Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
13 Cards in this Set
- Front
- Back
|
Corporations
Formation Promoters |
Person acting on behalf of not yet formed.
Liability: "Corporation becomes liable when it adopts the contract by: 1) EXPRESS adoption by Board of Directors OR 2) IMPLIED adoption through knowledge of the contract and acceptance of its benefits Promoter retains liability until NOVATION Novation = brand new agreement between corporation and third-party (promoter retains liability until then) CAN have double liability against both Corp and Novation |
|
|
Corporations
Formation Promoter's Duty to Corp |
Fiduciary Duty
|
|
|
Corporations
Formation Promoter Right to Own Property |
Can own property
Sale to corporation of property acquired by promoter before becoming promoter = Profit recoverable by corporation only if sold for more than FMV Sale to corporation of property acquired by promoter after becoming partner = Profit is recoverable by corporation |
|
|
Corporations
Formation Subscribers |
Persons / entities who make written offers to buy stock from a corporation not yet formed
Revocation Rule: pre-incorporation offer to buy stock is irrevocable for 6 months, must be held open |
|
|
Corporations
Formation Pure De Jure Corporations (Elements) |
1) Incorporator
2) Articles of Incorporation |
|
|
Corporations
Formation Pure De Jure Corporations Incorporators |
Merely filed Article of Incorporation with the State
|
|
|
Corporations
Formation Pure De Jure Corporations Articles of Incorporation -- Components |
1) Authorized Shares (maximum number of shares corp is authorized to use, unless amendment)
2) Purpose Clause (general purpose and perpetual duration is valid and will be presumed in the absence of a specific purpose or limited duration) 3) Agent (names and addresses) 4) Incorporation (names and addresses) 5) Name of Corporation (name must contain some indicia of corporate status, "Corp/Inc.") |
|
|
Corporations
Formation Pure De Jure Corporations Ultra Vires |
"beyond the power" of corporate purpose IF SPECIFIC PURPOSE
Effect: 1) State can enjoin activity 2) Corp can sue its own directors and officers for losses caused by the ultra vires activity |
|
|
Corporations
Formation Pure De Jure Corporations A PAIN |
A PAIN
Authorized Shares Purpose Agent Incorporators Name |
|
|
Corporations
Formation De Factor Corporation |
1) Colorable good faith attempt to comply with corporate formalities
2) no knowledge of failure/lack of corporate status |
|
|
Corporations
Formation - Legal Significance |
Limited liability
Sh/h are not liable for the debts and obligations of the corporation itself Only liability --> full consideration for their shares |
|
|
Corporations
Formation Piercing the Corporate Veil |
"Owners of stock are not liable for corporate obligations EXCEPT courts in equity will pierce the corporate veil to avoid fraud or unfairness and to render a sh/h liable to some third-party victim"
ALTER EGO scenario --> controlling owner of stock will treat corp as its alter ego (no adherence to corporate formalities) UNDERCAPITALIZATION scenario --> failure to maintain sufficient funds/capital to cover foreseeable liabilities esp. tort victims, controlling SH |
|
|
Corporations
Formation Foreign Corporations |
Corporation outside the state that wishes to engage in regular intrastate business -->
A PAIN |
