Bus Law Final Dirty Albs

Black's Law Dictionary defines a "Corporation" as

"An artificial person or legal entity created by or under the authority of the laws of the state or nation, which has an existence distinct from that of its associated individuals, and has a duration that is either perpetual or for a limited term of years, and which acts as a unit in matters relating to the common purpose of the association and within the scope of the powers conferred upon it by law."

Industry Self Regulation: Arbitration

- Many securities investment firms have adopted a code of arbitration, giving customers a contractual right to settle disputes through arbitration. - Courts rarely overturn the decisions of an arbitrator in these cases, as due process and an opportunity to be heard for both sides is afforded. - Arbitrators are selected jointly or pursuant to a contract

Insider Trading

- Trading of securities based upon "inside information" is unlawful and subjects those involved to both criminal sanctions and civil penalties of three times the profit made. - Directors and corporate employees are liable for insider trading, as can be temporary insiders (consultant, attorney, CPA, etc). - A person will only be liable if the insider providing the information breaches a fiduciary duty

What is an Agency?:

-Administrative law is simply that body of law that defines, describes and commands the behavior of agencies. -Agencies come in a huge array of sizes and shapes. Some have thousands of employees; others have much smaller numbers. They have names like "Department," "Board", "Division" or "Office." -Agencies have widely differing missions, goals and organizations. They all share, however, some common features. -First, all are created by legislation. This is known as enabling legislation. These enabling statutes, are duly passed by the congress or state legislature, and define the agency's mission, organization and jurisdiction. -Second, Agencies have widely differing missions, goals and organizations. They all share, however, some common features, including the fact that all agencies are shaped roughly like a pyramid. Pursuant to this structure, some person or group of persons are at the top, with his, her or their immediate staff below, and then down through the ranks of their subordinates and other employees of the agency. -Third, agencies share a unified mission. This mission is defined by the enabling statute (the legislation that creates the agency) and is expressed in the most immediate sense by the person or persons who head the agency.

Agency Powers:

-Agencies challenge our notions of separated governmental authority. -In a traditional view of separation of powers, the legislature is charged with making laws, the executive for enforcing them, and courts for interpreting them. -Agencies, with their powers of Rule Making, Adjudication, Investigation and Enforcement, however, can combine all of these functions (and more) into a single entity.

Enforcement:

-Agencies may also be vested with strong powers of enforcement. -Pursuant to these enforcement responsibilities, if agency personnel detect violations of the law, they may be able to take legal action in a manner parallel to that of a prosecutor. -Heavy fines and injunctions can be administratively levied against the violator, but due process standards, although in some cases reduced, still apply.

Investigations:

-Agencies may also be vested with strong powers to investigate potential violations of the law within their jurisdiction. -Under such powers, they may make use of a full range of investigative tools, including inspections, tests, record-keeping and reporting requirements, and others.

Limited Liability Companies Attributes:

-An LLC is an unincorporated business organization of one or more persons who have limited liability for the contractual obligations and other liabilities of the business. -The Limited Liability Company Law governs the formation and operation of an LLC. An LLC may organize for any lawful business purpose or purposes. -The owners of an LLC are "members" rather than shareholders or partners. A member may be an individual, a corporation, a partnership, another limited liability company or any other legal entity. -Organizers form an LLC by filing the Articles of Organization, pursuant to Section 203 of the Limited Liability Company Law, with the Department of State. -Organizers are like incorporators for a corporation, and the Articles of Organization are like the Articles of Incorporation of a Corporation. Any person or business entity may be an organizer, and need not be, a member of the LLC formed.

Bankruptcy: The Nature of Bankruptcy

-Bankruptcy is an action brought under Federal Law (the United States Bankruptcy Code - Title 11 of the United States Code). -Federal Jurisdiction for Bankruptcy is conferred by the Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States. -The first federal bankruptcy law was enacted in 1801. Prior to that insolvency and debtors were dealt with pursuant to Common Law.

