FACT PATTERN 1: ORGANIZATION OF A CORPORATION- WHAT DOES IT TAKE TO FORM A CORPORATION? Flashcards
WHAT DOES IT TAKE TO FORM A CORPORATION?
People, Paper, Act
what are the people that make the corporation called?
incorporators
How many incorporators do you need?
One or more
What does an incorporator do?
They execute (sign)sign the articles and deliver them to the secretary of state.
Can an incorporator be an entity?
Yes. incorporator can be an individual or an entity.
Can XYZ, Inc. serve as an incorporator for Curl Up and Dye Beauty Supply Corp.? Can Joan Rivers?
Yes, incorporator can be an individual or an entity.
What is the paper that needs to be filed to form a corporation called?
Articles of Incorporation.
What are the two purposes of the articles of incorporation?
a. The articles are a contract between the corporation and the shareholders.
b. And also a contract between the corporation and the state.
What is the info that needs to be in the articles of incorporation?
1) Corporate name.
2) Name and address of each incorporator.
3) Name and address of each initial director.
4) Name of registered agent and address of the registered office. (Registered agent is the company’s legal representative, so can receive service of process for the corporation.)
Can I form a corporation with the name Vance Refrigeration?
No.
A corporations name must include at least one of 4 words. What are they?
Corporation, company incorporated, limited
What if there is no statement of the corporation’s duration?
Presume perpetual existence. (unless articles state something else)
Does the corporation need to have a statement of purpose?
Generally, yes.
Can the articles of Vance Refrigeration, Inc. indicate that the corporation’s purpose is to “engage in all lawful activity, after first obtaining necessary state agency approval”?
Most corporations say that.
What if there is a specific statement of purpose, what do you look for?
ultra vires rules problems
What if the articles of Vance Refrigeration, Inc. say the corporation will “manufacture refrigeration machinery” and the corporation then goes into gold mining?
Doing this is an ultra vires activity(it’s beyond the scope of the articles)
At common law, what was the consequence of having an ultra vires contract?
any ultra vires contract could be voided as beyond the company’s capacity
How do we handle ultra vires today?
- Ultra vires contracts are valid as to third parties.
- Shareholders can seek an injunction to stop an ultra vires act. (no creditor can sue)
- The corporation itself can sue it’s mangers for any harm caused by an ultra vires act.
What is Authorized stock?
maximum number of shares the corporation can sell.
What is Issued stock?
number of shares the corporation actually sells.
What is Outstanding stock?
shares that have been issued and not reacquired.
What must the articles include as to stock?
Articles must include:
(a) authorized stock,
(b) number of shares per class, and
(c) information on voting rights and preferences of each class.
What is the Act that is needed for incorporation?
Incorporators have notarized articles delivered to the Secretary of State and pay required fees.
What happens if the Secretary of State’s office accepts the articles for filing?
That is “conclusive proof” of valid formation.
After the articles have filed what kind of corporation do we have at this point?
At that point, we have a de jure corporation.
What must the newly formed corporation do after it files the articles of incorporation?
the board of directors holds the organizational meeting, where it selects officers and adopts any bylaws and conducts other appropriate business.
