Corporations/Agency/Partnership

Question 1

Four Main Features of Corps

Answer 1

1) limited liability
2) shares freely transferable
3) continued existence
4) central management

Question 2

Powers/Duration

Answer 2

1) Same powers as individuals
2) default purpose: any lawful business
3) perpetual existence by default

Question 3

Foreign Corps

Answer 3

NC requires foreign corps to obtain “certificates of authority” to transact business before engaging in any enterprises in state.

Question 4

Articles - Mandatory Provisions

Answer 4

1) Name of corporation
2) number of authorized shares (other share info)
3) address of corporation’s initial registered office and name of initial registered agent
4) address of corp’s principal office
5) name and address of each incorporator

Question 5

Name Requirements

Answer 5

Must contain word “corporation” “incorporated” “company” “limited” or abbreviation.

Question 6

Registered Agent

Answer 6

Each corp must maintain a registered office and agent subject to service of process on the Secretary of State. Agent must reside in NC or be entity with same registered office.

Question 7

Articles - Optional Provisions

Answer 7

1) Anything required or permitted in bylaws
2) Names/addresses of initial Directors
3) provisions not inconsistent with law (e.g., purpose of corp)
4) Provision limiting personal liability for directors (in some circs)

Question 8

Filing Articles

Answer 8

1) Submitted to Sec of State
2) With the appropriate fee
3) signed by an incorporator

**Articles become effective when filed by Sec, and that begins corp’s existence.

**Sec’s filing of Articles is conclusive proof that all conditions precedent to incorporation have been met.

Question 9

Organization Meeting

Answer 9

If initial directors named in Articles, they must hold an organization meeting (at call of maj). Purpose:

1) appoint officers
2) adopt bylaws
3) other business brought before meeting

If no initial directors named, incorporators must hold the org mtg at call of maj of incorpors to:

1) Elect directors and complete organization of corp, OR
2) Elect directors who will complete the organization.

Question 10

Bylaws - Nature

Answer 10

Internal rules/regs to govern corp.

Often specify:

1) time/place of annual SHs mtg.
2) Record date for determining SHs entitled to vote at mtgs or receive dividends.
3) # of SHs = quorum
4) % of votes to authorize corp action
5) restrictions on share transferability.

Question 11

Bylaws - Adoption/Amendment

Answer 11

Board may amend/repeal BLs unless Articles or BL adopted through SH vote says otherwise.

If SH vote adopts/amends/repeals a BL, Board may not change unless Articles/BLs explicitly authorize.

SHs may amend/repeal even if Board also allowed to do so.

Question 12

Emergency Bylaws

Answer 12

Temporary, need not follow normal protocols. Ends when emergency ends

Question 13

Defective Incorporation

Answer 13

1) De Jure corporation - complies entirely
2) De facto corporation - doesn’t meet a mandatory provision, but (A) good faith, colorable attempt to comply with incorporation statute and (B) corporate principals acted in good faith as if corporation. De facto status insulates Directors/SHs from liability except in direct action by state.
3) Corporation by estoppel - If Creditor always dealt with principals as if they were a corporation, estopped from later asserting corporation is defective if it would unjustly harm principals. Works against those holding selves out as corporations, too.

Question 14

Ultra Vires Acts

Answer 14

Board not permitted to undertake action beyond corp’s authority set out in Articles or BLs.

Corp cannot be obliged to undertake a contract or activity that is beyond scope of the power in A/BLs.

NC: validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.