Administrative Law History:

-Developed from the Rise of Agencies: starting with President Chester Arthur, who created the federal civil service system, agencies developed as a professional, merit based model for government administration. -Followed the Growth of Government: The number of state and federal agencies began to accelerate starting with the 20th century, with leaders such as Teddy Roosevelt, Woodrow Wilson, Franklin Roosevelt and Lyndon Johnson who dramatically expanded the size and functions of government, to perform more and more tasks. -Expansion of Laws and Government: Federal Departments and the date of their initial creation. -Administrative Law Reflections: Administrative Law (the process of Rule Making, Adjudication, Investigation and Enforcement) has been the means by which federal agencies take this active role. -New York State Agencies: Although the NYS Constitution provides that there shall be only 20 state "Departments" (Article V, section 2), there is no limit to the number of Divisions, Offices, Commissions, Public Authorities, ect., that may be established by the state.

Insurance Issues:

-Directors and Officers of a Corporation can purchase liability insurance to protect against exposure to lawsuits. -Fire, Auto, and Homeowners Insurance is Property and Casualty Insurance. -The Patient Protection and Affordable Care Act concerns Health Insurance, and for someone who is not self employed, Health Insurance is generally purchased as an Employment Benefit.

What the Parties Want:

-In a bankruptcy case the Debtor wants a discharge of his debts and to preserve his assets. -What the Creditor(s) and Trustee want is to maximize the distribution to creditors, to keep the Debtor "honest", to discharge only dischargeable debts, and to keep no non-exempt assets. -What the Bankruptcy Court wants is a "fresh start" for honest debtors, a return to productivity free from unmanageable debt, to promote best interests of Creditors, and an equitable distribution of estate, from debtor's non-exempt assets.

Agents and Brokers (Insurance):

-Insurance contracts are often made through an insurance agent or an insurance broker. Both an agent and a broker are agents. -An insurance agent is an agent for the insurance company, while an insurance broker is the agent of the insured. -Insurance can be purchased directly by the insured from the insurance company. In such cases neither an agent nor a broker is involved in the transaction. -Insurance Agents and Brokers are licensed by the state.

Insurance Attributes:

-Insurance is a contract. The contract itself is called a policy. -Under an insurance policy, provision is made by the insurer, in consideration of premium payments, to pay either the insured or a beneficiary, a sum of money, if the insured sustains a specified loss, or is subjected to a specified liability. -In order to purchase an insurance contract, the purchaser must have what is known as an insurable interest in the subject of the policy. -An insurable interest in property exists when the damage or destruction of the property will cause a direct monetary loss to the insured. An insurable interest in the life of the insured exists, if the purchaser would suffer a financial loss from the insured's death.

Insurance Defined:

-Insurance is a contractual agreement in which a group of individuals (insureds) transfer risk to another party (insurer) in order to combine loss experience. It is the sharing of the risk of loss. -Insurance permits the statistical prediction of losses and provides for the payment of losses from funds contributed (premiums) by all members who transferred risk. -In short, insurance provides protection against financial losses by pooling the resources of policyholders. -Insurance is created when people like you and your neighbors pool their resources to protect themselves from loss. If the risk of loss can be spread over a large enough group, the effects of the loss to any one individual can be minimized.

How Bankruptcy is Declared and Processed:

-Jurisdiction over bankruptcy cases is in U.S. district courts, which may refer all cases and related proceedings to adjunct bankruptcy courts. These are federal cases pursuant to federal statute (Title 11 of the US Code - The Bankruptcy Code). -An action is commenced by the filing of a petition. -This can be voluntary (filed by the debtor - natural person or the corporation that owes the money); or -Involuntary (by not less than 3 creditors - the corporations or people to whom the money is owed). -The debtor(s) and the creditor(s) are the parties in Bankruptcy.

