Chapter 29- Corporations

Piercing the Corporate Veil

A doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations

The business judgment rule

A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgment and bad business decisions that were made in good faith.

Corporate Officers

Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation

Corporation

a creature of statute; a legal entity created and recognized by state law

Board of Directors

a group of persons elected by the stockholders to manage a corporation; responsible for the overall management of the firm

Shareholders' Derivative Suit

a lawsuit filed by a shareholder on behalf of the corporation

A corporation is recognized under U.S. law as...

an artificial legal person

Torts and Criminal Acts

corporation is liable for the acts of its agents and officers; they are subject to respondeat superior; corporations may be fined for criminal acts, but not imprisoned

Corporation profits=

dividends or retained earnings

Corporate Taxation (21%)

profits can be submit to double taxation (company & shareholders pay tax on the profits); disadvantage

corporate shareholders' liability is limited to...

the amount of their investments