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Formation Of The Corporation Outline

Law Outlines > Business Association (Duke Cox) Outlines

This is an extract of our Formation Of The Corporation document, which we sell as part of our Business Association (Duke Cox) Outlines collection written by the top tier of Duke University School Of Law students.

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Formation of the Corporation A. Characteristics of Corporations a. Corporations provide limited liability to SH

1. Shareholders are not personally liable for corporate obligations

2. Managers generally not personally liable b. Free transferability of ownership interests

1. Ownership or "equity," represented by shares of stock, can be freely sold c. Continuity of existence

1. Legal existence is usually forever

2. Can specify a shorter duration on certificate of incorporation d. Centralized management

1. Power is legally vested in a Board of Directors

2. Shareholders have no right to participate in management e. Entity status

1. Corporation is a legal person

2. Corporation exercises powers and has rights in its own name f. Corporation is preferred form for publicly-held companies, but for privately held companies, the choice of form is more complex

1. Owners may value certain partnership attributes

2. Enterprise could be a: 1) Corporation 2) Limited liability company (LLC) 3) General partnership 4) Limited partnership 5) Limited liability partnership g. Corporate law consists of four major modules:

1. State statutory law

2. Model Business Corporations Act (MBCA) 1) Delaware, NY, and Cal don't use it

3. State judge-made law

4. Federal law (example. Securities Acts and Sarbanes-Oxley)

5. Private ordering (ex. soft-exchange rules for listed companies) B. Selecting a Corporate Domicile: Internal Affairs Doctrine a. Firms can incorporate wherever they want

1. Close corporations (corporations with a few owners) incorporate locally in the principal

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