General Overview

Question 1

Promoter Liability

Answer 1

Generally, a promoter is personally liable and remains liable until the corporation comes into existence.
Three exceptions:
1. Novation
2. C expressly adopts the Kt or uses its benefits
3. 3rd party had ACTUAL KNOWLEDGE that there was no corporation

Question 2

Is a corporation liable for any transactions prior to its existence?

Answer 2

Generally, no.
Two exceptions:
1. C is liable if it expressly or impliedly adopts a contract
2. Novation: C is liable if all parties agree that C will assume liability for a promotoer’s kt.

Question 3

Requirements of Articles of Incorporation

Answer 3

1. Must be filed with the Dpt of State (DOS)
2. on the date it is accepted for filing, or
3. on a specified future date, if provided.
4. Must include corporate name (company, corporation, incorporated)
5. Must include address
6. Must include number of shares authorized to issue
7. Preemptive rights
8. Name and address of registered agent
9. Name and address of each incorporator

Question 4

Ultra Vires Actions

Answer 4

Latin for “beyond the powers”. It occurs when the C has a stated narrow purpose in its articles, but engages in activities outside the stated purpose.

Question 5

Who may sue on behalf of the C for an ultra vires act?

Answer 5

1. Shareholders
2. C against directors, employees, or officers.
3. The state

Question 6

Defective Incorporation Liability

Answer 6

Liable if acted without good faith. Not liable if acting with good faith.

Question 7

Remedies in a challenge to an ultra vires action

Answer 7

1. State can dissolve or enjoin the action

2. Shareholders or corporation can enjoin or award damages

Question 8

Hierarchy of authority

Answer 8

1. Statutes over
2. Articles of Incorporation over
3. Bylaws

Question 9

Florida tax rate on Corporations

Answer 9

5.5% state income tax after $50,000 exemption

Question 10

Activities regularly conducted during organizational meetings

Answer 10

1. Appointment of officers
2. Adoption of bylaws
3. Approval of contracts

Question 11

Annual reporting requirement

Answer 11

1. Name and address in incorporation
2. Principle office location
3. Tax ID number
4. Names and addresses of all principle officers, directors, agents, etc…
5. Must be filed between 1/1 and 5/1
6. Must be accompanied by fees
7. Must be accurate as of the date executed

Question 12

Consequence of failure to report

Answer 12

can result in dissolution and a bar from bringing any court action

Question 13

Common Stocks vs. Preferred Stocks

Answer 13

Common Stocks can vote on governance matters while preferred stocks have preference over other stick with regards to items such as distributions.

Question 14

Inspection of Records

Answer 14

A shareholder with a proper purpose has the right to inspect and copy corporate records upon 5 days written notice.

Question 15

What are the two types of shareholder suits?

Answer 15

1. Direct Actions: An action to enforce the SH’s rights for breach of fiduciary duty by D or O or a suit on grounds unrelated (Such as a tort claim by SH from one of C’s employees).
2. Derivative Actions: SH sues on behalf of C for harm suffered by C

Question 16

The law of corporations in Florida is governed by:

Answer 16

The Florida Business Corporation Act (FBCA)