NY Business Relationships 1 Flashcards

After filing its Articles of Organization with the New York Department of State, a newly formed LLC must comply with what statutory requirement within 120 days?

Answer: Publish a notice of its formation in two newspapers designated by the county clerk

NY LLC Law § 206 requires a newly formed LLC to publish a copy of its Articles of Organization (or a notice of formation) in two newspapers designated by the county clerk of the county where the LLC's principal office is located, once a week for six consecutive weeks, within 120 days of filing. Failure to comply can result in suspension of the LLC's right to conduct business.

Under New York's Partnership Law, which of the following acts in a general partnership requires the unanimous consent of all existing partners?

Answer: Admitting a new partner to the partnership

Under NY Partnership Law § 40(7), no new partner may be admitted to a general partnership without the unanimous consent of all existing partners. Routine business acts bind the partnership without unanimous approval, but adding a new co-owner fundamentally alters the partnership relationship and therefore requires every partner's agreement.

Under the New York Business Corporation Law, what vote of shareholders is generally required to approve a plan of merger for a corporation incorporated after the 1998 amendment to BCL § 903, absent a higher requirement in its certificate?

Answer: A majority of the votes of all outstanding shares entitled to vote

BCL § 903(a)(2): for corporations incorporated after the 1998 amendment (or whose certificate so provides) a plan of merger is adopted by a majority of the votes of all outstanding shares entitled to vote, not just those present. Two-thirds remains the rule only for older corporations that did not opt for a majority. The certificate may impose a higher vote.

Under the New York Business Corporation Law, a director's duty of loyalty is most directly implicated when the director does which of the following?

Answer: Has a material personal financial interest in a contract being considered by the board

The duty of loyalty requires directors to subordinate personal interests to those of the corporation. BCL § 713 specifically addresses director conflicts of interest: a director with a material interest in a proposed contract must disclose that interest, and the transaction may then be approved by a majority of disinterested directors or by shareholders. Failure to disclose can render the transaction voidable.

Under New York's Limited Liability Company Law, absent any provision to the contrary in the operating agreement, how are profits and losses allocated among LLC members by default?

Answer: In proportion to each member's capital contribution to the LLC

NY LLC Law § 503 provides that, in the absence of a governing provision in the operating agreement, profits and losses are shared in proportion to the agreed value of each member's contribution to the LLC. This default rule ties economic benefit to economic investment rather than awarding equal shares.

Under New York's Partnership Law, what is the scope of personal liability protection for partners in a registered limited liability partnership (LLP)?

Answer: Partners are shielded from personal liability arising from the malpractice, negligence, or wrongful acts of their co-partners

NY Partnership Law § 26(b) provides that a partner in a registered LLP is not personally liable for debts, obligations, or liabilities of the partnership arising from the malpractice, negligence, or wrongful acts committed by another partner or representative of the firm. Each partner, however, remains personally liable for their own wrongful conduct.