Formation: articles of incorporation

Question 1

Incorporator role

Answer 1

Must sign and file articles of incorporation AND pay fee

Question 2

Is incorporator liable for Ks entered by promoters?

Answer 2

NO, just promoters (or corp if there is novation)

Question 3

Definition of Articles of Incorporation

Answer 3

Like K between corporation + shareholders

Establishes parties’ basic rights

Question 4

What must articles of incorporation include?

Answer 4

1) NAME (incl. Corp/Company/LLC/Inc)
2) name/address of corporation agent
3) name/address of incorporators
4) Duration of corporation
5) purpose of corporation
6) authorized shares (maximum number of each type of stock corp can issue)

Question 5

What is usual duration of corporations?

Answer 5

Perpetual

Question 6

Ultra vires

Answer 6

Acting beyond powers of incorporation

If corp acts outside its stated purpose, acts will be UNENFORCEABLE

Question 7

Who can take action for ultra vires

Answer 7

SHAREHOLDERS can sue to enjoin

STATE can initiate proceedings to enjoin

Or corporation itself

Question 8

What is corporation’s usual purpose and what is its effect on ultra vires?

Answer 8

Usually: “to engage in any lawful activity”

Thus, hard to make ultra vires claim