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Based on Professor Kaufman's lecture for Ca Bar

Promoters, Formation

Are liable until novation and are fiduciaries.

Subscribers, Formation

Irrevocable for 6 months period.


- Authorized shares
- Purpose
- Agent
- Incorporators
- Name


Not liable unless pierced veil

Par Value, Issuance

Minimum Issuance Price

Preemptive Rights, Issuance

Maintain ownership percentage

Director/Officer Liability

1. Duty to manage
2. Business Judgment Rule
3. Fiduciaries = care/prudence, unless articles limit + loyalty, no unfair benefits unless disclosure & independent ratification

Derivative Suits, Shareholder Rights

2 Requirements:
1. Contemporaneous ownership
2. Demand

Voting, Shareholder Rights

Only the record date owner votes

Proxies, Shareholder Rights

Revocable unless 1) labeled, 2) coupled with interest.

Quorum Shareholder Rights

Majority of all shares, all shares. NOT shareholders.

Vote Shareholder Rights

Votes cast in favor exceed votes cast against.

Cumulative Voting, Shareholder Rights

Shares times slots.

Dividends, Shareholder Rights

Discretionary unless insolvency. 1) common pay last, 2) preferred pay first, 3) participating pay again, again, 4) cumulative add-up, add-up, add-up.

Eliminating Formalities, Closely Held Corporations

1) Unanimous election + 2) share transfer restriction = no piercing + possible S corp status.

Professional Corporation, PC

Just 1 profession + limited liability

Fundamental Changes

5 Steps:
1. Board resolves
2. Special notice
3. Majority of all shares
4. dissenters rights
5. notice to state

Section 10(b), Securities Laws

Scienter + deception + actual buying or selling stock

Section 16(b), Securities Laws

no trading profits with in 6 months. none.

Sarbanes Oxley Act, SOA, Securities Laws

no knowingly false filings + no benefits during falsehoods or black out periods

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