Rule Making:

-Many Agencies are vested with the legal authority for the development of legal standards much like legislation. -These standards, intended to amplify statutes or case law, are known alternatively as rules or regulations. -Using a formal process that requires publishing notice of the proposed rulemaking in the State or Federal Register, (depending on whether they are a state or federal agency) and these agencies must take public comment and follow other legally proscribed steps, in order to adopt such rules. -Once adopted, these Rules/Regulations must be published in the State or Federal Register, and eventually assembled in the Official Compilation of Codes, Rules and Regulations of the United States or State of New York, so that the public and those who are regulated, know the rules. -These publications are broken down into various volumes, and are often abbreviated as the "CFR" and "NYCRR" respectively. -Agencies also make less formal and binding pronouncements in handbooks, memoranda, orders and other guidance documents.

Adjudication:

-Many agencies are also vested with the power to conduct administrative adjudications. -These hearings, presided over by an Administrative Law Judge (ALJ), who is an employee of the agency, are often less formal than a court determination, but often have many of the same qualities. -Moreover, In terms of the impact upon the lives of the persons involved, administrative adjudication can be every bit as important, critical and profound as court adjudication. -These determinations made in this adjudication process, like that of rule making, are subject to judicial review, but upon such review, often strong deference is given by the court to the agency, as experts in their field.

Public Authorities

-Public Authorities are Public benefit corporations chartered by an act of the state legislature. -The first Public Authority was the Port of London Authority. -The First Public Authority in New York (and in the United States) was the Port Authority of New York, which was chartered by Congress, and then codified in State Law. It is a bi-state authority, now known as the Port Authority of New York and New Jersey. -Today there are hundreds of Public Authorities in New York. Some of the more famous include the Thruway Authority, the Dormitory Authority, the Metropolitan Transportation Authority, the Power Authority, and the Empire State Development Corporation (legally known as the Urban Development Corporation). -The purpose of Public Authorities is to finance, build and operate things (principally infrastructure) for the benefit of the state and its citizens (i.e. the public).

Public Benefit Corporations

-Public benefit corporations are entities that chartered by an act of the state legislature and are closely associated with governmental operations and public functions (such as public authorities). -Public benefit corporations are designed to carry out a public purpose and therefore receive some benefit for this function. -Public benefit corporations are usually not bound by the same set of rules and statutes as private corporations. They are formed for limited purposes, which are principally to build, finance and operate something for the public benefit. -Public benefit corporations are often given special tax treatment and other benefits that private corporations do not receive.

What is Administrative Law:

-The Law of Agencies: • Administrative Law consists of the legal rules that define authority, structure and operations of an agency -Sources for Administrative Law include: • Enabling statutes of administrative agencies • Federal Administrative Procedures Act (APA, 1946) • State Administrative Procedure Act (SAPA, 1975) • Rules, Regulations and Adjudications issued by agencies • Court decisions reviewing the validity of agency actions -Administrative Agency Powers include: • Legislative (or Rulemaking) • Investigative •Adjudicatory • Enforcement

Administrative Law

-The Law of Agencies: Administrative Law concerns the Law of Governmental Agencies. -Broad Based and Expanding: It is a broad based, expanding area of the law, that deals with the administration of our laws on both the Federal and State levels of government. -Controversial: It is an area of the law frequently subject to political and legal controversy and debate. -Fourth Branch of Government: Administrative Law has been described as the law of a "fourth branch of government"

First Insurance Companies:

-The first Insurance Company was formed in 1688 in London (Lloyds of London). It served more as a gaming/odds house then an actuarial based risk of loss company. At Lloyds, merchants, ship-owners, and underwriters met at a coffeehouse to discuss how to protect the sea voyages, and share their risk of losses. -The development of more Modern insurance products traces back to the "Great Fire of London" in 1666, when 13,200 houses were completely destroyed. Societies were formed to pool money for losses. These collective investments also created the need for modernizing fire fighting. -The first Insurance Company was in the United States was formed in Charlestown, South Carolina in 1735. It specialized in underwriting both maritime risks as well as property and casualty (mostly fire). -Fire Insurance Companies began spreading to northward to New York City and Philadelphia. -Benjamin Franklin was a huge proponent of Insurance. He founded America's first successful insurance company, as well as the first mutual insurance company. He also encouraged prevention by educating the public about fire hazards, refused to insure wooden buildings and coined phrase "an ounce of prevention is worth a pound of cure"

Bankruptcy: History

-The word bankrupt is actually of ancient origin, and traces its roots to medieval Italy. -There, as a symbol of your financial failure, and your inability to pay your debts, creditors were legally empowered to break the bench from which the merchant operated their business. -From the Italian "banka" - meaning "bench" and "rotta" - meaning "break" derives the word "bankrupt".

