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NY Corporations > Organization of NY Corporations > Flashcards

Organization of NY Corporations Flashcards

1
Q

INCORPORATORS

  • what do they do?
  • how many do you need?
  • qualifications?
A

Incorporators

  • execute the certificate
  • deliver the certificate to the dept of state
  • hold the organizational meeting

You need 1+

They must be adult (18+) humans (natural person)

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2
Q

Certificate of Incorporation (articles)

- What is its purpose?

A

Contract btw the corporation & shareholders

Contract btw corporation & state

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3
Q

Information that MUST be in the Certificate

A
  • corporate name (must incl. corp, inc, ltd)
  • Address (the county in NY of the office of incorporation)
  • Sec of State designated as agent
  • address for forwarding process to the corp
  • name/address of each incorporator
  • Corporate purpose (can be broad)
  • stock info
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4
Q

What information MUST be in the Certificate Re: Corp Stock?

A
  • amount of authorized stock
  • number of shares per class of stock
  • info on par value, rights, preferences, and limitations of each class
  • info on any series of preferred stock

NOTE: at least one class of stock or bonds must have unlimited voting rights & at least once class of stock must have unlimited divident rights

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5
Q

Ultra Vires Act

A
  • act beyond the scope of the certificates stated purpose
  • UV contracts are valid in NY
  • shareholders can seek an injunction
  • Responsible managers are liable to the corporation for any ultra vires losses
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6
Q

DEF:

  • authorized stock
  • issued stock
  • outstanding stock
A

authorized stock = the max number of shares the corp can sell

issued stock = the number of shares the corp actually sells

outstanding stock = stock that the corp has sold and has not reacquired

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7
Q

What “ACTS” must the incorporators do to form the corporation?

A
  • each incorporator signs the cert and acknowledges it before a notary; they deliver it to the NY Dept of State. If it conforms w/ law, and filing fees are paid, the Dept. files the certificate. Such filing is conclusive evidence of valid corporation, aka we have a DE JURE corporate
  • then the incorporators hold an ORGANIZATIONAL MEETING (or do it by written consent) to adopt bylaws and elect the initial BoD. At that point the BoD takes over management.
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8
Q

Governing law

A

NY law governs the internal affairs of ALL NY corps EVEN if they do ZERO business in NY

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9
Q

Can a corporation make POLITICAL contributions?

A

Yes, but no more than $5G/year/candidate or org

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10
Q

Can a corp make charitable contributions?

A

Yes, UNLIMITED

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11
Q

Can a corp guaranty a loan that is NOT in furtherance of corporate business?

A

yes IF approved by 2/3 of the shares entitled to vote

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12
Q

Limited Liability

A

shareholders and the people who run the corporation are (generally) not liable for what the corporation does

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13
Q

De Facto Corporation

  • what is it?
  • elements necessary?
  • allowed in NY?
A
  • Def: a defense; the proprietors fail to form a de jure corporation by w/ this defense the business formed is treated as a corporation (so SH are not personally liable for what the business did) for all purposes EXCEPT in an action by the state
  • Required elements: (1) relevant incorporation statute (BCL); (2) the parties made a good faith, colorable attempt to comply w/ the statute; and (3) the business is being run as a corporation
  • was thought to be completely abolished in NY under BCL, but case law suggested it may be alive in the VERY limited circumstance where the Dept of State fails to file a properly delivered certificate (w/o rejecting it).
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14
Q

Corporation by Estoppel

  • what is it?
  • allowed in NY?
A
  • Def: defense to get the business treated as a corp even though the proprietors failed to form a de jure corporation; one dealing w/ a business as a corp, treating it as a corp may be estopped from denying the business’s corporate status. So such a person, under this theory, cannot sue the individual proprietors.
  • ABOLISHED IN NY– PROPRIETORS ARE LIABLE IF THEY FAIL TO FORMA DE JURE CORP
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15
Q

BYLAWS:

  • do you need them?
  • what do they do?
  • who adopts the initial bylaws?
  • who can amend/repeal/adopt new ones?
  • vs. certificate *
A
  • Not necessary but almost every corp has them
  • they are an internal contract that sets up procedures and responsibilities of people like officers, and set forth the type of notice required for meetings, etc.
  • incorporators at the organizational meeting adopt the initial bylaws (have the status of a s/h bylaw)
  • shareholders ALWAYS can amend/repeal/adopt new ones
  • BoD may only amend/repeal/adopt if the CERT or a S/H BYLAW allows
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16
Q

Def: Promotor

A

A person acting on behalf of a corporation not yet formed. For example, a promoter might enter a K with a 3rd party on behalf of the corporation-not-yet-formed

17
Q
    • PRE-INCORPOATION CONTRACT:
  • when is the corporation liable on the K?
  • is the promoter liable?
A
  • Corporation is only liable if it adopts the pre-incorporation contract by either (1) express adoption via board action; or (2) implied adoption by knowingly accepting a benefit of the K
  • Unless the K clearly indicates otherwise, the promoter is liable UNTIL THERE IS A NOVATION (agreement among promoter, corp, and 3rdP that corp will replace the promoter under the K).
18
Q

SECRET PROFIT RULE RE: PROMOTERS
(rarely tested)
- what is the rule?
- what is the test when prop acquired before becoming a promoter?
- what is the test when prop acquired after becoming a promoter?

A
  • ROL: Promoter cannot make a SECRET profit on her dealings w/ the corporation. If she does, she is liable and has to account for the profit– aka return it to the corp.
  • Sale to corp of property acquired BEFORE becoming promoter –> Profit = price paid by corp - FMV
  • Sale to corp of property acquired AFTER becoming promoter –> Profit = price paid by corp - price paid by promoter
19
Q

FOREIGN CORPORATIONS:

  • what are they?
  • what is doing business?
  • ROL?
  • how to qualify?
A
  • Foreign Corp= corp incorporated outside NY (even if another state)
  • Doing Business= the regular course of INTRA-state business activity (bar will make this obvi)
  • ROL= Foreign corps doing business in NY must qualify
  • qualify by applying to the NY Dept of State and designating Sec of State as agent for service of process; pay fees to NY for privilege of doing business here
20
Q

What happens if a foreign corporation does business in NY w/o qualifying?

A

It can not sue in NY until it qualifies, pays fees, pays taxes, and pays accrued penalties and interest.

NY Corporations (6 decks)

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