I. Organization of a Corporations* Flashcards
1
Q
Forming a Corporation
A
- People
- Paper
- Act
2
Q
Formation: People
A
- INCORPORATORS: must have one or more.
- they execute the articles & deliver them to the secretary of state
- Can be a person or an entity (e.g. another corporation can be incorporator of a corp.)
3
Q
Formation: Paper
A
ARTICLES of INCORPORATION: what is it?
- **What: **
- Contract between CORPORATION & SHAREHOLDER (can add other interests to the contract)
- Also a K b/w CORP & STATE
4
Q
Articles of Incorporation: Names and Addresses
A
- CORPORATE NAME: Must include the magic words: Corporation, Company, Inc, etc.
- Names and addresses of EACH INCORPORATOR
- REGISTERED AGENT & OFFICE: which must be in GA–is representatitive for purposes of service of process
- address of PRINCIPAL OFFICE–can be anwywhere
5
Q
Ultra Vires Activities
A
Activites outside the scope of company purpose
6
Q
Article of Incorporation: Company Purpose
A
- DURATION is assumed to be perpetual if not listed
- PURPOSE: if not listed ,to conduct business
- ULTRA VIRES ACTIVITIES: activites outside the scope of the company’s purpose. At acommon law, would be voided as beyond capacity. Today
- 1) activities are valid
- 2) Shareholders can seek an injunction
- 3) Resposnible managers are liable to corp for any losses resulting from the UV activities
7
Q
Types of Stock
A
Types of Stock:
- AUTHORIZED STOCK: maximum number of shares the corp can sell
- ISSUED STOCK– number of shares the corp *actually sells *
- OUTSTANDING STOCK–shares that have been issued and not reqacquired by the corporation
8
Q
Articles of Incorporation: Stock Requirements
A
Articles must contain information about:
- Authorized Stock
- Number of Shares Per Class
- Information on Voting Rights and Preferences of Each Class
9
Q
Formation: Act
A
- Incorporators must excute articls and deliver them to GA sec of state along w/ certificate requesting to publish the company’s formation
- must pay fees
- electornic filing is okay
- once filed, proof of valid formation
- becomes a DE JURE corporation
- After that, directors–if named in articles–hold org meeting, selects officers and adopts bylaws and conducts other approrpiate business
- if not named, incorporators meet to name directors
*
- if not named, incorporators meet to name directors
10
Q
Legal Significance of Formation of Corporation
A
- INTERNAL AFFAIRS of a corp are governed by Georgia law even if their business is done outside of GA
- SEPARATE LEGAL PERSON:
- it can be sued, hold property, be a partner in a partnership, make donations, pay income tax, etc.
- Directors or officers are not liable for the corp
- sharehodlers not liable
- Limited liability–corp is liable
- TAXES: Taxed on profits; taxpayers taxed on distribution–means double taxation
- S corp can avoid taxation at corporate level but must have no more than 100 shareholdres, all of whom are human and US citizens or residents. Once class of stock–not publicly traded
11
Q
S Corp
A
- Not subject to corporate taxation on profits
- Requirements:
- no more than 100 shareholdres,
- all of whom are human
- and US citizens or residents.
- One class of stock–
- not publicly traded
12
Q
Defacto Corp and Corp by Estoppel
A
- If Proprietors failed to form a de jure corp so they will be personally liable for what the business does (it’s a partnership), they can invoke these doctrines so the business is treated as corp and they’re not liable
- Must be unaware of fialure to form corp
13
Q
De Facto Corporation
A
Requirements (in addition to believing they had formed a corp)
- There is a relevant incorporation statute (is one in GA)
- the parties made a GOOD FAITH, COLORABLE attempt to comply with it AND
- some exercise of corporate privileges are evidence (acting like they had one)
If requirements met, terated as a corp for all purposes EXCEPT IN AN ACTION BY THE STATE (quo warranto)
Not clear whether it has been abolished in GA
14
Q
Corportation by Estoppel
A
- One who treats a business as a corporation may be estopped from denying that it is a corporation
- e.g. customer treats you like corp for months, can’t sudenly decide your not for favorable liability
- Also used against corp where the business tries to argue it wasn’t properly formed but they had thought it was
- Applies only in K–not tort
- alive in GA
15
Q
Corporate Bylaws
A
- NOT REQUIRED: Not requried but usually used ofr internal governance
- not requried to be filed with SoS
- WHO ADOPTS: Adopted by either the incorporators or the directors
- AMENDMENT: amended by the board and/or shareholdres
- can reserve to shareholders only
- CONTROL: Articles control over bylaws when conflicting