Bankruptcy: Fundamentals

-There are two parties involved in bankruptcy. -Each party can be a natural person or a corporation. Such parties are debtors and creditors. -There is also the trustee and the federal government who will administer the bankruptcy proceeding. -The term "Bankruptcy" is defined by Black's Law dictionary to mean: "A statutory procedure by which a (usually insolvent) debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation of the debtor's assets for the benefit of creditors".

Types of Agencies: Independent

-These agencies can act independently of the Executive (President or Governor) -The head of the agency does not serve at the pleasure of the Executive, and can be either appointed by the Executive for a term, appointed by some other branch of government (such as the congress or the legislature), or in the case of the state, be an independently elected official (such as the Attorney General or the Comptroller). -Examples or Independent Agencies on the Federal level include the Federal Reserve and the National Labor Relations Board. Examples of Independent Agencies on the state level include the Department of Law and the State Board of Regents.

Types of Agencies: Executive

-These agencies do not act independently of the Executive (President or Governor) -The head of an Executive Agency serves at the pleasure of the Executive -The enabling statute of the Agency will determine its Executive status.

Limited Liability Companies Processes:

-To form an LLC the organizers must select a name for the business and verify its availability. They must further determine other requirements, if any, and file the Articles of Organization with the Department of State together with a $200 fee. -Organizers must additionally apply for a Federal ID Number and fulfill publication requirements (the formation must be published in the legal notices of a local newspaper). -Finally, just like an organizational meeting with a corporation, the organizers must adopt a written operating agreement (like a partnership agreement). -When selecting the business name, the organizers must include the words "Limited Liability Company", "L.L.C.", or "LLC". Such name must be distinguishable from all other business names on file with the NY Dept of State.

Kinds of Insurance:

1. Property and Casualty -Auto -Marine -Home Owners/Renters -Fire Personal Liability 2. Commercial Liability -Professional liability -Directors and Officers -Construction/safety 3. Health and Life -Health -Life -Disability

Limited Liability Companies Defined:

A Limited Liability Company is an unincorporated business organization of one or more persons or entities who have limited liability regarding contractual obligations and other liabilities of the business.

Corporation Attributes and Activities(Constitutional Status):

A corporation is a "person" entitled to due process and equal protection of the law under the Fifth and Fourteenth Amendments, but it is not a "citizen" referred to by the Privileges and Immunities Clause of Article IV or the Fourteenth Amendment. The Supreme Court has further clarified that Corporations have free speech rights (see Citizens United).

Characteristics of a corporation(Statutory Sources of Authority):

A corporation is a creature of statute; it and its managers and agents have only such authority to act as is conferred by or pursuant to statutes (principally the BCL), the case law (to a lesser extent), or legally permitted provisions of the certificate of incorporation or bylaws.

Legal Entity of to Itself: An Artificial Person Under the Law

A corporation is a legal entity (an artificial person) created in accordance with statutes. The corporate entity is separate and distinct from the legal personalities of those who own and manage the corporation. In New York, as elsewhere, corporate law is mostly statutory, and most of the statutory law relating to general business corporations (i.e., corporations for profit) is contained in the New York Business Corporation Law ("BCL").

Corporate Formation(In General)

A corporation is formed by compliance with the formalities prescribed in the New York State Business Corporation Law (BCL). The creation of corporations by special act of the legislature is prohibited except for municipal purposes or for cases where, in the judgment of the legislature, the corporation's objectives cannot be attained under the general laws.

