Organization of a Corp Flashcards
If there is no express state of corporate activity in the A of I, then corp can do . . .
Any lawful activity
An activity that is beyond the scope of the purpose set forth in the A of I is called a ____ ____ activity
Ultra vires activity
How do we handle ultra vires activities today? Are they valid? S/H recourse? Liability?
Valid
SH can seek an injunction
Responsible managers are liable to corp for ultra vires losses.
Why is failure to form a de jure corporation a bad thing?
Can expose SH to liability
Two defenses to faulty corp formation to protect SH?
De Facto Corp
Corp By Estoppel
Three requirements for a De Facto Corp?
Relevant incorporation statute
The parties made a good faith, colorable attempt to comply with it; and
Some exercise of corporate privileges (i.e., acting like a corp)
Effect of a De Facto Corp?
If all 3 elements met, the business is treated like a corpr for ALL PURPOSES, except in an action by the state (quo warranto)
Explain Corp by Estoppel
One who treats a business like a corp may be estopped from denying that it is a corp.
Corp by Estoppel applies ONLY in these type of cases, not these
Contract, NOT tort.
If a bylaw conflicts with a A of I, which controls?
The A of I.
Are bylaws binding on outsiders?
No
Who is a promoter?
Person acting on behalf of the corp not yet formed. Enters contracts on behalf of the corp.
A corp will not be liable on pre-corp contracts until when?
It adopts the k
A corp can adopt a k in two ways. Explain them
Express – BOD action adopting the k
Implied – corp accepts the benefit of the k
A promoter will be held liable on pre-inc contracts until what happens?
A novation
