Corporations Flashcards
When does a corporation’s existence begin?
A corporation’s existence begins on the date the Articles of Incorporation are filed with the Secretary of State, unless a delayed effective date is specified.
What must the Articles of Incorporation contain?
The Articles of Incorporation must contain: (1) the corporate name; (2) the number of shares the corporation is authorized to issue; (3) the address of the corporation’s initial registered office and the name of its initial registered agent at that office; and (4) the name and address of each incorporator.
How is a Limited Liability Company (LLC) formed?
An LLC is formed when: (1) the Articles of Organization (a.k.a. Certificate of Formation) is properly filed with the Secretary of State; and (2) the company has at least one member.
What governs the relations in an LLC?
Unless stated otherwise, the Operating Agreement governs: (1) the relations between the members and the LLC; (2) the rights and duties of managers; (3) the activities and affairs of the company; and (4) any means and conditions for amending the Operating Agreement.
What is a de jure corporation?
A legally formed corporation is called a de jure corporation, formed when the Articles of Incorporation are filed with the Secretary of State.
What happens if a corporation is not legally formed?
A corporation that is not legally formed cannot enter into contractual obligations, resulting in personal liability of the owners/promoters, unless exceptions apply.
What is a de facto corporation?
A de facto corporation exists where the entity: (1) made a good faith attempt to incorporate; (2) is otherwise eligible to incorporate; and (3) took some action indicating that it considered itself a corporation.
Who can assert the de facto corporation doctrine?
Only a person who was unaware that the corporation was not properly formed may assert the de facto corporation doctrine.
What is the doctrine of corporation by estoppel?
Under the doctrine of corporation by estoppel, any person or entity that treated a business as a corporation may be estopped from denying that the business is a corporation, even if a valid corporation was not formed.
To whom does the doctrine of corporation by estoppel apply?
The doctrine applies to both: (a) third-parties that treated the business as a corporation; and (b) an entity that held itself out as a corporation and benefited from that claim.
What is promoter liability?
A promoter is a person who acts on behalf of a corporation that has not yet been formed and remains personally liable on any pre-incorporation contract entered into.
What are the exceptions to promoter liability?
Two exceptions to promoter liability exist: (1) where there was a subsequent novation; or (2) if the contract explicitly provides that the promoter has no personal liability on the contract.
Is a corporation liable for pre-incorporation contracts?
A corporation is not liable for a pre-incorporation contract entered into by a promoter unless the corporation adopts the contract.
How can a corporation adopt a pre-incorporation contract?
A corporation may adopt the contract either: (a) expressly – through a board resolution; or (b) impliedly – by knowing the material terms and accepting/retaining benefits of the contract.
