- •1. Right to Participate in Management
- •2. Right to Profits
- •3. Right in Partnership Property
- •4. Right to Extra Compensation
- •1. Make Binding Contracts, for the Firm
- •2. Receive Money Owed to the Firm and Settle Claims against the Firm
- •3. Borrow Money in the Firm Name
- •1. Perpetual Life
- •2. Limited Liability
- •3. Transferability of Ownership Interests
- •4. Ability to Attract Large Sums of. Capital
- •5. Professional Management
- •1. Perpetual Succession
- •2. Corporate Name
- •3. Bylaws
- •4. Power to Conduct Its Business
- •1. The Right to a Stock Certificate
- •2. The Right to Transfer Shares
- •3. The Right to Attend Shareholder Meetings and, in Some Cases, to Vote
- •4. The Right to "Increase the Capital Stock
- •5. The Right to a Share of the Profits
- •6. The Right to Share in Distributions of the Capital
- •7. The Right to Inspect Corporate Books of Account
- •1. Agreement of the Shareholders
- •2. Forfeiture of the Charter
- •3. Consolidation or Merger
- •4. Bankruptcy
- •5. Court Order
1. Perpetual Succession
In most jurisdictions, the corporation is the only form of business organization, which may be granted the power of perpetual succession. Perpetual succession means that regardless of changes in the shareholders (owners), the corporation may continue indefinitely, or for whatever period originally requested by the incorporators. During this time, the death or withdrawal of a director, manager, or shareholder has no legal effect on the corporation's life.
2. Corporate Name
A corporation can select any name to identify itself unless that name is identical or deceptively similar to the name of another business already operating. Most states require that the name selected indicates that the business is a corporation, to alert the public of the limited liability of its owners. This can be done by including a descriptive word in the name, such as Corporation, Incorporated, or Limited, or their abbreviations (Corp., Inc., Ltd.).
Note that any form of business organization (not just the corporate form) can use a fictitious name to identify itself. Most states require that these fictitious names be registered.
The power to have a seal, which shows the company name, is inherent in corporate existence. However, this power is insignificant because of the declining importance of seals.
3. Bylaws
A. corporation can make its own rules and regulations for the internal management of its affairs. Called bylaws, these rules specify times for meetings of shareholders and directors, for .example, and define duties of officers.
4. Power to Conduct Its Business
In achieving its purpose(s), a corporation may use any legal means to conduct authorized business. Thus, the corporation has the power, in. its own name, to:
a. make contracts and incur liabilities;
b. borrow and loan, money;
c. make, indorse, and accept commercial paper;
d. issue various types of stock and bonds (long-term notes issued in return for money borrowed and usually secured by a mortgage or deposit of collateral). Unsecured bonds are called debentures;
e. mortgage, pledge, lease, sell, or assign its property;
f. buy its own stock unless this would make it impossible for the corporation to pay its debts or to pay off any superior class of stock;
g. acquire and hold stock in other corporations if such action is not in violation of antitrust laws;
h. make reasonable donations or gifts for civic or charitable purposes;
i. hire agents, independent contractors, and ordinary employees;
j. establish pension, profit sharing, and other incentive plans for employees; and
k. sue and be sued.
Answer the questions:
1. What is a perpetual succession?
2. What do the abbreviations Corp, Inc., Ltd. Mean?
3. What are bylaws?
4. What are the powers of a corporation?
TEXT 13
THE RIGHTS OF SHAREHOLDERS
1. The Right to a Stock Certificate
A shareholder has the right to receive a stock certificate as evidence of ownership of shares in the corporation. One certificate may represent one or more shares.