corporation_slides_08_Presentation

corporation_slides_08_Presentation - ANNOUNCEMENTS Reading...

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ANNOUNCEMENTS Reading: Text at 670-690 First assignment out next Monday and due Feb. 21 Is your cell phone silent?
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Corporations Formation Financial transactions stock distributions Management directors officers shareholders
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Corporate Powers Statutory powers See RMBCA 3.02 Articles of Incorporation Implied powers
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Ultra vires act Beyond the purposes and/or powers of a corporation Cannot be alleged in a suit by a third party Corporate act can be challenged on these grounds only: shareholder suit against the corporation action by attorney general suit by corporation against the party (like an ex- director) responsible for the act
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Articles of Incorporation corporate name number and type of authorized shares location of corporate headquarters designated agent for service of process name and address of each incorporator
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Liability of Promoters Pre-incorporation contracts promoters individually liable corporation not liable
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Post-incorporation liability corporation adopts contract promoter remains liable unless creditor and corporation agree otherwise Coopers & Lybrand v. Fox , Case 34-2, text at 662
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Corporate By-laws supplemental to articles of incorporation changed/amended by directors always binding on shareholders binding on third parties with actual knowledge
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Possible results of defective incorporation De jure corporation defect considered immaterial Defacto corporation substantial defect but only state through attorney general can assert corporation Corporation by estoppel third party who has dealt with entity under right circumstance cannot deny existence
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Defacto corporation Valid law under which incorporation could have been undertaken Good faith attempt to comply with the law “Colorable” compliance with the law not enough to be substantial but at least something done Some use of the corporate powers
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Corporation by estoppel Representation by enterprise that it is a corporation Reasonable reliance on that representation by third party Fair or equitable behavior by party asserting estoppel See Harris v. Looney , Case 34-3, text at 663
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Legal Issues in Corporate Finance Types of stock and ownership rights Acquiring and transferring stock Types of corporate distributions and the right to receive distributions
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Rights of Stock Ownership Receive dividends if/when declared Right to vote unless excluded Participate in distribution at time of liquidation
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Types of Shares Authorized Provided for in the Articles of Incorporation Issued Sold by the corporation Treasury Repurchase by the corporation [no right to vote] Outstanding Issued shares minus treasury shares
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