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Corporations - Introduction

Corporations - Introduction - BUSINESS LAW II Corporations...

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    BUSINESS LAW II Corporations - Introduction
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    Corporations – Attributes Legal Entity.  A corporation is a legal entity. It  has a life distinct from that of its shareholders.  It may sue, be sued, enter into contracts, and  own property Existence Owed to the State.  Corporations  exist by virtue of state laws enabling the  corporate form Each state has its own incorporation statute to follow The Secretary of State is authorized to issue a  certificate of incorporation upon compliance with the  requirements of the incorporation statute
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    Corporations – Attributes  (Cont.) Limited Liability.  Since the corporation is a  separate entity, it is liable for its own debts.  Shareholders have limited liability for the debts  of the corporation. The shareholder’s  investment is at risk – No more Shares Are Freely Transferrable.  Unless  there is a contractual restriction, corporate  shares are freely transferrable  Continuous Existence.  Unless otherwise  stated in the Articles of Incorporation, a  corporation has a perpetual existence
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    Corporations – Attributes  (Cont.) Centralized Management.  Shareholders are  not necessarily the managers. The  shareholders elect a board of directors, and  those directors place managers to run the day- to-day business of the corporation. The  managers do not have to be shareholders of the  corporation Taxed Separately.  A corporation pays federal  income taxes on its income. Shareholders are  taxed separately on their dividend income.  Unless the corporation qualifies under IRC  subchapter S
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    Corporations – Attributes  (Cont.) Status as a Person.  For many purposes, a  corporation is considered a person. For example,  it is entitled to: Due process under the Fifth and Fourteenth  Amendments,  Equal protection under the Fourteenth Amendment,  Freedom from unreasonable searches and seizures  under the Fourth Amendment, and 
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