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Corporations MEE Questions and Correct Answers (elaborations) with 100% Accurate , Verified , Latest fully Updated , 2024/2025 ,Already Passed , Graded A+, Complete solutions guarantee distinctions Rationales

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Corporations MEE Questions and Correct Answers (elaborations) with 100% Accurate , Verified , Latest fully Updated , 2024/2025 ,Already Passed , Graded A+, Complete solutions guarantee distinctions Rationales

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  • August 3, 2024
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  • 2024/2025
  • Exam (elaborations)
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Corporations MEE
Promoter, liability, and exceptions
Promoter—enters into contracts securing capital to bring the corporation into existence.
Personally liable for a contract entered into pre-incorporation, even after the corporation comes
into existence
Exceptions:
a) Novation—the corporation and the third party contract agree to substitute the corporation for the
promoter
b) Adoption—the corporation takes the benefits of the contract
Incorporation
In order to form a corporation, AOI must be filed with the state. The articles must include certain
basic information, including the number of shares the corporation is authorized to issue. Unless a
delayed date is specified in the articles, the corporate existence begins when the articles are filed.
Ultra Vires Act
Occurs when a corporation has a narrow purpose and acts outside the scope of that purpose.
A SH can file a suit to enjoin the action or take action against the officer, director, or employee
who engaged in the act.
De Jure Corporation
Exists when the statutory requirements for incorporation are met
100%
A good faith attempt to incorporate can still invoke corporate protections if:
Under either doctrine, the owner must make a good-faith effort to comply with the incorporation
requirements and must operate the business as a corporation without knowing that the
requirements have not been met.
1) De Facto Corporation—attempted to incorporate and ran business believing it was
incorporated: the owner, as a de facto shareholder, is not personally liable for obligations
incurred in the purported corporation’s name. Note, however, that the RMBCA has abolished the de
facto corporation, as have many jurisdictions that have adopted the RMBCA.
2) Corporation by Estoppel—a third party entered into a contract with the corporation as though
it was properly incorporated; the third party is estopped from asserting that the corporation was
not formed appropriately
Issuance of stock
Must be authorized by the BoD
Valuation
BoD must determine whether the value paid for the stock is adequate
Par Value Stock
Corporation assigns a minimum value to its stock. Today, par is typically NOT required. If it is
required, it will usually be set at a nominal amount. If sold for less than the par value, the board is
liable. SH may also be liable if had knowledge of par value.
Shareholder meetings

, Required to hold an annual SH meeting. The primary purpose is to elect directors.
Shareholders' right to inspect corporate records
1. Restricted to normal business hours
2. Requires five days' notice
3. Must state a proper purpose —related to the shareholder's financial interest in the corporation
(improper purpose—designed to harass the corporate officers)
SH has burden of showing credible evidence of improper conduct and that the document sought
is essential to the proper purpose. The inspection may be limited to specified or excerpted records.
The right to inspection continues even while a lawsuit is pending.
Shareholders' right to vote
1. To select the board of directors
2. To approve fundamental corporate changes (e.g., merger, sale of corporation/substantially all
assets)
3. Share exchanges
4. Amendments to the AoI
5. Dissolution
Shareholder proxy voting and requirements
Proxy—written agreement to allow a person to vote on behalf of the SH. Revocable unless otherwise
stated (irrevocable proxy is allowed).
To be legally effective, a proxy must:
1. Be in writing; 100%
2. Be signed by the shareholder as of the record date ;
3. Be sent to the secretary of the corporation;
4. State that it authorizes another to vote the shareholder's shares; and
5. Cannot be valid for more than 11 months unless otherwise specified.
Shareholder power to amend corporate bylaws
1. Can amend or repeal existing bylaws
2. Can pass new bylaws
3. Can limit the board of director's ability to change the bylaws
The nomination of directors and the procedure for nominating directors are common provisions in the
bylaws and are consistent with regular corporate practice.
Shareholder agreements
May enter into an agreement to vote their shares together
Direct actions lawsuits
SHs suing the SHs for their own benefit (i.e., to remedy a wrong personal to the SH). Damages go
directly to the SH.
A SH can sue directly if the SH has been harmed directly, including: Interference in voting rights
or dividends, misinformation about important issues, and tort injury. Usually arises when the SH is
denied voting rights, the board failed to declare a dividend, or the board failed to approve or
deny a merger

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