Corporate Formation(Defacto Corporations)

A de facto corporation is an entity that has not met all of the requirements set out by state law for corporate formation but operates as though it has. Courts may grant it temporary status as a corporation. The rules about articles of incorporation are simple and straightforward: If they contain a fatal defect, a corporation is not authorized under the law.

Shareholders:

A shareholder is a person who owns shares in a corporation. A "share" is literally the physical representation of a predetermined amount of the business. As owners, these stockholders have the right to control the corporation through the election of directors and through other proposals brought to a vote. Ordinarily, stockholder action is taken at a regular or special meeting of the stockholders. Shareholders cannot have their percentage of ownership diluted.

Officers:

An individual hired or selected by a board of directors who has specific authority, such as the ability to bind the corporation to contracts and other agreements, and who carries out the day-to-day activities of the business.

Definition of Investment Contract:

An investment contract for purposes of the Securities Act, on the other hand, means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.

Corporation Attributes and Activities(Corporate Ownership)

An ownership interest in a corporation is represented by shares of stock in the Corporation. Voting shares allow the shareholder to elect members of the board of directors of the corporation and control certain decisions of corporation policy.

Characteristics of a corporation(Entity Powers):

As a separate entity, a corporation can contract in its own name, sue or be sued, own or convey property, and be held criminally liable for crimes that it commits.

Characteristics of a Corporation(Limited Liability):

Because a corporation is a separate legal entity, its debts and obligations are treated as being distinctly its own; its shareholders and managers are ordinarily not liable for corporate indebtedness. Two exceptions exist to limited liability. One is to pierce the corporate veil for fraud. The second is the 10 largest shareholders of non-publicly traded corporations for the wages of their employees.

Sources of Administrative Law: Enabling Statutes

Both Federal and State Agencies are creatures of statute. For the Federal Agencies, these are found in the United States Code. For State Agencies these are found in McKinney's. These enabling statutes set forth the mission, jurisdiction, responsibilities and powers of the agency. Through these enabling acts, agencies are delegated the constitutional power to act on behalf of the government. Enabling Statutes provide the legal authority for an agency to act.

Anti Fraud Provisions Generally

Both the Martin Act and the Federal Securities Laws provide for measures to combat fraud and misrepresentation with respect to the sale, purchase and transfer of securities. These provisions permit enforcement by both federal and state authorities to combat fraud and misrepresentation and authorize the imposition of both civil and criminal sanctions upon the proof of such misconduct.

Types of Stock

Common Stock: Ownership of Common Stock entitles the owner to voting rights, whereby such owner of can cast a vote per share to elect members of the Board of Directors. Preferred Stock: Preferred Stock is an investment vehicle, which entitles the owner to be paid dividends first, but which generally confers no voting rights to the owner.

Characteristics of a corporation(centralized management):

Control of a corporation is centralized in a board of directors elected by shareholders. In general, the shareholders have only extremely limited power to make management decisions (except insofar as they may elect and remove directors).

Federal Regulation Generally

Corporate regulation under federal law began after the 1929 stock market crash.There are four principal federal laws which provide the framework for federal regulation of the sale of securities in interstate commerce. These include: * The Securities Act of 1933; * The Securities Exchange Act of 1934; * The Sarbanes-Oxley of 2002; and * The Dodd-Frank Act of 2010

Manner of Corporate Governance / Management:

Corporation Governance and Management is a form of republican rule where shareholders elect directors to represent them. Corporations must act through their employees, agents, officers and directors. Shareholders are not authorized to sell corporate property, negotiate contracts on behalf of the corporation, or take individual action to hire and fire employees.

Corporate Personhood(a person under the law)

Corporation Has Rights similar to those of human beings. A corporation can: Own property;Pay taxes; Exist for an indefinite period;Sue; and Be sued A corporation is a Creature of Statute, meaning it derives all its powers from the general incorporation law state statute under which it is formed. It has its own legal identity as a person under the law, and it can only act through its agents and employees.

