busorg outline-marcy

busorg outline-marcy - CORPORATIONS 1 Unlimited lifespan...

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CORPORATIONS : 1) Unlimited lifespan- They continue after the CEO or shareholders die (different from a partnership which has a limited life) 2) Limited Liability- Shareholders can only lose up to the amount they hahve invested and can't go after shareholder's personal assets. 3) Transferability- There is a free transferability of shares, shareholders just sell their stock. 4) Rigid pre-fixed management structure- The shareholders elect the board of directors, and the board of directors appoints the officers. -Officers control the day to day operations of the corporation. -Board of directors supervise the corporations affairs. I. Mechanics to Forming a Corporation : A. File a certificate of incporporation with the state (Section 401) and must sign it. -What needs to go into the certificate of incorporation: (Section 402) 2) Name of corp. 3) County and state where it will be incorporated. 4) Purpose for which it is formed. 5) How many shares of stock corp. is allowed to issue. 6) State the par value of the shares 7) Whether there will be a multiple classes of shares. -Common Stock- General stock that has voting rights -Preferred Stock- Preferential rights when it comes to payment of dividends and usually has no voting rights -Articles of Incorporation can be amended anytime after filing. B. Adopting Bylaws -Rules governing the corporation's internal affairs -Contract among members of the corporation -My formally adopt bylaws in writing -Things to include in the bylaws : 1) Date time and place for the annual meeting of shareholders 2) Number of directors that will be allowed 3) Whether or not there is cumulative voting for directors 4) Listing of the officers of the corporation and their duties 5) What shall constitute a quorum - In NY it’s a majority of votes cast by the shares or the shareholders which are entitled to elect directors (usually a majority of common shares). Why do we have both a certificate of incorporation and bylaws? -Certificate of incorporation is a general charter, the people and the state can see it. -Bylaws discuss how the corporation will govern itself. It is internal and doesn't involve 3rd parties. Bylaws are easier to amend.
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II. Promoter’s Liability : Promoter – A person who takes initiative in founding and organizing a business or enterprise - SEC Rule 405 - promoters generally have the following activities Arranging for necessary capital Acquiring any needed assets or personnel Arranging for incorporation of the business 1. If the promoter enters into a K in the corp’s name and the promoter knows that the corp has not been formed but the other party is not aware of this, the promoter is liable. 2.
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busorg outline-marcy - CORPORATIONS 1 Unlimited lifespan...

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