Characteristics and Formation of the Corporation

Question 1

Who owns a corporation?

Answer 1

The shareholders

Question 2

Who can be held liable for a corporation’s obligations?

Answer 2

Generally only the corporation itself. Shareholders, directors, and officers have limited liability.

Question 3

How is a corporation managed?

Answer 3

As a general rule, by the board of directors, which delegates day-to-day operations to officers. It is possible, though, for shareholders to vest management power in themselves.

Question 4

Are ownership shares transferable?

Answer 4

Yes, shareholders can usually freely transfer shares, though this can be restricted by agreement of the shareholders.

Question 5

How long does a corporation last?

Answer 5

A corporation may exist perpetually.

Question 6

What is a C Corp?

Answer 6

C Corporations are taxed as an entity on the profits made (at preferential rates) and shareholders are taxed again When income is distributed.

Question 7

What is an S Corp?

Answer 7

Certain corporations can elect to be taxed as a partnership, eliminating the double taxation that characterizes the typical corporate form. An S Corp is taxed using pass through taxation, meaning profits and losses flow directly to owners. [***PUT IN REStriCTIIONS]

Question 8

What is a benefit corporation?

Answer 8

A/K/A a B corp is a corporation formed to benefit both the public and shareholders. They maintain the same fiduciary duties but are also required to assess the impact of their decisions on employees, customers, communities and the environment and prepare an annual benefit report. Taxed like C Corps.

Question 9

How is a B Corp formed?

Answer 9

In accordance with regular state incorporations law but the articles of incorporation must also state that it is a benefit corporation.

Question 10

What is necessary for the formation of a corporation?

Answer 10

X

Question 11

What does an incorporator do?

Answer 11

X

Question 12

What are the required contents of the articles of incorporation?

Answer 12

X

Question 13

What additional steps beyond incorporation are necessary to initially organize the corporation?

Answer 13

X

Question 14

What optional provisions may be set forth in the articles of incorporation?

Answer 14

X

Question 15

What are ultra vires acts?

Answer 15

X

Question 16

What is the effect of an ultra vires act?

Answer 16

X

Question 17

Are corporations allowed to make charitable donations?

Answer 17

X

Question 18

What is the difference between a de jure corporation and a de facto corporation?

Answer 18

X

Question 19

What are the common law requirements for formation of a de facto corporation?

Answer 19

X

Question 20

What does the RMBCA say about de facto corporations?

Answer 20

X

Question 21

What is a corporation by estoppel?

Answer 21

X

Question 22

What is the effect of the corporation being considered a de facto corporation?

Answer 22

X

Question 23

How are de facto/estoppel doctrines applied in contracts cases?

Answer 23

X

Question 24

How are de facto/estoppel doctrines applied in torts cases?

Answer 24

X

Question 25

How are de facto/estoppel doctrines applied in determining the liability of associates?

Answer 25

X

Question 26

Do all states recognize de facto and/or estoppel doctrines?

Answer 26

X

Question 27

What is piercing the corporate veil?

Answer 27

X

Question 28

In which situations will the corporate veil be pierced?

Answer 28

X

Question 29

What is the alter ego theory of corporate veil piercing?

Answer 29

X

Question 30

When is a corporation deemed an alter ego of its shareholders?

Answer 30

X

Question 31

When is a corporation deemed an alter ego of a parent or subsidiary corporation?

Answer 31

X

Question 32

When is a corporation deemed an alter ego of an affiliated corporation?

Answer 32

X

Question 33

What is the inadequate capitalization theory of corporate veil piercing?

Answer 33

X

Question 34

How is inadequate capitalization theory applied in one-person or close corp situation?

Answer 34

X

Question 35

How is inadequate capitalization theory applied in parent/subsidiary situation?

Answer 35

X

Question 36

What is the fraud justification for corporate veil piercing?

Answer 36

X

Question 37

When the corporate entity is ignored, who is liable?

Answer 37

X

Question 38

Which cases are more successful corporate veil piercing cases?

Answer 38

X

Question 39

What law governs internal corporate affairs?

Answer 39

X

Question 40

What is a corporation’s legal status?

Answer 40

X

Question 41

What is a promoter?

Answer 41

X

Question 42

Is a corporation bound to contracts made on its behalf prior to its formation?

Answer 42

X

Question 43

Is a promoter liable on contracts made on a corporation’s behalf prior to its formation?

Answer 43

X

Question 44

What must foreign corporations transacting in a state do?

Answer 44

X

Question 45

What is the nature of a promoter’s relationship to other promoters?

Answer 45

X

Question 46

What is the nature of the promoter’s relationship with the corporation?

Answer 46

X

Question 47

Under what theories will a promoter’s liability to the corporation arise?

Answer 47

X

Question 48

What will happen when a promoter personally profits from a sale of property to the corporation?

Answer 48

X