the corporation liable for pre-incorporation contracts?
Definition
Only if it adopts the contract
Term
How can adoption of pre-incorporation contracts by corporations happen?
Definition
1) Express adoption by board action
2) Implied Action - Corporation knowingly accepts a benefit of the contract
Term
Is the promoter of a corporation liable of pre-incorporation corporate contracts?
Definition
Yes unless the contract clearly indicates otherwise until there is a novation.
Term
What is a novation?
Definition
agreement between promoter, corporation, and other contracting party that the corporation will replace the promoter under the contract.
Term
Can a promoter make a secret profit from her dealings with the corporation?
Definition
No. If she does she is liable and must account of the profit - return it to the corporation.
Term
What is the definition of a foreign corporation?
Definition
A corporation incorporated anywhere outside of NY
Term
How does a foreign corporation qualify to do business in NY?
Definition
Applying to the NY Dept. of State and designating the Secretary of State as agent for the service of process. Pay fees.
Term
What kind of information does the foreign corporation give the NY Dept. of State?
Definition
Info. from its certificate and good standing in its home state
Term
What happens if a foreign corporation does business in NY without qualifying?
Definition
It cannot assert a claim in NY until it pays taxes, fees, penalties, and interest
Term
An issuance of stock occurs when...
Definition
a corporation sells its own stock
Term
What is a debenture?
Definition
a loan, the repayment of which is not secured by corporate assets
Term
What is the definition of a corporate subscription?
Definition
A written, signed offer to buy stock from the corporation
Term
Are pre-incorporation subscriptions revocable?
Definition
No, not for 3 months unless subscription provides otherwise or all subscribers agree to let you.
Term
Are post-incorporation subscriptions revocable?
Definition
Yes until accepted by the corporation.
Term
Can a corporation decide to sell to only some subscribers and not to others?
Definition
No it must be uniform within each class and series of stock
Term
What happens if a corporation accepts the subscription offer and the subscriber defaults on payment?
Definition
1) If subscriber has paid less than half of the purchase price and fails to pay the rest within 30 days from written demand, corporation can keep the money paid and cancel the shares. (Stock becomes authorized and unissued so the corporation can sell it)

2) If subscriber has paid half or more, and fails to pay the rest within 30 days of written demand, corporation must try to sell to someone else for cash - if no one will pay remaining balance then acts like section 1
Term
What happens if someone will pay more than the remaining balance on an unpaid subscription?
Definition
Defaulting subscriber recovers any excess over what she agreed to pay (but deduct corporation's expenses)
Term
What are the five permitted forms of consideration for an issuance?
Definition
1) Money (cash or check)
2) Tangible or intangible property
3) Services already performed for corporation
4) Binding obligation to pay money or property
5) Binding obligation to perform future activities with an agreed upon value
Term
What happens if a corporation issues stock to someone without consideration?
Definition
All issued stock is considered unpaid stock and treated as water
Term
What is the definition of par?
Definition
Minimum issuance price for a corporate stock
Term
Who sets the sale price for no par stock?
Definition
The board unless certificate says shareholders can do it
Term
What is the definition of treasury stock?
Definition
Stock that was previously issued and had been reacquired by the corporation
Term
Are directors liable for issuing stock at a price below par (called watered stock)?
Definition
Yes if they knowingly authorized the issuance
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