Corporations (Mediums)

Question 1

Formation of a Corporation

Answer 1

• Date of Corporate Existence→begins on the date the Articles of Incorporation are properly filed with the Secretary of State, unless a delayed effective date is specified.
  
  • RMBCA → DOES NOT allow an earlier effective date.
• De Jure Corporation = a properly formed corporation.
• Articles of Incorporation – are filed to form a corporation, and MUST contain:
  
  1. corporate name;
  2. number of shares the corp. is authorized to issue;
  3. corp.’s address and name of the initial registeredagent; AND
  4. name and address of each incorporator.
• The Articles of Incorporation control if there is a conflict with the Bylaws.

Question 2

Bylaws

Answer 2

• rules and regulations adopted by the BoD that govern the internal operations of a corp.
  
  • RMBCA→bylaws may contain any provision not inconsistent with the: (a) Articles of Incorporation; OR (b) law of the jurisdiction.

Question 3

Liability of Promoter

Answer 3

• A promoter acts on behalf of a corp. that has not yet been formed.
• A promoter is personally liable when:
  
  1. he purports to act as or on behalf of a corp.; AND
  2. knows no corp. was formed.
• A promoter remains personally liable for a pre-corp. contract even if the corp. subsequently adopts the contract.
  
  • BOTH the corp. and the promotor will be liable if adopted.
• A promoter is NOT liable if:
  
  1. there is a subsequent novation; OR
  2. the contract explicitly provides that the promoter has no personal liability.

Question 4

Liability of Corporation

Answer 4

• A corp. is NOT liable on a contract made by a promoter UNLESS the corp. expressly or impliedly adopts the contract post- incorporation.
  
  • Express Adoption = BoD action or reference in corp.’s formation documents.
  • Implied Adoption = Corp. (1) knows / has reason to know the material terms of the contract; AND (2) accepts some benefit of the contract.