corporations

Question 0

what are the requirements for articles of incorporation?

Answer 0

1. Written in english, signed by each incorporator or agent of each
2. Correctly filed: in person, fax, electronic submission, email attachment

Question 1

what forms must be filed for a corporation?

Answer 1

articles of incorporation AND
initial report
(File with Secretary of State and within 30 days the mortgage office of parish where registered office of corporation is)

Question 2

what must the articles of incorporation include?

Answer 2

Corporation name and purpose
# shares
Par value/ rights of class (or without par value)
duration
name and address of corporation

Side notes: purpose “to engage in any lawful business activity for profit” is okay… “to make money” is not.

Question 3

what must the initial report have to be valid?

Answer 3

must be signed by each incorporator

must state name and address of registered office, agents, and directors if applicable

Question 4

were the articles of incorporation filed properly?

Answer 4

articles must include:
Name of corporation
Corporate Purpose
Number of Shares
Par Value or No Par
Duration
Full name and address of each incorporator

Question 5

in order to form a corporation what must be prepared and filed?

Answer 5

Articles of incorporation
Initial report
Must file within 30 days of filing with Secretary of State office in the office of recorder of mrotgages in parish where corporations registered office is located
(include discussion of what must be in articles)
Make sure any desired clauses are included to have effect: preemptive rights, cumulative voting; cumulative or participating rights for preferred shareholder sin dividdend distributions; limiting shareholder, director, or officer liability for breach of duty of care (not for loyalty) ; statement that unclaimed dividends revert to the corporation (otherwise reversion to state)

Question 6

what clauses should be included in articles of corporation in order to have effect?

Answer 6

Make sure any desired clauses are included to have effect: preemptive rights, cumulative voting; cumulative or participating rights for preferred shareholder sin dividdend distributions; limiting shareholder, director, or officer liability for breach of duty of care (not for loyalty) ; statement that unclaimed dividends revert to the corporation (otherwise reversion to state)

Question 7

what are preemptive rights, and under what circumstances will one have them?

Answer 7

rights of each shareholder to purchase the same percentage of a block of newly issued shares as they currently hold of the stock of corporation. Shareholders do not have preemptive rights unless the corporate articles expressly grant them. If they do, that gives each shareholder the right to purchase the same percentage of newly issued stock as she currently holds of total voting shares. (if they do not want exceptions to apply, must state so in articles)

Question 8

what is cumulative oting? when do they have these rights?

Answer 8

Method for electing directors with the following characteristics:

1. all of the directors seats up for election at any given time are determined from a single slate of all candidates running for the board of directors
2. each share of stock is entitled to anumber of votes equal to the number of board seats up for election at that time
3. a shareholder may cast all of the votes he holds for his shares for one candidate or distribute in any manner
4. when all votes are counted the candidates are ranked according to number of votes, to votes get seats elected. Must be expressly provided for in the articles, otherwise directors are elected by plurality vote, each seat voted on separately.

Question 9

What are bylaws

Answer 9

created by directors, adopted by directors at first meeting. may adopt or amend without shareholder approval, but subject to change or repeal by shareholders. No requirement to have or to file them.

Question 10

Must a corporation adopt bylaws? how are they adopted?

Answer 10

no a corporation does not have to adopt by laws. If they do elect to have them, they are made by action of corporations board of directors. However, the power of the board to make and amend the bylaws is subject to the power of the shareholders to change or repeal them.

Question 11

who normally posesses the authority and power to adopt and change corporate bylaws?

Answer 11

normally the power to adopt and amend corporate by laws rests with the board of directors.

Question 12

do the teledata (specific to question) shareholders ordinarily have the power to change or repeal bylaws specifically adopted by directors?

Answer 12

yes. the power of the board of directors to adopt and amend the by laws is expressly “subject to the power of the shareholders to change or repeal any of the bylaws made”

Question 13

after passage of single bylaw and amendment by shareholders, how many remaining shares in aggregate does (teledata) board now have power to issue? can bylaws change number of shares?

Answer 13

authorization ot issue stock must be in articles of incorporation. any provision in by laws changing number of authoirzed shares is invalid.

Question 14

when is legal existance of a corporation ?

Answer 14

retroactive to date articles were filed (or date of notary if within 5 days of filing)

Question 15

is there any action shareholders may take to ensure corporations cannot issue further shares?

Answer 15

the only way shareholders can take away boards authority to issue the authorized but unissued shares would be to amend the articles of incorporation to reduce the number of shares. Must sign a petition calling for a special meeting of shareholders to vote on proposed amendment. Must then be filed with corporate secretary, at meeting two thirds would have to be voted in favor of amendment. Then the amendment would be adopted and board could no longer issue shares.

Question 16

is (company) required to issue certificates of stock representing shares of ownership in the business? If so, what information must be shown on each certificate? If not, will this affect right of shareholders

Answer 16

each share of stock must be represented in a stock certificate unless the issuing corporation is a participant in DRS Direct Registration System. (or Depositary trust and clearning corporation) Such stock certificates must state.

1. name of corpoation and fact that it is organized under laws of louisiana
2. name of the person the stock is issued to
3. number and class of shares that certificate represents and serial number
   - if company does not issue certificates or is not participant in DRS, the rights and obligations of shareholders will be unaffected unless a specific provision provides otherwise

Question 17

a plan to issue stocks at midnight meeting has developed so one member can have more voting shares. what do you think of this?

Answer 17

assuming there are authorized shares of stock available for the board of directors to issue, a board may normally issue them for fair value to whomever the board chooses, provided it does not breach the directors fiduciary duty to act in the best interests of the corporation. There may be provision for preemptive rights, which means that all SH’s have the right to purchase the same percentage of any newly issued shares as each SH currently holds of the outstanding voting shares of the corporation. SO before new shares could be issued, they would have to offer all other SH’s the right to buy same percentages as they currently own.

Question 18

do any of shareholders face liability for receipt of dividend (unauthorized) and if so, which shareholders and why?

Answer 18

every shareholder who rec’d an illegal dividend check, whether aware of its illegality or not is liable to either the corporation or the creditors of the corporation for up to the full amount of the illegal dividend rec’d.
*generally shareholders are not personally liable for debts of corporation, but may be if it would cause injustice or reward fraud. Grounds are: business not conducted in proper corporate form (officers acting outside scope of duty, no minutes kept) assets treated as shareholders own or commingled with personal assets; under capitalized corporation; thinly capitalized

Question 19

what agency powers do officers have in a corporation?

Answer 19

an employee or officer has power to bind the corporation under actual authority or apparent authoirty. additionally when a person without actual authoirty acts, the corporation is bound if it ratifies the act expressly or by accepting benefit of the transaction

Question 20

what is ultra vires?

Answer 20

when a corporation exceeds its powers as stated in articles, it is still liable on a contract or for a tort

Question 21

is there any legal basis to contest (action of corporation that should have been made; i.e. dividends that are improper)?

Answer 21

the improper action may be challenged on the ground that directors did not authorize it. whom ever acted improperly did so ultra vires.