ACC 241 CH 22

CORPORATE POWERS

1. Express powers come from constitutions, statutes, articles, bylaws, and resolutions. 2. Implied: powers beyond express powers that allow a corporation to accomplish its corporate purpose. 3.Ultra Vires: Act by a corporation that is "beyond its express or implied powers. "

CHARACTERISTICS OF CORPORATIONS

1. Limited Liability of Shareholders 2. Free Transferability of Shares 3. Centralized Management 4. Perpetual Existence

3. Centralized Management

>"Board of directors" makes policy decisions concerning the operation of the corporation. Members of the board elected by the shareholders. >Directors appoint "corporate officers" to run the corporation's day-to-day operations. >Directors and the officers form the "corporate management."

Amending the Articles

>Amendment requires: 1. Board adopted resolution recommending amendment. 2. Shareholders voted to approve. >Filed with secretary of state.

2. Free Transferability of Shares

>Corporate shares are freely transferable by the shareholder. Unless issued pursuant to certain exceptions from securities registration. >Shareholders may agree among themselves to restrict transfer of shares.

4. Perpetual Existence

>Corporations exist in perpetuity. Unless specific duration is stated in articles of incorporation. >Can be voluntarily terminated by the shareholders. >May be involuntarily terminated by the corporation's creditors if involuntary petition for bankruptcy is granted.

Winding Up, Liquidation and Termination

>Dissolved corporation's assets are collected, liquidated, and distributed to: Creditors, shareholders, other claimants >Termination Occurs only after the liquidation of its assets

Eligibility to be S Corporation

>Domestic corporation. >No more than 100 shareholders. >Only U.S. citizens or residents as shareholders. >Only one class of stock.

CORPORATE SECURITIES

>Equity(stock) Common vs Preferred >Debt Debentures, bond, notes

INCORPORATING

>Pick a state >Pick a name >Draft and file the Articles of Incorporation >Receive corporate charter from the state >Hold 1st organizational meeting. Choose the 1st board; corporation can be incorporated in only one state.

1. Limited Liability of Shareholders

>Shareholders are only liable to the extent of their capital contributions for the contracts and debts of the corporation. >Not personally liable. Menendez v. O'Neill

S Corporations

>Some corporations and their shareholders can avoid double taxation by electing to be an S Corporation. >S Corporations pay no federal income tax at the corporate level. >Corporation's income or loss flows to the shareholders' individual income tax returns.

Corporations can:

>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.

1. Domestic

A corporation is a domestic corporation in the state in which it is incorporated. S court, will be somewhere in the US.

2. Foreign

A corporation is a foreign corporation in states other than the one in which it is incorporated.

The Corporation as a Legal "Person"

A corporation is a separate legal entity (or legal person).

3. Alien

A corporation is an alien corporation in the United States if it is incorporated in another country.

Bylaws

A detailed set of rules adopted by the board of directors after a corporation is incorporated in order to manage the business and affairs of a corporation.

- Ultra Vires

Criminal activities, corporate issue,

TYPES OF CORPORATION

Domestic Foreign Alien Public Closely Held

4. Public

Have many shareholders and shares are traded on organized security markets.

3. Judicial

Instituted by AG if: 1) procured articles through fraud or 2) exceeded or abused authority

2. Administrative

Secretary of state will administratively dissolve corporation

5. Closely Held

Shares owned by a few shareholders—often family members, relatives, or friends.

DISSOLUTION

Voluntary Administrative Judicial

1. Voluntary

You need a board dissolution and majority of shares of stocks. If business has started, board of directors must recommend, and majority of shares must vote to dissolve; file articles with secretary of state.

1 stock

the majority of the shares