Module 4: Corporations

Origins of Corporations

Emerged from political/religious authority; grew with joint-stock trading companies.

Limited Liability

Encouraged investment by limiting shareholder losses.

Delaware Incorporation

Most corporations register here since 1899.

Corporate Legal Rights

Corporations have due process, equal protection, and free speech rights.

Corporate Limits

No self-incrimination under Fifth Amendment.

Piercing the Veil

Courts may hold shareholders personally liable for fraud/misuse.

Corporate Classifications

Nonprofit, municipal, professional, business.

Articles of Incorporation

Charter between corporation and state.

Organizational Meeting

Board meets after incorporation certificate issued.

De Facto Corporation

Exists if statute, good faith effort, and corporate actions present.

Corporation by Estoppel

Court may treat business as corporation based on reliance.

Preferred Stock

Has dividend/liquidation priority; mix of debt/equity traits.

Common Stock

Ownership with voting rights.

Treasury Stock

Repurchased corporate shares.

IPO (Initial Public Offering)

First public stock sale.

Dividend

Corporate payment to shareholders (cash or stock).

Ultra Vires Doctrine

Corporate actions beyond authority/illegal.

Shareholder Rights

Vote, preemptive rights, sue derivatively.

Preemptive Rights

Buy new shares to prevent dilution.

Board of Directors

Manages corporate powers; delegates duties.

Fiduciary Duties

Loyalty (no conflicts) + care (prudent actions).

Business Judgment Rule

Court presumes directors act in good faith/informed.

Sarbanes-Oxley Act

Imposed stricter governance rules on officers/directors.