Chapter 43 Corporations: General Characteristics and Formation

A corporation is a separate legal entity. It holds property, can sue and be sued and pays taxes. Advantages of a corporation Disadvantages of a corporation Shareholder liability Piercing the corporate veil in order to promote justice and prevent inequity, the courts sometimes ignore the separateness of a corporation and its shareholders. Generally two conditions: domination of a corporation by its shareholders and use of a domination for an improper purpose. For example, in cases of inadequate capitalization, failure to hold regular shareholders and directors meetings, failure to record minutes of meetings, co-mingling of corporate and personal assets. This is also called the alter ego theory. Promoters and pre-incorporations transactions A promoter incorporates a business, organizes its initial management and raises its initial capital. If s/he acts before incorporation, s/he may be personally liable on the contracts. The corporation may adopt the promoters contracts, expressly or by implication. RKO-Stanley Warner Theatres Inc.v. Graziano (page1547) Incorporation Process: prepare articles of incorporationfile the articles with the Secretary of State and pay feesreceipt of the articles of incorporation stamped filedholding an organizational meeting to adopt the by-laws, elect the directors and transact other businesses Articles of incorporation ( = certificate of incorporation = charter): lay down the rules between the corporation and the outside world. They contain the corporate name, shares to be issued, purpose, duration etc. They are public. By-laws: supplement the articles of incorporation and concern internal management (quorum requirements, notice requirements, shareholders and directors meetings, procedures for share transfer etc.).

Pssst…We can write an original essay just for you.

Any essay type. Any subject. We will even overcome a 6 hour deadline.

<< SAVE15 >>

Place your first order with code to get 15% discount right away!

Impressive sample results