- •§ 1: The Nature of the Corporation
- •§ 2: Corporate Powers
- •Implied Corporate Powers
- •§ 3: Classification of Corporations
- •§ 4: Corporate Formation
- •Incorporation Procedures
- •§ 5: Improper Incorporation
- •§ 6: Disregarding the Corporate Entity
- •§ 7: Corporate Financing
- •§ 1: The Role of Directors and Officers
- •§ 2: Duties and Liabilities of Directors and Officers
- •§ 3: Role of Shareholders
- •§ 4: Rights of Shareholders
- •Illegal Dividends
- •Inspection Rights
- •§ 5: Liability of Shareholders
- •§1: Merger and Consolidation
- •§2: Purchase of Assets
- •§ 3: Purchase of Stock
- •§ 4: Termination
- •Voluntary Dissolution
- •Involuntary Dissolution
- •§ 2: The Securities Act of 1933
- •Violations of the 1933 Act
- •§3: The Securities Exchange Act of 1934
- •Insider Trading: Section 10(b) and Rule 10b-5
- •Violations of the 1934 Act
- •§4: Corporate Governance
- •§5: Regulation of Investment Companies
- •§ 6: State Securities Laws
- •§ 7: Online Securities Offerings and Disclosures
§ 1: The Nature of the Corporation
A corporation is a creature of statute, an artificial “person.”
Most states follow the Model Business Corporation Act (MBCA) or the RMBCA, that are model corporation laws.
The shares (stock) of a corporation are owned by at least one shareholder (stockholder).
The corporation substitutes itself for the natural persons in conducting corporate business and incurring liability, but its authority and liability are separate and apart from the shareholders.
In certain situations, the corporate “veil” of limited liability can be pierced, holding the shareholders personally liable.
Corporate Personnel
Individual shareholders own corporation.
Shareholders elect board of directors to manage corporation.
Board of directors hires officers to run corporation on a daily basis.
Body of shareholders can change constantly without affecting the continued existence of the corporation.
Shareholder can sue corporation and be sued by corporation and bring suit for corporation in some instances (derivative action).
Corporate Taxation
Corporate profits can either be kept as retained earnings or passed on to the shareholders as dividends.
Corporate profits are taxed under federal and state law as a separate “person” from its shareholders.
Regular “C” corporations are taxed twice: at the corporate level and at the shareholder level.
Constitutional Rights of Corporations
A corporation is an artificial “person” and has constitutional rights to:
Equal protection;
Access to the courts, can sue and be sued;
Right to due process before denial of life, liability or property.
A corporation is an artificial “person” and has constitutional rights to:
Equal protection;
Access to the courts, can sue and be sued;
Right to due process before denial of life, liability or property.
Torts and Criminal Acts
A corporation is liable for the torts committed by its agents or officers within the course and scope of their employment under the doctrine of respondeat superior.
Corporation can be liable for criminal acts, but only fined. Responsible officers may go to prison.
Corporate Sentencing Guidelines
Federal Organizational Corporate Sentencing Guidelines provide specific sentencing guidelines for crimes committed by corporate employees (white collar crime).
32 levels of offenses:
Culpability score.
Credits can be applied.
§ 2: Corporate Powers
A corporation may act and enter into contracts as any natural person, except as limited by:
U.S. Constitution.
State constitutions.
State statutes.
Its own articles of incorporation.
Its own corporate bylaws.
Resolutions by its own board.
Express Powers
The express powers of a corporation are found in the corporation’s articles of incorporation, the laws of the state of incorporation, and in the state and federal corporations.
Corporate by-laws may also grant or limit a corporation’s express powers.