Corporation Flashcards
(20 cards)
Corp - Filing
Required
Corp - Taxation
Double taxation, both corporate level and member level
Articles of Incorporation (5)
MBCA § 2.02(a)
Must include (1) corp name, (2) # of shares of stock the corp is authorized to issue, (3) corporation’s street and mailing address for registered office
(4) name of registered agent at office
(5) name and address of each incorporator
Closely Held Corporation
When a corporation is not available for public trading. Normally, will operate as closely held for several years before reaching a position where it might decide to go public.
Corp - Duration
perpetual duration unless articles of incorporation state otherwise
Corp - Power (ability)
buy property, sue and be sued
Corp - Purpose
Why corp was created
Cooperative Corporation
an entity that has corporate existence but is primarily for the purpose of providing services and profits to its members and not for corporate profit.
Ultra Vires
Acting in some way outside of the scope of the purpose of biz
Actors Who can bring ultra vires
(1) an action brought by a shareholder to enjoin a corporate act
(2) an action by a corporation against an officer or director
(3) an action brought by the attorney general
Premature Commencement of Biz
Promoter Liability
Promoter
A promoter is a person who directly or indirectly takes initiative in founding and organizing an enterprise
Promoter Liability
Personally liable on a pre-incorporation contract except when there is a third party who contracted with the promoter who knew that the corporation was not in existence but agreed to look solely to the corporation for performance
Promoter Responsibilities/Rules
Corporate funds must be dedicated to corporate purposes. There can be no secret profit-making.
Corporation can bring suit against promoters after it has come under control of other persons. Corporation not liable unless they adopt the contract after formation.
Pre-Incorporation Contracts (3)
(1) K executed in the name of the promoter, the promoter is liable and will remain liable unless there has been novation
(2) K is entered into in the name of the corp, the promoter is liable and will remain unless novation
(3) K refers to the fact that the corp has no yet been formed, the liability of the promoter depends on what the ct finds to be the parties intent
Defective Incorporation
Where parties assume that the articles have been formed, even if incorrectly assumed
De Jure Corporation
A corporation formed according to mandatory statutory requirements
De Facto Corporation
When there was an attempt to organize under a valid corporation and a good faith claim to be doing business as a corporation
Corporations by Estoppel
Usually applied where the person seeking to hold the officer or SH personally liable has contracted with the association in manner that recognizes and admits its existence as a corporation.
Liability for Acting before Incorporation
MBCA § 2.04
if act on behalf of a corporation, knowing there was no incorporation –> jointly and severally liable for all liabilities created while so acting.
Piercing the Corporate Veil (1,a,b,c,2)
(1) Alter ego or instrumentality
(a) commingling of funds/assets
(b) failure to observe corporate formalities
(c) undercapitalization (formed without adequate capital to meet known and expected business risks)
(2) deception, misrepresentation, or fraud
