CO Bar Business Organizations Flashcards

Under Colorado agency law, an agent acting with apparent authority binds the principal when:

Answer: The principal's conduct causes a third party to reasonably believe the agent has authority

Apparent authority arises when the principal's conduct or representations cause a third party to reasonably and justifiably believe that the agent has authority to act.

In Colorado, a general partner in a limited partnership is personally liable for partnership debts, while limited partners:

Answer: Have liability limited to their capital contribution so long as they do not participate in management beyond safe harbors

Limited partners' personal liability is capped at their investment contribution, provided they do not participate in management control beyond the safe harbors defined by the Colorado Uniform Limited Partnership Act.

Under the Colorado Business Corporation Act, cumulative voting for directors, if permitted, allows minority shareholders to:

Answer: Multiply their shares by the number of directors being elected and concentrate all votes on one candidate

Cumulative voting allows shareholders to multiply their shares by the number of director seats up for election and cast all resulting votes for a single candidate, giving minority shareholders a better chance of electing a director.

A shareholder derivative suit in Colorado is brought by a shareholder:

Answer: On behalf of the corporation to enforce corporate rights when the board wrongfully refuses to act

In a derivative suit, a shareholder sues on behalf of the corporation to enforce the corporation's legal rights when those controlling the corporation have wrongfully refused to do so.

Under Colorado law, a statutory merger requires approval by:

Answer: A majority of the board and a majority of outstanding shares of each merging entity, absent a higher threshold in articles

A statutory merger in Colorado generally requires approval by the board of directors and a majority of the outstanding shares of each merging corporation, unless a higher approval threshold is specified in the articles.

In Colorado, a director's duty of loyalty prohibits the director from:

Answer: Usurping a business opportunity that belongs to the corporation without disclosure and approval

The duty of loyalty requires directors to act in the corporation's best interest; usurping a corporate opportunity for personal benefit without disclosure and disinterested approval is a classic breach.