Organization of a corporation Flashcards
(30 cards)
What does it take to form a corporation?
people- incorporators
paper- articles of incorporation
act
Paper: corporate name: magic words
corporation
company
incorporated
limited
Paper: what names must be included in articles of incorporation? 4
1) corporate name
2) incorporator name and address
3) director name and address
4) name of registered agent (legal rep) and address of registered office
Paper: what must articles of incorporation include?
1) names and addresses
2) statement of purpose
3) capital structure (stock)
Doing something beyond the scope of corporation’s purpose is an ultra vires activity. How do we handle ultra vires today?
1) ultra vires Ks are VALID
2) shareholders can seek an INJUNCTION
3) responsible managers are LIABLE to the corporation for ultra vires losses
Articles of incorporation must include capital structure, including
1) authorized stock
2) number of shares per class
3) info on voting rights and preferences of each class
What is authorized stock?
maximum number of shares the corporation can sell
What must incorporators do?
execute articles and deliver them to secretary of state
Act: what happens if incorporators have notarized articles delivered to the Secretary of State and pay required fees and Secretary of State’s office accepts the articles for filing?
that’s conclusive proof of valid formation and at that point we have a de jure corporation
Who holds an organizational meeting?
The Board of Directors
What happens at an organizational meeting?
The Board of Directors selects officers and adopt bylaws
There’s double taxation on corporations. What is it taxed on?
It is taxed on its profits and shareholders are taxed on distributions
What’s is an S Corporation?
It’s a way to avoid having to pay income tax at the corporate level. Has no more than 100 shareholders. There is one class of stock and it is not publicly traded
Are directors or officers liable for what the entity does?
No.
Are shareholders / owners liable for what the entity does?
No
Who is liable for what the corporation does?
The corporation itself.
What happens if proprietors fail to form it de jure corporation?
Will be personally liable for what the business does because it’s just a partnership
Unless de facto corporation or corporation by estoppel
DFC requirements
What happens if meet reqs?
One. There is a relevant incorporation statute. There is.
Two. The parties made a good-faith, colorable attempt to comply with it.
Three. Some exercise of corporate privileges. Acting like we have a corporation.
Anyone asserting this doctrine must be unaware of failure to form a did your corporation.
Business is treated as a corporation for all purposes except in action by the state
Corporation by Estoppel
What is it and what does it apply to?
One who treats a business as a corporation maybe Estopped from denying that it is a corporation
it can also prevent that improperly formed corporation from avoiding liability by saying it was not properly formed
Anyone asserting this doctrine must be unaware of failure to form de jure corp
Only applies to contract not tort cases
What is the status of the two doctrines DFC and Corporation by estoppel?
Abolished in many states
Are corporations required to have bylaws
No
Are bylaws filed with the state
No they’re internal
Who adopts the initial bylaws?
The board of Directors at the organizational meeting
Who can amend or repeal the bylaws of the corporation?
Shareholders or in many states the board also can
