Business and Corporate Law Flashcards

Under federal securities law, which of the following transactions is EXEMPT from registration under Regulation D, Rule 506(b)?

Answer: A private placement to up to 35 non-accredited sophisticated investors without general solicitation

Rule 506(b) exempts offerings to up to 35 non-accredited but sophisticated investors with no general solicitation.

Which element is NOT required for a legally binding contract?

Answer: Written form

Most contracts are valid without being in writing; the written form is required only for certain contracts under the Statute of Frauds.

An LLC member's ownership interest is typically represented by:

Answer: Membership units or interests

LLCs issue membership interests or units, not stock certificates, which are specific to corporations.

Which doctrine holds that a corporation cannot enter contracts that exceed the powers granted in its articles of incorporation?

Answer: Ultra vires doctrine

The ultra vires doctrine historically voided contracts beyond a corporation's chartered purposes, though its application has been limited by modern statutes.

A covenant not to compete in an employment contract is generally enforceable if it is:

Answer: Reasonable in scope, geography, and time

Courts enforce non-compete covenants only when they are reasonable in duration, geographic area, and the activity restricted.

In a limited partnership, which class of partner has management authority but also faces unlimited personal liability?

Answer: General partners

General partners manage the limited partnership and bear unlimited personal liability for partnership obligations.

Which of the following describes a 'proxy' in corporate law?

Answer: A written authorization allowing another person to vote a shareholder's shares

A proxy is a written document by which a shareholder delegates voting authority to another person for a shareholders' meeting.