Formation and Status of Corporation Flashcards
Creation of De Jure Corporation
Corporation formed in accordance with law
Incorporators must file articles of incorporaiton with secretary of state
Requirements of Articles of Incorporation (4)
(1) name of the corporation
(2) number of authorized shares to be issued
(3) name and address of registered agent
(4) name and address of each incorporator
Ultra Vires Acts
If corp formed for narrow business purpose it cannot undertake activites unrelated to purpose
aka: activities beyond the scope of stated business purpose
(action can only be brought by shareholders, corp, or state)
Bylaws
Contain the provisions for managing the corporation that is not inconsistent with the articles or law
adopted by directors and modified or repealed by a majoirty vote of either directors or shareholders
De Facto Corporation
(1) statute under which entity could have been validly incorporated;
(2) colorable compliance with the statute and good faith attempt to comply; and
(3) the conduct of business in the corporate name and exercise of corporate privileges
De Facto has all rights and powers of a de jure but subject to attack in quo warranto proceeding by the state
Corporation by Estoppel
Persons who have dealt with the entity as if it were a corp will be estopped from denying corporate existence
applies in contract to prevent parties from backing out of contractual obligations
DOES NOT APPLY IN TORT
Piercing the Corporate Veil (3 ways)
(1) Ignoring corporate formalities (alter ego/instrumentality): needs also to include some “basic injustice” that resulted
(2) Inadequate capitalization at time of formation: not enough unencumbered capital to reasonably cover prospective liabilities
(3) Fraud, avoidance of existing obligations, evading statutory provisions: mere fact of formation of corporation to avoid future liabilities not itself enough to pierce
