J11 MGT 401 - Forms of Doing Business Pt2

J11 MGT 401 - Forms of Doing Business Pt2 -...

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Forms of Doing Business Part 2 MGT 401 Prof. Salzman
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Corporations - Types  For Profit Not-for-Profit or Nonprofit Domestic Foreign Governmental or Municipal Professional (P.C.) Publicly Held or Public Closely Held or Close C Corporations S Corporations 2
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Formation of a Corporation Charter Document -  Certificate of  Incorporation  (NY) or  Articles of  Incorporation  (Del.).  Includes: - Name  of Corporation – must include  corporation, corp., incorporated, inc., limited or  ltd. - Purpose  – general or specific - County  where office located - Capital Structure  – authorized # of shares;  classes of shares; voting, dividend and  dissolution rights - Statutory agent  – for service of process - Incorporator(s) 3
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Formation (cont.) Certificate of Incorporation  filed  with Office of  the Secretary of State  of the state in which  incorporated Certificate of Authority  - apply for authority to  do business in a state other than state of  incorporation Initial Organizational Meeting: - Directors  – initially elected by  incorporator(s) (later by shareholders) - Officers  – elected by directors  - By-Laws  – procedural rules – cover  meetings, quorum and voting, terms of office,  committees, fiscal year, etc. No  publication requirement 6
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Taxation C Corporations  - Double Taxation: - Corporation pays taxes on its income; does  not deduct dividends paid to shareholders - Shareholders pay tax on dividends received S Corporations: - Election - Not for public corporations   (100 shareholder limit) - Pass through entity - S corporation generally does not pay a  corporate income tax - Shareholders pay tax on income of the S  corporation (whether or not distributed as  dividends) 9
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Shareholder Liability corporation One exception – P.C. – professional  service corp. Another exception -  if the  corporate veil  is  pierced , shareholder(s) may be liable  for full amount of corporation’s debts “CORPORATION, n.  An ingenious device for  obtaining individual profit without individual  responsibility.” - Ambrose Bierce, American  writer, “The Devil’s Dictionary”  10
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Piercing the Corporate Veil Reasons corporate veil may be  pierced : - Inadequate capitalization - Failure to treat corporation as a  separate entity - Commingling of personal and corporate 
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This note was uploaded on 08/15/2011 for the course MGT 401 taught by Professor Dalton during the Spring '08 term at SUNY Buffalo.

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J11 MGT 401 - Forms of Doing Business Pt2 -...

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