Corporations

Question 1

Corporation

Answer 1

Legal entity distinct from its owners and may be created only by filing certain documents with the state

Question 2

Shareholders

Answer 2

Owners of the corporation

Question 3

Board of Directors

Answer 3

Group in charge of management

Question 4

Officers

Answer 4

Agents of the corporation appointed to carry out the policy

Question 5

Liability?

Answer 5

Shareholders, directors, and officers are generally not liable for the obligations of the corporation.

The corporation itself, however, can be held liable for the corporate obligations

Question 6

Key Characteristics

Answer 6

1. Limited Liability
2. Centralized Management
3. Free Transferability of Ownership
4. Continuity of Life
5. Taxation

Question 7

Taxation

C Corp

Answer 7

A corporation is taxed as an entity distinct from its owners.
Double Taxed once income is realized (corporate level then personal level.

Question 8

Taxation

S Corp

Answer 8

Taxed like a partnership. Profits and losses flow through the entity to the owners.

Restrictions:
- Stock held by no more than 100 persons
- Only one class of stock allowed

Question 9

Key Fact Patterns

Answer 9

1. Organization of Corporations
2. Issuance of Stock
3. Directors and Officers
4. Shareholders
5. Fundamental Corporate Changes

Question 10

Fact Pattern 1

MBCA

Answer 10

Model Business Corporation Act

Question 11

Fact Pattern 1

De Jure Corporation

Answer 11

Corp formed in accordance with the law
(Insulates against Personal Liability of shareholders)

Question 12

Fact Pattern 1

De Facto Corporation

Answer 12

Colorable compliance with most statutory provisions and exercise of corporate privileges
(Insulates personal liability, but corporation subject to quo warranto proceeding by the state)

Question 13

Fact Pattern 1

Corporation by Estoppel

Answer 13

Parties act as if there is a corporation; no requirement of following statutory provisions for formation
(Insulates against personal liability in contract but not in tort)

Question 14

Fact Pattern 1

Requirements for De Jure Corp

Answer 14

1. Person
2. Paper
3. Act

Question 15

Fact Pattern 1

Person

Answer 15

One or more persons who undertake to form a corporation, AKA incorporators.

Question 16

Fact Pattern 1

Paper

Answer 16

Articles of Incorporation

Question 17

Fact Pattern 1

Act

Answer 17

Filing with the state.

Question 18

Fact Pattern 1

Articles of Incorporation Required Contents

Answer 18

1. Name of the Corp (must include words like corp, inc, co, etc.)
2. Name and address of each incorporator
3. Registered Agent and the street address of the registered office (legal rep for service and such)
4. Information regarding the corporation’s stock (details about authorized stock, classes, numbers in each class, voting rights, preferences, and limitations of each class of stock)

Question 19

Fact Pattern 1

Optional Contents

Answer 19

Any other provision regarding operation of the corporation (i.e. names and addys of the initial directors)

Question 20

Fact Pattern 1

Business Purposes

Answer 20

Traditionally, Corporations have included a statement of business purposes in the articles.