1. Formation and Status of a Corporation Flashcards
(17 cards)
A corporation has four key characteristics:
- continuous existence; it survives the death or replacement of its owners(shareholders);
- centralized management of its assets and business by directors and officers;
- limited liability for its owners (shareholders) for the debts and obligations of the corporation and creditors of the corporation are limited in recovery of any claim to the assets of the corporation;
- free transferability of ownership interest(shares).
What is the first step in the formation of a corporation?
The first step in the formation of a corporation is the filing of the articles of incorporation with the Secretary of State by the incorporation or incorporators.
The articles of incorporation must set forth:
(1) a corporate name for the corporation;
(2) the number of shares the corporation is authorized to issue;
(3) name and address of registered agent and incorporators;
(4) principal office mailing address;
(5) signed and filed with the secretary of state;
(6) optional provisions/limitations.
What must the name of the incorporation contain?
the word “corporation,” “company,” “incorporated,” or “limited,” or an abbreviation of one of these words.
What can the name not contain?
The name may not contain language stating or implying that the corporation is organized to do any business not permitted by statute or the articles or be the same as or deceptively similarly to the name of another corporation that is authorized to transact business in the state.
True or false: the corporation must continuously maintain a registered agent and a registered office that is the same as any of its places of businesses.
True
Filing:
Where must the articles of incorporation be delivered by and to?
The articles of incorporation must be delivered by an incorporator to Georgia’s Secretary of State’s office for filing and its delivery should be accompanied by payment of the appropriate filing.
Organizational Meeting;
After incorporation, if initial directors are NAMED in the articles of incorporation, the initial directors must hold an organizational meeting at the call of:
a majority of the directors.
Organizational Meeting
In Georgia, if the initial directors are not specified in the articles of incorporation, a majority of the incorporators must call an organizational meeting to either:
- Elect directors and complete the corporation’s organization; or
- Elect a board of directors, who will then finalize the organization’s setup.
What are the Bylaws?
Bylaws are internal rules and regulations enacted by the corporation to govern its actions and relations to its shareholders, directors, and officers.
In Georgia, the authority to amend or repeal corporate bylaws is allocated as follows:
Before Issuing Shares: Incorporators hold this power.
After Issuing Shares: The board of directors and shareholders share this authority, unless the articles of incorporation reserve it exclusively for shareholders.
what is a de jure corporation?
a fully formed corporation that is organized in compliance with the statute and follows all formalities of articles.
Why doesnt the de facto corporation doctrine apply in Georgia today?
because the state must approve the articles before they’re filed, and the act of Secretary of State in approving the filing of the articles of incorporation is conclusive evidence of incorporation.
What is estoppel?
It stops a third party from denying corporation exists if third party treated it as a corporation.
(e.g., K w/ entity that failed to follow corporation formalities.)
What is the ultra vires acts?
Under the ultra vires doctrine, a corporation cannot be obliged to undertake a contract or activity that is beyond the scope of its power as described in the articles or bylaws.
Shareholder or attorney general can seek injunction and corporate can sue responsible agent.
What is piercing the corporate veil?
In Georgia, piercing the corporate veil is a legal action that allows courts to hold a corporation’s owners or shareholders personally liable for the company’s debts and obligations. This typically occurs when the corporation is found to be merely an “alter ego” of its owners, meaning there is no real separation between the entity and the individuals controlling it.
To justify piercing the corporate veil, the plaintiff must show that:
the owner abused the corporate form by disregarding the separateness of legal entities by commingling on an interchangeable or joint basis or confusing the otherwise separate properties, records, or control.
