Business Associations Flashcards

Under the Ohio Revised Code, what is the minimum number of incorporators required to form a corporation?

Answer: One

Under Ohio law, a corporation may be formed by one or more persons acting as incorporators, following the modern trend of allowing a single person to form a corporation.

Under the business judgment rule, a director's decision is protected from personal liability if the director acts:

Answer: In good faith, with the care of an ordinarily prudent person, and in a manner reasonably believed to be in the best interests of the corporation

The business judgment rule protects directors who act in good faith, with reasonable care, and in a manner they reasonably believe to be in the corporation's best interests.

Which of the following is NOT a factor courts typically consider when deciding whether to pierce the corporate veil?

Answer: Whether the corporation had too many shareholders

The number of shareholders is irrelevant to piercing the corporate veil; courts focus on undercapitalization, failure to observe formalities, and fraudulent use of the corporate form.

Under Ohio law, a shareholder's preemptive right to purchase newly issued shares:

Answer: Must be expressly granted in the articles of incorporation to exist

Under Ohio's opt-in approach, preemptive rights do not exist automatically and must be expressly granted in the articles of incorporation.

Under Ohio law, an interested director transaction (where a director has a personal financial interest) is best characterized as:

Answer: Voidable unless it was fair to the corporation or was approved by disinterested directors or shareholders after full disclosure

An interested director transaction in Ohio is not automatically void; it is voidable unless the transaction was fair to the corporation or was approved after full disclosure by disinterested directors or shareholders.

What is the legal effect of an Ohio corporation's failure to hold required annual shareholder meetings?

Answer: The corporation does not automatically lose its corporate status, but may face judicial dissolution or other consequences

Failure to hold annual meetings does not automatically dissolve an Ohio corporation, though it may provide grounds for judicial dissolution or other legal consequences.

Under Ohio law, before a shareholder may file a derivative lawsuit on behalf of a corporation, the shareholder generally must:

Answer: Make a written demand on the board of directors, unless demand would be futile

Ohio follows the majority rule requiring shareholders to make a written demand on the board before filing a derivative suit, with an exception when such demand would be futile.