DE Bar Business Organizations Flashcards

Under the Delaware General Corporation Law (DGCL), what is the default standard of judicial review for decisions made by a corporation's board of directors?

Answer: Business judgment rule

Under the DGCL, courts apply the business judgment rule, presuming directors acted on an informed basis, in good faith, and in the honest belief the action was in the corporation's best interests.

Under the Delaware LLC Act, what document governs the internal affairs of a limited liability company?

Answer: Limited liability company agreement

The LLC agreement (operating agreement) governs the internal affairs of a Delaware LLC under 6 Del. C. § 18-101 et seq.

Under the DGCL, which standard applies when the board of a Delaware corporation adopts a shareholder rights plan (poison pill)?

Answer: Unocal enhanced scrutiny

Defensive measures such as shareholder rights plans are subject to Unocal enhanced scrutiny, requiring the board to show a reasonable threat and proportionate response.

In Delaware, which court has exclusive jurisdiction over corporate internal affairs disputes?

Answer: Court of Chancery

The Delaware Court of Chancery has exclusive jurisdiction over most corporate internal affairs matters, including fiduciary duty claims and disputes under the DGCL.

Under the DGCL, what vote is required to approve a merger of a Delaware corporation (absent a supermajority provision)?

Answer: Majority of outstanding shares entitled to vote

DGCL § 251 requires approval by a majority of the outstanding shares entitled to vote, not merely a majority of a quorum, for a merger.

Under the Delaware Revised Uniform Limited Partnership Act, what is the liability of a limited partner for the partnership's debts?

Answer: Liability limited to capital contribution

A Delaware limited partner's liability for partnership obligations is generally limited to the amount of the partner's capital contribution under 6 Del. C. § 17-303.