|What is a corporation?
|A corporation is a separate legal entity or legal person.
|A legal entity has the capacity to enter into contracts, assume obligations, sue and be sued.
|A corporate entity is legally distinct from its members and can hold property and be sued.
|What can be an owner?
|Any legal entity, natural persons, partnerships, or corporations.
|Who are corporate owners?
|Corporations are treated as
|Artificial (legal) persons created by the state.
|What can corporations do?
|Sue or be sued, enter into contracts, hold property, be found liable for violations, exercise rights.
|Who are part of corporate personnel?
|Board of directors, officers, shareholders.
|How do you become a shareholder?
|By purchasing a share of stock in a corporation.
|Limited liability unless they voluntarily assume personal liability.
|A distribution of corporate profits or income to shareholders.
|The portion of a corporation’s profits not paid out as dividends.
|A corporation doing business in and organized under the laws of a specific state.
|A corporation doing business in a state without being incorporated there.
|Making an income ($)
|Corporations formed for purposes other than making a profit.
|Examples of non-profit
|Hospitals, educational institutions, charities, religious organizations.
|A corporation formed in another country but doing business in the United States.
|A corporation whose shares are publicly traded in securities markets.
|Closely held (close)
|A corporation whose shares are held by a family or relatively few persons.
|Most corporate enterprises in the US are
|Who can hold shares in a close corporation?
|Members of a family, privately held corporations.
|Closed corporations are also referred to as
|Closely held, family, or privately held corporations.
|Close corporation is similar to
|Steps taken to organize and promote a business before incorporating.
|The legal process of forming a corporation.
|1. Select a state of incorporation. 2. Secure the corporate name. 3. Prepare articles of incorporation. 4. File articles of incorporation.
|Name is subject to
|Who runs a check for the proposed name?
|The secretary of state.
|Corporate name must include
|The words “corporation,” “incorporated,” “company,” or “limited.”
|Primary document needed to incorporate
|Articles of incorporation.
|Articles of incorporation must include
|Name of the corporation, number of authorized shares, name and addresses of initial registered agent, name and address of each incorporator.
|Who signs the articles of incorporation?
|Who has implied powers?
|The first organizational meeting must be held.
|Most important function of organizational meeting
|Adoption of the bylaws.
|Bylaws cannot conflict with
|The corporation’s statute or articles of incorporation.
|The express and implied powers necessary to achieve the corporation’s purpose.
|Where are express powers found?
|Articles of incorporation, state law, state and federal constitutions.
|Order of priority in case of conflicts among documents
|U.S. Constitution, state constitutions, state statutes, articles of incorporation, bylaws, resolutions of the board of directors.
|Why does a corporation have implied powers?
|To borrow funds, lend funds, extend credit, and perform other necessary acts within the business purpose.
|The specific powers listed in laws and documents.
|Powers reasonably necessary and appropriate to accomplish the corporate purpose.
|Who and what is a corporation liable for?
|Torts committed by its agents or officers within the scope of their employment.
|Are corporations liable for criminal acts?
|Yes, but they can only be fined.
|Piercing the corporate veil
|When the court holds shareholders personally liable for corporate debts and obligations.
|When do courts pierce the corporate veil?
|When a party is misled, the corporation is set up never to make a profit, personal and corporate funds are commingled, or statutory formalities are not followed.
|What do directors do?
|Make corporate policy and hire officers.
|Rights, duties, and limited liability.
|Duties of a director
|Loyalty, care, and avoiding waste.
|Duties and limited liability.
|Duties of officers
|Loyalty and care.
|Rights of directors
|Participation in board meetings, inspection of records, indemnification.
|Duty of care
|Exercising due care in performing duties in good faith.
|Duty of loyalty
|Acting in the company’s best interest and avoiding conflicts of interest.
|Elect directors, preemptive rights, inspection rights, derivative lawsuits, voting rights, dividends, right upon dissolution.
|Liability of shareholders
|Limited liability with exceptions (such as piercing the corporate veil).
|The relationship between a corporation and its shareholders.
|Governance and corporate law
|State laws that set up the legal framework for governance.
|The most important structure of corporations
|Board of directors.
|A law that increases corporate accountability and imposes strict disclosure requirements and penalties.
|The termination of a corporation’s existence, either voluntarily or by government action.
|Action taken by shareholders, incorporators, or initial directors to dissolve a corporation.
|The state administrator takes away the rights, powers, and authority of a business entity due to non-compliance.
|The termination of a corporation’s existence handled by the courts.
|Rights and duties
|Shareholders have ownership rights, while duties involve loyalty and care.
|Main stakeholders with voting rights.
|Shareholders with no voting rights.
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Editorial Team. (2023, May 24). The concept of corporations and shareholders. Help Write An Essay. Retrieved from https://www.helpwriteanessay.com/blog/the-concept-of-corporations-and-shareholders/