Corporate Formation

Question 1

Corporation Formation Requirements

Answer 1

The filing of Articles with the Secretary of State.

Question 2

Ultra Vires Business

Answer 2

A corporation is presumed to be formed for a lawful business purpose, and any business outside of the corporation’s purposes is ultra vires.

Question 3

Remedies for Ultra Vires Business

Answer 3

(1) a shareholder can sue to enjoin the ultra vires act
(2) the corporation can sue officers and directors for damages arising from the ultra vires act;
(3) the state may seek dissolution of the corporation.

Question 4

Ways for Forming a Corporation

Answer 4

(1) De jure
(2) De facto
(3) By estoppel

Question 5

De Jure Corporation Formation

Answer 5

Formation in accord with the formation statutes.

Question 6

De Facto Corporation Formation

Answer 6

Requires an available statute for valid incorporation, a colorable compliance and good faith (the members do not know the incorporation was defective), and the corporation must act like one.

Question 7

Corporation by Estoppel

Answer 7

Persons who treat an entity like a corporation are estopped from later claiming it was not.