Formation

Question 1

Promoter liability

Answer 1

Promotors are liable until novation (agreement by promotor, corp, and other contracting party that corp takes over liability)

Question 2

Corporation liability for promoter preincorporation contracts

Answer 2

corp becomes liable when it adopts expressly (board resolution) or impliedly (knowledge and acceptance of benefits of contract)

Question 3

Subscribers and revocability

Answer 3

Subscribers are persons or entities who make written offers to buy stock from corps not yet formed

irrevocable for 6 months

Question 4

Shareholder liability

Answer 4

Shareholders generally not liable for coroporate obligations

Question 5

Exception to shareholder liability

Answer 5

Shareholders liable when corporate veil is pierced

When court believes that justice will be served by preventing fraud or unfairness (3 main situations)

Question 6

Exception to shareholder liability

Answer 6

Shareholders liable when corporate veil is pierced

When court believes that justice will be served by preventing fraud or unfairness (3 main situations)

Question 7

Requirements of Aricles of Incorporation

Answer 7

A PAIN
Authorized shares
Preferences of shares
Agent
Incorporators
Name

Question 8

Usual situations where courts pierce the corporate veil

Answer 8

Alter ego: controlling shareholder fails to observe sufficient corporate formalities

Undercapitalization: corp fails to maintain sufficient capital for foreseeable liabilities

Misuse of Corporate Form: using corporation to avoid personal obligations/fraud/general injustice