Annual Report:

Corporations are required to file an annual report with the secretary of state's office listing the names and addresses of the officers and directors. Such report details the operations and finances of the corporation, as well as its past substantive accomplishments and future aspirations. Pursuant to the Sarbanes Oxley Act, the Chief Executive Officer and the Chief Financial Officer are required to certify the authenticity of the information contained in the annual report.

Sources of Administrative Law: Constitutions

Federal and State Constitutions can define agencies and establish limitations on their actions.

Corporation Attributes and Activities(Limitation of Investment)

Financial Investments in a corporation are made by purchasing shares of stock in the corporation. The monies used to purchase the shares of stock, inherently limit the exposure of the investor, and the shares so purchased give investors certain rights with respect to the corporation.

Corporate Formation(Promoters)

Generally: Promoters are persons who provide the organizational initiative for the founding of a business and for the formation of a corporation (or other form) to carry on the business. What They Do: Promoters sell subscriptions for the purchase of stock in the proposed corporation, court prospective investors, and perform other organizational details that the corporation needs in its pre-incorporation existence. They Have a Fiduciary Duty: Promoters have certain fiduciary duties aimed at protecting (indirectly) the "outsiders" who invest. Promoters may be, but need not be, the "incorporators." Duties as Between the Promoters: As long as there are no "outside" investors, the promoters are the only ones having any legal interest in the transactions of the corporation, thus, self-dealing at this stage is not improper. Nonetheless, as between themselves, promoters do have a fiduciary duty to each other until the corporation is organized. After incorporation, promoters cease to have such "partnership" fiduciary duties, and among themselves they have only the rights, duties, and obligations of shareholders (and of managers if such be the case).

Directors:

Individuals who set policy and long-term goals for corporations. These Directors are elected by Shareholders and set the policies for the corporation and handle many other important decisions, including the payment of taxes, franchise fees, and changes in corporate procedures. Directors also select, appoint and hire the Officers of the corporation.

Election of Directors:

Members of the corporation who have shares entitling them to vote decide among themselves who they would like to elect to the board of directors. These directors will set the policies for the corporation and handle many other important decisions, including the payment of taxes, franchise fees, and changes in corporate procedures.

Corporation Attributes and Activities(Professional Corporations)

New York Law allows certain licensed professionals, such as doctors, lawyers or engineers, form a corporation to practice their profession. These special corporations require shareholders to be licensed to practice the profession for which the corporation was established.

Corporation Attributes and Activities(Close / Publicly Traded Corporations)

New York Law authorizes the sale of the corporation's shares to either select individuals or to the public at large. •Close corporations sell their shares to only select individuals. •Publically Trade Corporations offer their shares for sale to any member of the general public legally authorized to purchase stock.

Shareholder Agreements and Banking Resolutions:

One of the first acts of the board of directors will also be the approval of shareholder agreements. Such approval will be made pursuant to any guidance that exists in the Articles of Incorporation. Another of the first acts of the board of directors will be the approval of Banking Resolutions. Banking resolutions authorize the creation and maintenance of corporate bank accounts. These resolutions will further limit who has access to corporate accounts, who is permitted to sign corporate checks, who is allowed to oversee the accounts, and how account reports will be made to the shareholders.

Appointment of Officers:

One of the first tasks the board of directors must accomplish is to vote on officers that will lead the corporation on a day to day basis. These officers include: Chief Executive Officer, President, Vice President(s), Chief Financial Officer, Treasurer and Secretary.

Value of Stock

Par Value is the value of the stock at the time of issuance. Book Value is the value of the stock based on the company's assets. Market Value is based on how much the stock is sold for in the open market.

Corporation Attributes and Activities(Pre-incorporation Activities )

Pre-incorporation activities of promoters, such as those activities necessary to establish the corporation, or the business in which it will engage, can be ratified by the adoption of such by the board of directors, after the corporation is established.

Debtors Prison:

Prior to the enactment of modern Bankruptcy laws, a merchant who did not pay their debt through no fault of their own, could be imprisoned in Debtors Prison.

