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What must an incorporator do to create a corporation?
1. Execute articles and supplemental form.
2. Deliver them to the state secretary.
3. Might also hold the organizational meeting.
How many incorporators must there be to create a corporation?
At least one.
The Three things that must be in the articles of organization are:
1. Corporate Name (must have Corporation, company, incorporated, or limited in name.)
2. Name and address of each incorporator.
3. Information regarding stock.
What information regarding stock must be in the articles of incorporation?
1. Authorized stock.
2. # of shares per class or series.
3. Voting rights, preferences and limitations of each class or series.
Authorized stock is:
the maximum number of shares the company can sell.
Issued stock is the:
number of shares the corporation actually does sell.
Outstanding stock is:
the number of shares the corporations old and has not reacquired.
A series of stock is:
a subclass of stock.
The articles of incorporation are filed on the:
The supplemental form must state:
1. Name of the initial registered agent and the address of registered office. Office must be in MA.
2. Names and addresses of the initial directors, president, treasurer, and secretary.
3. Dates for the initial fiscal year.
If there is no statement of a corporation's duration we presume:
A statement of purpose for a corporation is not:
required for formation.
If there is a statement of purpose in a corporation, activity outside of the stated purpose is called:
ultra vires activity.
Ultra vires Ks are:
For ultra vires activities, shareholders can seek:
The managers responsible for ultra vires activities are:
personally liable to the corporation for losses stemming from the activities.
A de jure corporation is one that:
has filed the necessary documents and the MA state secretary finds them in compliance.
An S corporation is one in which:
1. There are 100 or fewer shareholders.
2. Does not pay double taxes.
A C corporation:
1. Can have as many shareholders as it would like.
2. Pays taxes on its income.
A De Facto corporation will be found to exist by the court it:
1. There is a relevant statute (In MA BCA)
2. THe parties made a good faith, colorable attempt to comply with it; and
3. They are acting like there is a corporation.
In a quo warranto action:
the State sues a de facto corporation like a partnership.
According to the doctrine of Corporation by estoppel, one who treats a business as a corporation may be estopped from:
denying that the business is a corporation.
Corporation by estoppel applies only in:
By laws are/aren't necessary for a corporation:
Are not necessary.
If the bylaws conflict with the articles:
the articles control.
A corporation is not liable on pre-incorporation contracts until:
it adopts the contract.
Express adoption of a K occurs when:
the Board expressly adopts it.
Implied adoption of a K occurs when:
the corporation accepts a benefit of the K.
One who enters into a K on behalf of an unformed corporation is known as a:
A promoter is liable on a pre-incorporation K until there is a:
novation. (Assuming that the K says nothing about promoter liability)
A promoter cannot make a secret:
profit on her dealings with the corporation.
A promoter's sale of property that is acquired after her becoming a promoter will generally be considered:
a secret profit.
When issuing stock the corporation must receive:
some form of consideration from the issuee.
In MA a board has the autority to determine what amount of consideration is:
adequate for the sale of the stock in question.
Reacquired stock may be sold by the corporation at:
A subscription is an:
offer to buy stock.
Unless noted otherwise, a pre-incorporation subscription is irrevocable for:
A post-incorporation subscription is revocable until:
it is accepted by the corporation.
A pre-emptive right is the right of a shareholder to:
maintain her percentage of ownership by buying stock whenever there is a "new issuance" of stock.
Issuance of re-acquired stock is:
a new issuance.
Pre-emptive rights only exist if:
the articles say so.
The number of directors required are:
One at least one director per shareholder up to 3 shareholders. After that, the number is discretionary. (Only if the articles are silent!)
A Staggered board is one where:
A certain number of directors are elected every year, each serving a different term.
A publicly traded corporation must have a staggered board divided by:
Directors are elected by:
shareholders at the annual shareholder meeting.
The shareholders of a private corporation may remove directors:
with or without cause.
The shareholders of a public corporation may only remove directors:
The directors of a corporation may remove a director by a:
majority vote of the the remaining directors, and for cause only.
The two ways a board may act are:
1. Unanimous written consent (e-mail and fax Ok) to act without a meeting or
2. A meeting that satisfies quorum and voting requirements.
Notice for directors' meetings are required for:
Special meetings only, not general meetings.
Directors may not use ______ or ______ in order to vote:
A board may delegate substantial management functions to a committee except:
1. Power to declare distributions.
2. Recommend a fundamental change to shareholders.
3. Fill a board vacancy.
4. Amend by-laws.
The director standard of care requires directors to act:
1. In good faith
2. With the care that a person in like position would reasonably believe appropriate, and
3. With the reasonable belief that her act is in the corporation's best-interest.
A director's failure to act reasonably will only render him liable to a shareholder if:
his breach caused the loss to the corporation.
The business judgment rule provides that:
a court will not second-guess a business decision if it was made in good faith, was informed, and had a rational basis.
The BJR does not apply when there is a:
conflict of interest.
An interested director is one who:
has any deal between the corporation and himself or a close relative of the director, or another business of the director's.
Interested director transactions will be set aside unless the director shows:
the deal was fair to the corporation when entered or her interest and the materail facts were disclosed or known and the deal was approved by: 1. majority (at least 2) of all disinterested directors, 2. majority of a committee of at least 2 disinterested directors or 3. majority of all disinterested shares.
In interested director transactions a quorum is:
a majority of disinterested directors or a majority of disinterested shares.
A director may only compete with his corporation after:
he disassociates from the company.
A director cannot usurp a:
corporate opportunity for himself he tells the board and the board rejects the opportunity.
A director is presumed to have concurred with board action unless:
her dissent or abstention is noted in writing in corporate records. An oral dissent alone is no good.
Absent directors are not:
liable for any decision made at the meeting.
A corporation must have 3 officers which are:
a president, secretary and a treasurer.
Officers owe the same duties of:
loyalty and care as directors.
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