Subchapter I: Formation Flashcards
§ 101 (a) Who can form a corporation
Any person or entity may incorporate a corporation in Delaware by filing a certificate of incorporation with the Department of State
§ 101 (b) Purpose of a corporation
A corporation may conduct or promote any lawful business or purposes
§ 101 (c) Public utilities corporations
Corporations for constructing, maintaining, and operating public utilities are additionally subject to Title 26
§ 102 (a)(1) Required contents of a certificate of incorporation: Name of a corporation
The certificate of incorporation shall: (i) generally have “incorporated,” “corporation,” or company” as part of the name, (ii) generally have a name not previously used, (iii) generally shall not have “trust” in the name, and (iv) shall not be called a bank unless registered as such
§ 102 (a)(2) Required contents of a certificate of incorporation: Registered Agent
The certificate of incorporation shall have the registered agent’s name and address
§ 102 (a)(4) Required contents of a certificate of incorporation: Classes of stock and members
The certificate of incorporation shall set forth the class(es) of stock, its par value(s), and its powers, preferences, and rights. This does not apply to nonstock corporations, which have classes of members with enumerated rights, powers and duties.
§ 102 (a)(3) Required contents of a certificate of incorporation: Any lawful activity
A corporation’s purpose must be stated in the certificate of incorporation. It is sufficient that the corporation’s purpose is any lawful activity. Corporate activities must be within the corporate purpose.
§ 102 (a)(5) Required contents of a certificate of incorporation: Incorporators
The certificate of incorporation shall have the name and address of the incorporator
§ 102 (a)(6) Required contents of a certificate of incorporation: Initial directors
If the incorporator’s powers are to terminate upon filing, the names, and addresses of the initial directors must be on the certificate of incorporation
§ 102 (b)(1) Optional contents of the certificate of incorporation: Bylaws
Any provision which is required or permitted to be stated in the bylaws can instead be stated in the certificate of incorporation
§ 102 (b)(2) Optional contents of the certificate of incorporation: Receivership
Verbatim provisions for stock and nonstock corporations regarding receivership
§ 102 (b)(3) Optional contents of the certificate of incorporation: Subscription
Preemptive stockholder rights to subscribe to additional issues of stock or convertible securities. These provisions must be in the certificate of incorporation for any person to have such rights
§ 102 (b)(4) Optional contents of the certificate of incorporation: Voting rule changes
Higher than default voting requirements for any corporate action
§ 102 (b)(5) Optional contents of the certificate of incorporation: Duration
A provision limiting the corporation’s duration
§ 102 (b)(6) Optional contents of the certificate of incorporation: Shareholder liability
Provisions imposing personal liability for the corporation’s debts on the stockholders
§ 102 (b)(7) Optional contents of the certificate of incorporation: Director Indemnification
Provisions eliminating or limiting a director’s personal liability for breaches of fiduciary duty. Cannot limit liability for: (i) breach of duty of loyalty, (ii) acts not in good faith or intentional misconduct, (iii) under § 174, or (iv) for transactions for which the director received an improper personal benefit
§ 102 (c) Statutory powers in the certificate of incorporation
It is not necessary to include any statutory powers in the certificate of incorporation
§ 102 (d) Conditional provisions in the certificate of incorporation
Many provisions can be made dependent on outside, ascertainable facts
§ 102 (e) Reserving names
A corporate name can be reserved by filing an application with the Secretary of State
§ 102 (f) Certificate of incorporation contents: Limitations on stockholder liability
A certificate of incorporation cannot impose liability on stockholders for attorneys’ fees in connection with internal corporate claims
§ 103 (a) Filing documents: Execution of documents
Generally, the incorporator shall sign the certificate of incorporation. Other instruments shall be signed by (1) an authorized officer, (2) a designated director, (3) a majority of directors, (4) designated stockholders of record, (5) a majority of outstanding shares, or (6) holders of all outstanding stock
§ 103 (b) Filing documents: Acknowledgement of documents
An instrument can be acknowledged by signature or by formal acknowledgment
§ 103 (c)(1)-(3) Filing documents: Definition of “filing”
“Filing” means (1) a signed instrument delivered to the Secretary of State, (2) taxes and fees paid, (3) Secretary certifies filing
§ 103 (c)(4) Filing documents: Filing date
One can make a request before or upon filing to have a filing date after the date on which it was filed. If the Secretary refuses to file a document due to some error on the filer’s part, the filing date can still be on the day of the attempted filing if the error is resolved within 5 days of receiving notice of the refusal. Any corporation that has a suspended instrument cannot receive a certificate of good standing.
