Business Organizations and Corporations Flashcards

Under Minnesota corporate law, shareholders in a closely held corporation may bring a derivative action when:

Answer: The board refuses to sue on behalf of the corporation after a demand or demand is excused

A derivative action in Minnesota requires a shareholder to first make a demand on the board (or show demand futility) before filing suit to enforce the corporation's rights.

Under the Minnesota Business Corporation Act, a shareholder may inspect corporate books and records upon:

Answer: Making a written demand describing the shareholder's purpose

Under Minn. Stat. § 302A.461, shareholders have inspection rights upon written demand that describes a proper purpose for the inspection.

Under the Minnesota Business Corporation Act, the duty of loyalty requires directors to:

Answer: Subordinate their personal interests to those of the corporation when conflicts arise

The duty of loyalty requires directors to put the corporation's interests ahead of their own personal interests when conflicts arise, and to deal fairly in self-interest transactions.

In Minnesota, which event triggers a shareholder's right to dissent and seek payment of fair value for their shares (appraisal rights)?

Answer: Certain fundamental corporate changes such as a merger or sale of substantially all assets

Under Minn. Stat. § 302A.471, appraisal rights arise upon fundamental changes such as mergers, plan of exchange, or sale of substantially all assets not in the ordinary course of business.

Under Minnesota law, an agent acting within the scope of their actual authority binds the principal because:

Answer: The principal expressly or impliedly authorized the specific act

Actual authority — express or implied — arises from the principal's manifestations to the agent that the agent is authorized to act, making the principal bound by acts within that authority.

In a Minnesota limited partnership, general partners differ from limited partners in that:

Answer: General partners have unlimited personal liability and management control

General partners in a Minnesota limited partnership have management control and bear unlimited personal liability, while limited partners have liability limited to their investment.