hot topics Flashcards
What must be included in the articles of incorporation?
The name of the corporation, number of authorized shares, name and address of incorporators and registered agent, and address of principal office. The name must include a ‘magic word’ indicating corporate status and cannot be similar to existing names.
When does corporate existence begin?
Corporate existence begins when articles are filed by the state. Promoters are generally liable for preincorporation contracts, and liability continues even after the corporation is formed absent a novation.
What happens if there are defects in formation?
A person acting on behalf of a corporation knowing there was no valid incorporation is personally liable. No liability exists if there is a de facto corporation or if the corporation by estoppel is recognized.
What is required to pierce the corporate veil?
Shareholders must have abused the privilege of incorporating, and fairness must require holding them liable. This includes ignoring corporate formalities, undercapitalization, or perpetrating fraud.
What is the capital structure of a corporation?
Debt securities create a debtor-creditor relationship, while equity securities create ownership interest. Authorized but unissued shares are described in the articles but not currently issued.
How can foreign corporations do business in a state?
A foreign corporation must obtain a certificate of authority to transact business within Georgia. Failure to qualify within 30 days incurs a civil penalty and prevents the corporation from bringing suit in Georgia courts.
How do shareholders vote?
Shareholders indirectly control the corporation by electing directors, amending bylaws, and approving fundamental changes. Record shareholders on the record date have the right to vote at the annual meeting and regarding fundamental corporate changes.
What types of meetings can shareholders have?
Annual meetings must be held to elect directors, while special meetings can be called for proper shareholder purposes. Notice must be given for both types of meetings.
What is the quorum requirement for shareholder meetings?
Generally, a majority of the outstanding voting shares must be present for a valid vote. Once a quorum is reached, a shareholder leaving does not invalidate the voting.
What is cumulative voting for directors?
Cumulative voting must be included in the articles for it to exist. Shareholders can vote their shares owned multiplied by the number of directors being elected.
