1. Formation (RMBCA)

Question 1

What is required to form a de jure corporation?

Answer 1

Revised Model Business Corporate Act (RMBCA)

1) Articles of Corporation
- Corporation’s name
- Shares (authorised for issuance)
- Agent’s name + address
- Incorporatiors’ name + address
- Other provisions consistent w/ RMBCA

2) Lawful business purpose
- Related activities

3) Organisational meeting
- Directors’ election (by SHs)
- Officers’ appointment
- Adoption of bylaws (by Ds)

4) Incorporators must file Articles with Secretary of State
- Corporation then exists

Question 2

Can a corporation be formed if the business purpose is not lawful (ultra vires)?

Answer 2

Common law (no)
- Void

RMBCA (yes)

• Enjoin purpose
• SH/State sues Corporation
• Corporation sues D/Employee

Question 3

What is the difference between Articles of Incorporation and Bylaws?

Answer 3

Articles
- Deals with formation of Corporation

Bylaws
- Deals with daily management of Corporation

Question 4

Which takes precedence between conflicting Articles of Incorporation and Bylaws?

Answer 4

Articles

Question 5

How can members avoid liability to third parties for actions before Corporation was incorporated?

Answer 5

De Facto Corporation (common law)

1) Existing statute (Corporation could have been formed under)
2) Liable SH made good faith attempt to comply
3) Business conducted under Corporation’s name/corporate privilege
- Contract + Tort victims

Corporation by estoppel (case-by-case)

• TP dealt with corporation as if Corporation existed
• TP estopped from denying Corporation’s existence
• Contract victims

Question 6

How can members be liable to third parties for actions before Corporation was incorporated?

Answer 6

Member knew corporation did not exist at the time of transaction => Jointly + severally liable with Corporation

Question 7

What is required for modifying/repealing bylaws?

Answer 7

Majority vote of SHs/Ds