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Piercingthecorporateveilcourtmayhold

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Unformatted text preview: written consent. all shareholders agree to not have a board of directors. • Minute book holds records of all meetings. • Bylaws set the rules for the corporation. Kulper - Econ 189 Kulper 5 • May be voluntary (shareholders’ vote) or forced • (by court order). Piercing the Corporate Veil – court may hold shareholders liable for debt in the case of: Death of a Corporation – Failure to observe formalities (such as holding meetings, keeping records) – Commingling of assets (using corporate funds to pay personal debts, etc.) – Inadequate capitalization (the corporation should obtain insurance against liability for torts) – Fraud (injured party may recover from the guilty party, even if the action was the corporation’s) Kulper - Econ 189 Kulper 6 Termination • Terminating a corporation is a three­step process: – Vote by a majority of the shareholders. – Filing Articles of Dissolution with the Secretary of State. – Winding up – paying debts and distributing assets. Kulper - Econ 189 Kulper 7 • Managers – want, first to keep their jobs and second, to build a strong company. – Managers have a fiduciary duty to act in the best interests of the shareholders. Managers vs. Shareholders: The Inherent Conflict • Shareholders – want the price of stock to increase. • Stakeholders – want the business to grow and continue to use the stakeholders’ services. Kulper - Econ 189 Kulper 8 • Business Judgment Rule – The manager has a duty of loyalty and a duty of care. – The manager must...
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This note was uploaded on 03/17/2010 for the course ECON 100B taught by Professor Kilenthong during the Spring '08 term at UCSB.

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