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25 Cards in this Set
- Front
- Back
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What is a promoter?
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A person acting on behalf of a corp not yet formed
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When does a corporation become liable on a promoter's preincorporation contract?
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When the corporation adopts the contract by either:
-express BoD resolution, or -Implied adption through knowledge of the K plus acceptance of the benefits |
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For how long does a promoter remain liable on a pre-incorporation K?
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Until there has been a novation, i.e. an agreement between the promoter, the corp, and the other party that the corp will replace the promoter under the K.
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Who is liable if the promoter enters a pre-incorporation K and the corp is never formed?
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The promoter alone is liable on the K.
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Who is liable if a promoter enters a pre-incorporation K and the corp is formed but merely adopts the K (no novation)?
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Both the corp and the promoter are liable, at the election of the other contracting party.
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To whom do promoters owe a fiduciary duty?
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Promoters are fiduciaries of each other and of the corporation.
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Promoter acquires property before becoming a promoter and resells the property to the corporation: may the corporation recover profits from the sale?
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ONLY if sold for more than fair market value.
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Promoter acquires property after becoming a promoter and resells the property to the corporation: may the corporation recover profits from the sale?
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YES--any profit is recoverable by the corporation.
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What is a subscriber?
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A person or entity who makes a written offer to buy stock from a corporation not yet formed.
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Describe the rule regarding a preincorporation offer to buy stock in a corporation not yet formed.
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A pre-incorporation offer to buy stock (a subscriber offer) is irrevocable for 6 months.
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It is A PAIN to form a corporation
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Authorized shares
Purpose Agent Incorporators Name |
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What is the role of incorporators?
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Merely sign and file the articles of incorporation with the state.
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What must be included in the articles of incorporation?
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--Authorized shares
--Purpose --Agent --Incorporators--names & addresses --Name |
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What are the authorized shares?
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The maximum number of shares the corp is authorized to issue.
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Describe the purpose of the corporation that must be included in the articles of incorporation.
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There may be a general purpose (all lawful activity) and a perpetual duration. General purpose and perpetual duration are presumed in the absence of specific purpose or limited duration.
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What are ultra vires rules?
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A corporation may have a specific purpose and a limited duration, with ultra vires rules. State can enjoin ultra vires activity, and corporation may sue its own directors and officers for losses caused by UV activity.
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Describe the agent requirement of the articles of incorporation.
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The articles must include the name and address of a registered office; registered agent is the corporation's official legal representative.
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What is required of the name of a corporation?
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Name must contain some indicia of corporate status.
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Must by-laws be included in the articles of incorporation?
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NO--but the board has power to adopt bylaws and amend bylaws, unless the articles give the power to the SHs
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Describe the de facto corporation doctrine.
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A business failing to achieve de jure status is nonetheless treated as a corporation if the organizers ahve made a good faith, colorable attempt to comply with corporate formalities and have no knowledge of the lack of de jure status.
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Describe the 'alter ego' circumstance for piercing the corporate veil.
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Shareholders may be liable for debts of a corporation if there is a failure to observe sufficient corporate formalities, e.g. corporate funds are used as SH's own.
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Describe the undercapitalization circumstance for piercing the corporate veil.
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Shareholders may be liable for debts of a corporation if there is a failure to maintain sufficient funds to cover foreseeable liabilities.
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For what type of claimant are courts more willing to pierce the corporate veil?
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Courts are more willing to pierce the corporate veil for a tort claimant than for a contract claimant.
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What is a foreign corporation?
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A corporation formed outside the state that wishes to engage in regular intrastate business.
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What must a foreign corporation file with the Sec of State?
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A Certificate of Authority wiht the same info required of articles of incorporation.
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