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Statements of Law > Corporations > Flashcards

Corporations Flashcards

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1
Q

Corporation Formation

A

(1) Incorporator
(2) Paper
(3) Act

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2
Q

Incorporator

A

Person or entity who executes and delivers the articles of corporation

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3
Q

Paper

A

(1) name with Inc
(2) incorporator info
(3) registered agent info
(3) stock, its levels and rights

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4
Q

Act

A

notarize the paper and deliver to secretary of state

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5
Q

de jure corporation

A

the corporation legally exists upon the filing and SOS acceptance for filing of the articles of incorporaiton.

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6
Q

Complete the Organization of the Corproation

A

Board of Directors hold meeting to
(1) adopt initial bylaws
(2) appoint officers

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7
Q

If Articles of Incorporation and Bylaws conflict

A

The Articles govern

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8
Q

Bylaws can be amended

A

by the board or the shareholders

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9
Q

Internal Affairs Doctrine

A

the duties of the corporate people are governed by the laws of the state of incroporation

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10
Q

Entity Status

A

it is a legal person
can contribute to charity, sue, be sued

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11
Q

B-Corp

A

formed for profit but formed for a social policy benefit
the articles must say that it is a benefit corproation, files areport for the mission,

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12
Q

Double Taxation

A

corporation pays income tax, and the shareholders pay income tax

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13
Q

S-Corp

A

subchater S of the IRS code,
does not pay federal income tax at the entity level.
no more than 100 shareholders, no entity shareholders, all be U.S. citizens
1 class of stock that is not publicly traded

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14
Q

C-Corp

A

pays federal income

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15
Q

Limited Liability

A

S/H not personally liability for any debts
Officers/Board not personally liable
Corporation itself is liable for the debts

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16
Q

Defective Incorporation

A

thought corporation formed, but failed so liable because only formed a partnership
Except (1) de facto corporation (2) corporation by estoppel relieves personal liability

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17
Q

De facto corporation doctrine

A

(1) unaware of failure to form a de jure corporation
(2) relevant incorporation statute, all states have this
(3) good faith, colorable attempt to comply
(4) exercise of corporate privileges like a corporation

the business is treated as a corporation for contract and tort purposes except in a pro warranto action by the state.

18
Q

Corporation by Estoppel

A

applies only to contracts when a party treats the corporation as a corporation and then sues saying it is not a corporation, estopped from saying that because treated as a corporation

19
Q

Pre-Incorporation Contracts

A

Corporation, not liable unless expressly or impliedly adopt a promoters contract
Promoter, is liable until express or implied novation (even if the corporation is formed and adopts)

20
Q

Express Adoption

A

board takes action adopting the K

21
Q

Implied Adoption

A

accepted benefits of the K

22
Q

Express Novation

A
23
Q

Implied Novation

A
24
Q

Foreign Corporation

A

corp. transacting business in another state or foreign country
transacting business means the regular course of intrastate business activity, includes systematic business there not just owning property or sporadic deals there.

25
Q

Foreign Corporation Qualifying to do business

A

must get a certificate of authority by registering with SOS, providing articles, proving good standing, registered agent and office

26
Q

Consequences of foreign corporation qualifying

A

civil fine
cannot asset a claim in the state
can be sued and defend
it must pay the fines and meet the requirements to assert a claim

27
Q

Issuance of Stock

A

Pre-incorporation

28
Q

Subscriptions

A

offers to buy stock from corporation

29
Q

Preincorporation subscriptions

A

irrevocable for six months unless terms or all subscribers consent to revocation

30
Q

postincorporation subscriptions

A

revocable until accepted the board of directors accepts the offer

31
Q

Consideration for the Stock

A

any tangible or intangible property or benefit to the corporation
ex. property, services already provided, discharge of debt, services in the future,

32
Q

Stock options for employees

A

valid

33
Q

par value

A

the corporate peppercorn
the minimum issuance price, can receive more.

34
Q

no par value

A

no minimum issuance price
board can issue stock for any price it sets

35
Q

treasury stock

A

company issued and reacquired, corp can resell at any price the board wants

36
Q

who determines the value for property or past services for issuance of stock

A

the board, puts value on the consideration, conclusive if made in good faith

37
Q

watered stock

A

stock is issued less than its par value
board is liable because they knowingly authorized it, X is liable because they had notice of the deficit in the par value, a third party acting in good faith is not liable because they did not have notice of the water.

38
Q

preemptive rights

A

existing owner of a corp has right to maintain % of ownership by buying new issues of stock for money or equivalent (not property or services)
must be expressly in the articles of incorporation for the right, if silent no preemptive right

39
Q

Fiduciary Duties of Directors to Corp

A

(1) A director must discharge their duties in good faith and with the reasonable belief that their actions are in the best interest of the corporation. (Loyalty)
(2) A director must act with the care that a person in like position would reasonably believe appropriate under the circumstances. Note, it is not a prudent person standard. (Care)

40
Q

Duty of Care

A

Burden on the Plaintiff
nonfeasance - director does nothing, lazy, fails to attend or know of company business - liable if nonfeasance caused company harm. (hard to prove because company may have lost money anyways)
misfeasance - board makes a decision that hurts the business - causation is clear but subject to the business judgment rule

41
Q

Business Judgement Rule

A

Presumption that the board did appropriate homework before the action.
Court won’t inquire to the business decision if it was made in good faith, informed, and having a rational basis.

42
Q

Duty of Loyalty

A

Conflict of Interest
business judgment rule doesn’t apply to duty of loyalty because conflict of interest.
Burden is on the Defendant
Self-Dealing/interested director transaction

Statements of Law (15 decks)

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