Types of corporations

Private Corporations: Business Corporations :Foreign / Domestic & Close / Publically Traded Professional Corporations Subchapter S Corporations Public Corporations: Public Benefit Corporations, Municipalities, Not - for - Profit Corporations, Public Authorities

Corporation Attributes and Activities(Formation of Corporations)

Pursuant to a general incorporation acts (such as the provisions of the Business Corporation Law) incorporation of a new corporate entity can be accomplished by: •Having incorporators (natural people over 18) prepare a certificate of incorporation which conforms to all state laws; •Filing the certificate of incorporation with the office of the secretary of state; and •Paying all necessary state incorporation fees

Issuance of Stock

Shares of Stock are issued by the corporation pursuant to the terms of the Certificate of Incorporation. Shares of Stock are purchased either by direct subscription from the corporation itself, or from other shareholders, by means of a stock trade. A person must be 21 years of age to buy stock in NY. Stock may be Common Stock or Preferred Stock.

Initial Shares and Distribution

Shares of stock are ownership interests in a company, upon which the corporation will raise its capital necessary for operation. There are different types of shares, and these different classifications give rise to different levels of participation in the company. The articles of incorporation are where the company decides on the type and variety of shares that it will issue. The articles must also specify any limitations on the shares, including voting rights. The direct sale of shares by the corporation is performed by subscription. Shareholders may thereafter sell their shares back to the corporation or to another third party, which is known as trading the shares. As shares have to be registered for voting purposes, the stock certificate is only evidence and not dispositive of an ownership interest. The organizational meeting is the time that the subscribed shares are officially sold to and distributed to the corporation's initial shareholders.

Shares of Stock

Stock is divided into shares, with each "Share" being equal to the fractional interest in the total property (and ownership) of the corporation

Corporate Formation(Articles (Certificates) Of Incorporation):

The Articles, sometimes also referred to as the Certificate, of Incorporation is the legal instrument that creates the corporation. Like a constitution for government, it sets out the general framework of what the corporation is, and can later be amended. Contents: The Articles (certificate) of incorporation must set forth the following: • Name of the Corporation; • Purposes of the Corporation; • Office of the Corporation; • Authorized Shares and Descriptions; • Duration of the Corporation; • Registered Agent; • Designation of Secretary of State; and • Limitations on Director's Liability (if any).

Corporate Formation(Corporate Charters)

The Corporate Charter contains three elements: •The Articles of Incorporation; •The Pre-Incorporation Documents; •The State Incorporation Laws

The Business Judgment Rule:

The business judgment rule is a case law-derived concept in corporations law whereby the "directors of a corporation . . . are clothed with [the] presumption, which the law accords to them, of being [motivated] in their conduct by a bona fide regard for the interests of the corporation whose affairs the stockholders have committed to their charge" The Business Judgment Rule has at its core, a responsibility of directors to weigh risk against reward. This is an art, not a science.

Corporation Attributes and Activities(Source of Limited Liability):

The concept of Limited Liability for corporate investors is derived from the sovereign immunity of a king or the state. It was originally provided through the corporate charter by a sovereign as an incentive for capital investment.

Corporation Attributes and Activities(Foreign vs. Domestic Corporations)

The difference between a foreign corporation and a domestic corporation is that a foreign corporation is chartered outside New York State and a domestic corporation is chartered inside the state of New York. A foreign corporation need not be located outside the United States, but rather just outside New York State

Characteristics of a corporation(Free Transferability of Interests):

The interest of the corporation's owners is divided into shares, and these shares may be freely transferred; that is, another person may be fully substituted in the place of the transferor as the holder of ownership interests (shares) in the corporation.

Organizational Meeting Generally:

The organizational meeting, or initial meeting, is the first official business of the newly formed corporation. The purpose of this meeting is to bring together the various members of the corporation, vote on officers, adopt by-laws, and take care of the other clerical work that must be done to officially launch the corporation

Corporate Formation(Rules for Corporate Formations)

The rules that govern a corporation come from the following sources: •States Constitutions •State Statutes •Articles of Incorporation

How to Tell A Corporation's Type:

The simplest way to determine a Corporation's type is to examine its Articles of Incorporation. The Articles will state what type of corporation it is and under what purposes and statutory authority it is formed

Definition of Security:

The term "security" has defined as "stocks and bonds issued by a corporation". Other definitions may also include other financial products interests that seek to provide unearned income.

