1. Setting Up A Business

Question 1

_{Person, Paper, Act}

What does the incorporator do?

Answer 1

Executes articles and delivers to secretary of state

Question 2

_{Person, Paper, Act}

What four things must the Articles of Incorporation contain?

Answer 2

1. Name of corp
2. Name and address of each incorporator
3. Registered agent and address of registered office
4. Info about stock

Question 3

_{Other steps}

What happens at the organisational meeting?

Answer 3

1. Directors and officers are elected
2. Bylaws are adopted

Question 4

_{Other steps}

Are the bylaws filed with the state?

Answer 4

No, they are internal

Question 5

_{Other steps}

What wins in a clash between bylaws and articles?

Answer 5

Articles

Question 6

_{Consequences of forming a corporation}

What is the internal affairs rule?

Answer 6

A corporation’s internal affairs are governed by the law of the state of incorporation

Question 7

_{Consequences of forming a corporation}

What is the status of a corporation and what things can it do?

Answer 7

Legal person

Can sue, be sued, be a partner, hold property

Question 8

_{Consequences of forming a corporation}

What type of corp is not liable for corporate income tax?

Answer 8

S-Corp

Question 9

_{Consequences of forming a corporation}

What are the three requirements for an S-Corp?

Answer 9

1. No more than 100 SHs
2. All SHs U.S. citizens or residents
3. Not publicly trader

Question 10

_{Consequences of forming a corporation}

Are SHs/directors/officers liable for corporate debts?

Answer 10

No

Question 11

_{Defective Incorporation}

If you fail to incorporate properly, what do you have and what is the consequence?

Answer 11

You have a partnership

You are liable for corporate debts

Question 12

_{Defective Incorporation}

What three things give rise to a de facto corporation?*

Answer 12

1. Relevant incorporation statute (always present)
2. Party made a good faith, colourable attempt to comply with it
3. Party must carry on though they thought it was a corporation

Question 13

_{Defective Incorporation}

Against whom will the de facto corporation doctrine not apply?

Answer 13

Actions against the state

Question 14

_{Defective Incorporation}

What will prevent a third-party from asserting that a de facto corporation exists?

Answer 14

Knowledge that the incorporation was defective

Question 15

_{Pre-Incorporation Contracts}

What is the name of a person acting on behalf of a not-yet-formed company?

Answer 15

Promoter

Question 16

_{Pre-Incorporation Contracts}

What must a corporation do to be liable on pre-incorporation contracts?

Answer 16

Adopt the contract

Question 17

_{Pre-Incorporation Contracts}

What are the two types of adoption, and what gives rise to them?

Answer 17

Express Adoption

Board expressly approves the contract

Implied Adoption*

Corporation accepts a benefit under the contract

Question 18

_{Pre-Incorporation Contracts}

Does adoption relieve the promoter of liability?

Answer 18

No, it just makes corp also liable under the contract

Question 19

_{Pre-Incorporation Contracts}

When is the promoter relieved of liability?

Answer 19

When there is a novation, swapping him for the corp as party to the contract