Formation Flashcards
What are the requirements to form a de jure corporation?
- Person
- Paper (articles of incorporation)
- Act (filing of articles)
What are the required contents of the articles of incorporation?
- Corporate name;
- Number of shares the corp. is authorized to issue;
- Name of registered agent and address of registered office, and
- Name and address of each incorporator.
When does corporate existence begin?
On the date the articles of incorporation are properly filed with the Secretary of State.
What is the organizational meeting and who holds it?
Purpose is to adopt initial bylaws and appoint officers.
If initial directors were named in the articles, they hold the meeting. If not, the incorporators hold it.
What happens if the bylaws and articles of incorporation conflict?
The articles control!
What is the internal affairs doctrine?
Internal affairs of a corporation are governed by the law of the state of incorporation.
What is a B Corp?
A benefit corporation formed for profit and also to pursue some benefit to a broader social policy cause.
Who is liable for corporate debts?
The corporation. NOT shareholders/directors/officers!
What are bylaws?
Rules and regulations adopted by the board that govern the internal operations of a corp.
May contain any provision not inconsistent with the articles or law of the jurisdiction.
What are the requirements for a de facto corporation?
- Made a good faith attempt to incorporate;
- Is eligible to incorporate; and
- Took action that it considered itself a corp.
This doctrine only prevents personal liability for persons unaware that a corp. wasn’t properly formed!!
What is corporation by estoppel?
A person/entity may be estopped from denying that a business is a corp. when it treated the business as such.
Only applies in contract cases.
Anyone asserting must have been unaware that a corporation was not properly formed!
Who is liable if a corporation was not properly formed?
Owners may be personally liable, but see if de facto corporation or estoppel doctrines apply.
Who is a promoter?
A person acting on behalf of a corporation not yet formed.
Before a corporation is formed, promoters procure commitments for capital, etc. that will be used by the corporation after its formation.
When is a corporation liable for a promoter’s pre-incorporation agreement?
Only when it expressly or impliedly adopts the promoter’s contract (e.g., take action or accept benefits).
When is a promoter personally liable for pre-incorporation agreements?
- They purport to act as or on behalf of a corp., and
- Knows no corp. was formed.
A corporation does not yet exist when the agreement is entered, so can’t be liable – must be promoter.
