Organization (FP #1) Flashcards
What is a de jure corporation?
Corporation formed in accordance with law
Requirements for a de jure corporation
1) person (art. of incorp.)
2) paper AND
3) act
What is required for the articles of incorporation?
1) name of corporation
2) name/address of incorporator(s)
3) registered agent & registered office’s street address
4) info re corporation’s stock
If corporation does not have a statement of business (i.e., purpose)?
MBCA presumes corporation formed to conduct any lawful conduct
What are ultra vires acts?
Activities beyond the scope of corporation’s stated business purpose
In what 3 situations can ultra vires act be raised?
1) shareholder suing to enjoin act
2) corporation suing officer/director for damages for approving act
3) State may move to dissolve
What is an organizational meeting? Who partakes?
Meeting of directors (or, if no directors, incorporators) to complete the organization of the corporation (i.e., adopt initial bylaws and appoint officers)
When does corporate existence begin?
When incorporators have delivered notarized AofInc to secretary of state AND paid applicable fees
What document prevails between the Articles of Incorp. and Bylaws?
Articles of Incorporation
What is the internal affairs doctrine?
Idea that internal affairs of corporation governed by law of state of incorporation
What are benefit corporations?
Corporation formed 1) for profit AND 2) to pursue some benefit to a broader social policy cause
What is required to form a B corp?
Articles must say it’s a B Corp
Also required: annual benefit report; decision-makers must consider broader impact
Requirements for de facto corporation
1) relevant inc. statute (always met)
2) parties made GF, colorable attempt to comply, AND
3) exercise of some corporate privileges (i.e., acting as corp.)
What are corporate shareholders generally liable for?
Only for their stock (NOT corporate debts)
How can incorporators avoid personal liability following defective formation?
1) de facto corporation
2) estoppel
Effect of recognizing entity as de facto corporation?
Entity treated as corporation for all purposes EXCEPT in action by state (i.e., “quo warranto” action)
What is the key limitation when seeking a de facto corp. finding?
Can only raise if unaware that there was no valid corporation
What is a corporation by estoppel?
Doctrine from CL saying persons who’ve dealt with entity as if it were a corporation are estopped from denying corporation’s existence
What are the only instances in which corp. by estoppel applies?
CONTRACT cases (not tort victims)
What is a promoter?
Person acting on behalf of corporation not yet formed; considered joint venturers with FD to each other
How can promoter breach FD?
Secretly pursuing personal gain at expenses of fellow promoters
What is a promoter’s FD to a corporation?
1) fair disclosure
2) good faith
A promoter who profits by selling property to corporation may be liable for his profit UNLESS _____.
All material facts were disclosed
Promoter must disclose to _____.
All who are contemplated to be part of initial financing scheme
T or F: Promoter cannot enter contracts on behalf of corporation until formed
False (BUT corp. not usually bound prior to incorp.)
Under what circumstance may corporation be liable for K entered by promoter on its behalf?
Where it expressly or impliedly adopts the promoter’s contract
Per MBCA, anyone who acts on behalf of corporation knowing it doesn’t yet exist is ________.
Jointly and severally liable for the obligations incurred
What are foreign corporations?
Any corporation outside the state in question, whether from another state or another country
If a promoter enters agreement with 3P on behalf of unformed corporation, the promoter is ______.
Personally liable on K until express or implied novation (i.e., agreement between all 3 parties) OR special agreement
What is the promoter’s right to reimbursement?
Promoter has right to be reimbursed for contracts entered before corporation formed to extent ant benefits are received by the corporation
Requirement for foreign corporations transacting business in a given state?
Must register with state and pay fees (usually means must provide info re AofInc and prove good standing in home state)
What does “transacting business” mean?
regular course of intrastate business activity
