Corporations 1

1) INCORPORATORS (people)

2) CERTIFICATE OF INCORPORATION (paper)

3) ACTS

• SIGNING of certificate of incorporation by EACH INCORPORATOR before a notary public
• DELIVERY of signed certificate to NY Department of State (and payment of fees)
• ORGANIZATIONAL MEETING held

1) DO THE FOLLOWING 2 THINGS

• EXECUTE the certificate of incorporation, AND
• HOLD an ORGANIZATIONAL MEETING

2) AT LEAST ONE (may have more)

3) ANY ADULT HUMAN

1) MUST CONTAIN THE FOLLOWING

• Corporate NAME (designated as "Corp.," "Inc.," or "Ltd.")
• COUNTY where incorporated
• NY SECRETARY OF STATE as agent for process
• ADDRESS for forwarding mailed-process to corporation
• statement of CORPORATE PURPOSE (to "engage in all lawful activity, after obtaining necessary state agency approval" is sufficient)
• STOCK STRUCTURE (bascially ANYTHING and about the stock, including number of shares authorized, per class, par value, rights, preferences, limitations, prefered shares, etc.)

2) MAY ALSO INCLUDE THE FOLLOWING

• statement of DURATION (otherwise PERPETUAL EXISTENCE is presumed)
• Additional registered agent for service of process (in addition to NYSS)

1) CERTIFICATE OF INCORPORATION

• EACH INCORPORATOR must sign before a NOTARY PUBLIC
• must be DELIVERED to NY DEPT OF STATE (Dept's filing is CONCLUSIVE evidence of valid formation (i.e., "de jure" corporation))

2) ORGANIZATIONAL MEETING--incorporators

• adopt any BYLAWS
• ELECT initial BOD (the BOD then takes over the management of the corporation)

1) INTERNAL AFFAIRS

• Governed by NY LAW, regardless of where corporation does business
• includes duties, relationship among directors, officers, S/H

2) SEPARATE LEGAL PERSON--corporation can

• enter Ks, acquire/dispose of property interests, etc.
• make POLITICAL CONTRIBUTIONS (up to $5K/year per candidate or organization)
• make CHARITABLE CONTRIBUTIONS
• guaranty loans (even if NOT in furtherance of business if approved by ≥ 2/3 share entitled to vote)

3) LIMITED LIABILITY

• SHs loss limited to price of stock paid
• corporation is separately liable for all debts (even if there is ONLY ONE SH)

IN VERY LIMITED CIRCUMSTANCES—must show

• relevent corporation statute (BCL)
• parties made GOOD FAITH, colorable attempt to comply with statute
• business being conducted as a corporation

• MBE: One DEALING with a business and treating the business AS A CORPORATION may be estopped from denying corporate status to the business
• NYBE: ABOLISHED BY BCL--i.e.., no such thing as a corporation by estoppel in NY

1) NO--adopting BL are optional

2) CERTIFICATE OF INCORPORATION prevails in a conflict with the BL

3) INCORPORATORS adopt the initial BL (at the organziational meeting)

4) SHs can amend, repeal, or adopt new BL

5) BOD may amend, repeal, or adopt new BL ONLY IF the certificate or a SH BL allows it (but event then, the SHs can modify or repeal ANY BOD-adopted BL)

1) Person acting on behalf of unformed corp.

2) Liable on all Ks until novation

• corporation ADOPTS the K (BOD action, or knowing accepts benefits)
• NOVATION (all parties agree)

1) No Secret Profits

• REQUIRES: (1) PROFT, (2) undisclosed to incorporators or BOD (i.e., SECRET)
• REMEDY: ACCOUNTING (e.g., disgorge)

2) Computing the Profit

• PRE-PROMOTER: Profit = (a) Price paid by Corp. MINUS (b) FMV
• POST-PROMOTER: Proft = (a) Price paid by Corp. MINUS (b) Price paid by Promoter

1) CONDUCTS A REGULAR COURSE of INTRASTATE business activity in NY

2) Foreign corp. CANNOT SUE another in a NY court—i.e., can't be π--until it qualifies (though it can be sued or defend itself in a NY court)

3) PROCEDURE FOR QUALIFYING

• apply to NY Dept of State
• provide info from home state's certificate of incorporation AND proof of good standing
• designate NYSS as agenct for service of process
• pay all FEES, TAXES, PENALTIES that may be due

Pre-Incorporation Ks