Nature of the Corporation

Question 1

Why incorporate in Delaware?

Answer 1

• • Predictability
• • Flexibility for Management
• • Legislative reform (for corporations)
• • Specialized courts (for corporations)

Question 2

What is the Internal Affairs Doctrine?

Answer 2

The law of the state of incorporation governs the relationship among the parties within the corporations.
– Duties, remedies, statutory guidelines?

Question 3

What are the six characteristics of a Corporation?

Answer 3

• • Perpetual existence by default
• • Separate existence
• • Limited liability
• • Centralized management by board
• • Passive ownership by stockholders
• • Freely transferable ownership interests

Question 4

How is a Corporation organized (started)?

Answer 4

The Articles of Incorporation and the By-Laws

Question 5

What is a promoter?

Answer 5

An agent for those who want to be invested in the corporation.

Question 6

What are the duties of the promoter?

Answer 6

Fiduciary duties; personally responsible if company is never formed; responsible after the formation if the third party does not release?

Question 7

What is “Corporation by Estoppel”?

Answer 7

If one who contracts with what he acknowledges to be, and treats as, a corporation, incurring obligations in its favor, he is estopped from denying its corporate existence, particularly when the obligations are sought to be enforced.
– the Plaintiff has recognized the corporation and acted as if the corporation exists

Question 8

What is a “De Facto Corporation”?

Answer 8

a court may treat a firm not properly incorporated as though it were a corporation if the organizers: (1) in good faith, tried to incorporate; (2) had a legal right to do so; and (3) acted as a corporation.