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Chapter36: Corporate Formation and financing
Terms in this set (30)
a fictitious legal entity that is created according to statutory requirements
*Separate legal entity or legal person.
Owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation
State statutes that regulate the formation, operation, and dissolution of corporations
*Courts interpret state corporation statute to decide individual corporate and shareholder disputes
Sue or be sued in their own names
Enter into and enforce contracts
Hold title to and transfer property
Be found civilly and criminally liable for violations of law
Free Transferability of shares
National securities markets have been developed for the organized sale of securities
(unless a specific duration is stated in a corporation's articles of incorporation)
Its existence can be voluntarily terminated by the shareholders
Board of directors makes policy decisions concerning the operation of a corporation
limited liability of shareholders
Corporations are liable for their own debts and obligations
A general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions.
Board of directors
A panel of persons who are elected by the shareholders that make policy decisions concerning the operation of a corporation
employees of a corporation who are appointed by the board of directors to manage the day-to-day operation of the corp.
a corporation formed to meet a specific governmental or political purpose
Local gov. corps. are often called municipal corporations
a corp. formed to conduct privately owned business
one founded for the purpose of operating a business for profit
Can distribute profits to shareholders in the form of dividends
formed to operate charitable institutions, colleges, universities, and other non profit entities.
Publicly held corporation
Shares traded on organized security markets
Shareholders rarely involved in management
closely held corporation
Shareholders may have buy-and-sell agreements
Shareholders often involved in management
formed by lawyers, doctors, or other professionals
Shareholders are called members
Members not usually liable for torts committed by agents or employees
May be liable for malpractice of members
a corporation in the state in which it is incorporated
a corporation in any state in which it does business except the one in which it is incorporated
a corporation chartered by a foreign government and conducting business in the United States
articles of incorporation
the basic governing document of a corporation
Must be filed with secretary of state of state of corp.
Contains name of corp., number of shares authorized, name and address for registered agent and incorporators.
a clause that can be included in the articles of incorporation that permits the corporation to engage in any activity permitted by law
Limited - Purpose clause
A clause that can be included in the articles of incorporation that stipulates the activities that the corporation can engage in. The corporation can engage in no other purposes or activities.
A person or corporation that is empowered to accept service of process on behalf of a corporation
A detailed set of rules adopted by the board of directors after the corp. is incorporated
A design that contains the name of the corporation and the date of incorporation
A corporation that has not met certain requirements and has elected to be taxed as an ______S corp. for federal and income tax purposes
Does not qualify for or has not elected to be taxed as an s corp.
Powers given to a corp. by the US constitution, state constitutions, federal and state statutes, articles of incorporation, bylaws, and resolutions of the board of directors.
Ultra vires act
an act by a corp. that is beyond its express or implied powers.
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