ACTG 1P71 Lecture Notes - Lecture 20: Derivative Suit, Due Diligence, Fiduciary
Document Summary
Indoor management rule (section 19 of business corporations act: protects an innocent 3rd party, principle vs. Agent: partners in a partnership, actual vs. Reduction of liability (section 34: reducing debt. Corporations can only do these items, if the corporation is able to meet their obligations. Show that after money is paid to shareholders, corporations can pay debts as they come due. Realizable value of assets must exceed the liability and stated capital. Directors liability for payments that have been made to shareholders: reduce liability of shareholder, direct can be held personally liable if they do not meet terms of 2 tests. Gives directors power to management and supervise: subject to any restrictions given in unanimous shareholders agreement. Right to delegate powers to officers: delegation of that power is subject to the unanimous shareholders agreement. If you ever take advantage of the result from situation of conflict of interest, you must give back your profits.