What is Stock?

The term "stock" derives from what was traditionally deemed to be the capital assets of a business. Traditionally, for merchants, it was deemed to constitute their goods and wares of a kept for sale and traffic (i.e. their inventory). With respect to Business Corporations, the term stock refers to the capital or principal funds of the corporation, formed by the contributions of subscribers from the sale of shares. In the corporate context, the term "stock" has also been held to embrace not only capital stock of a corporation but all corporate wealth and resources, subject to all corporate liabilities and obligations. The term, "shares of stock" refers to a proportionate ownership interest in the corporation.

Corporation Attributes and Activities(Business Corporations):

Under New York Law [Section 201 of the Business Corporation Law], a Business Corporation is: •A private corporation under the law; •A corporation that is established to conduct a business for profit; and •Limited in the liability of its shareholders.

Characteristics of a corporation(Continuity of Existence):

Unless duration is specifically limited in the certificate of incorporation, a corporation's duration is "perpetual"; i.e., it continues until dissolved, merged or consolidated, pursuant to the BCL. The death, withdrawal, bankruptcy, or incapacity of any of its shareholders or managers has no effect on the corporation's existence.

Bond as Debt Securities

Unlike Stock, Bonds are debt securities. Accordingly, a bondholder is a creditor rather than an owner of the corporation. Bondholders' interests are represented by an indenture trustee, who is responsible for ensuring that the corporation complies with the terms of the bond. Bondholders are not shareholders and have no voting rights

Adoption of Corporate By Laws:

Whereas the Articles of Incorporation are similar to a Corporation's Constitution, the Corporation will also adopt By-Laws, which are similar to statutes. These By-Laws contain guidelines for how the business will be run and should make provisions for the following: •The Date and Location of the annual shareholder meeting •The number of Directors •The authority, duties, and titles of corporate officers The By-Laws must be consistent with the articles of incorporation, and many courts have defined By-Laws as the essential contract between shareholders and the corporation.

Corporate Formation(Incorporators)

Who Incorporators Are: Incorporators are one or more natural persons of the age of 18 or over, who act as the incorporators of a corporation. . The Role of Incorporators: The role of the incorporators is to sign (with an acknowledgment) the certificate of incorporation for delivery to the New York Department of State. The department of state files the certificate. When the corporate existence has begun (when filing has occurred), the incorporators hold an organization meeting for the adoption of bylaws and the election of the first board of directors.

Corporate Personhood

a corporation is an Artificial Person under the law. Corporations are the only legal entity of business organization which have this status In 1819, the U.S. Supreme Court defined a corporation as an artificial being that is invisible, untouchable, and exists only in the theory of the law (Derived from the Latin word "corpus", it first appeared under Roman Law, as a form of business organization that could have its own legal status and a perpetual existence.

State Regulators

•Office of the Attorney General: Under the Martin Act the Office of the NYS Attorney General has the legal authority to monitor and bring lawsuits for securities fraud and violations of the NYS General Business Law. •Department of Financial Services: This new state entity, created in 2011, has jurisdiction to regulate all insurance companies and banks doing business in New York. They further have some limited power to regulate certain securities transactions where such regulation is not pre-empted under Federal law.

State Regulation Generally: Corporate regulation under state law is as follows:

•State Blue Sky Laws: These laws apply only to intrastate transactions, and protect the public from the sale of fraudulent securities. The National Securities Markets Improvement Act of 1996 allocated responsibilities between federal and state authorities. •The Martin Act: In 1921 the NYS Legislature enacted one of the nation's first blue sky laws, known as the Martin Act.The law provides extraordinary powers to the State Attorney General to combat financial fraud.