1.
Advantages of Corps.: 1) Limited liability
2) Financing flexibility
2.
Classifications: 1) Domestic
2) Public
3) Business
4) Publicly Held
5) Regular
3.
Corporation: 1) Legally created artificial person - rights and duties similar, but not the same as an individual
2) Legal entity separate from its owners (shareholders), managers (directors), and employees (officers and personnel)
4.
Disadvantages of Corps.: 1) Double taxation (entity and individual level)
2) Texas Franchise Tax
5.
Financing the Corporation: 1) Debt Securities - $ owed by corp. to others which must be repaid plus inters
✦Commercial loans
✦Corporate bonds
✦Corporate debentures
2) Equity Securities - ownership interest in corp. in exchange for investment of $$
✦Shares of capital stock sold to shareholders or stockholders (SH)
6.
Formation of Corporations: 1) Promoter - "idea person", puts idea with people who have $$ expertise to make it reality
2) Incorporation - legal procedure to be born
3) Articles of Incorporation = Certificate of Formation - constitution of the entity ("skeleton")
4) Certificat of Incorporation = Acknowledgment of Filing = Corporate Charter
5) Organizational Meeting - elect officers and adopt Bylaws
6) Bylaws = statutes, internal organizational procedures ("muscles,tendons")
