CH 39- Corporations

What legal rights and privileges do corporations enjoy under state and federal law?

Corporations enjoy rights like due process, free speech, and freedom from unreasonable searches and seizures, similar to citizens.

Who are considered corporate personnel, and what are their roles?

Corporate personnel include officers and employees who run daily operations, directors elected by shareholders to manage the corporation, and shareholders who own the company.

What does limited liability mean for shareholders in a corporation?

Limited liability means shareholders are not personally liable for the debts or obligations of the corporation beyond their investment.

What are holding companies, and how are they related to corporate earnings?

Holding companies control other companies by owning their stock. They can retain earnings and dividends from their subsidiaries.

Explain how corporate earnings and taxation work, particularly regarding double taxation.

Corporate earnings are subject to double taxation: the corporation pays taxes on its profits, and then shareholders pay taxes on dividends received.

What are the classifications of corporations based on their place of formation?

Classifications include domestic (formed in the home state), foreign (doing business in another state), and alien (formed in another country).

What is the difference between a public and a private corporation?

Public corporations are formed by the government for public purposes, while private corporations are created for profit or non-profit objectives.

What is a close corporation?

A close corporation is one whose shares are held by a few persons, often family members, and typically has restrictions on the transfer of shares.

What are the key characteristics and restrictions of an "S" corporation?

An "S" corporation is not subject to corporate income tax, but it must meet criteria like having no more than 100 shareholders, only one class of stock, and shareholders must be individuals, estates, or certain trusts.

What is a professional corporation, and how does it differ from other corporations?

A professional corporation is formed by licensed professionals like doctors or lawyers, and while it provides limited liability, members can still be held liable for malpractice or breach of duty to clients.

What is a benefit corporation, and what are the rights of its shareholders?

A benefit corporation aims to have a positive impact on society and the environment. Shareholders have the right to determine if the corporation meets its social or environmental goals and can sue if it fails to pursue its mission.

What are the steps involved in the formation of a corporation?

Steps include organization by promoters, incorporation procedures (selecting state, name, preparing and filing articles), and the first organizational meeting where directors are elected, stock is issued, and bylaws are passed.

What is the difference between de jure and de facto incorporation?

De jure incorporation means the corporation has substantially complied with all conditions for incorporation. De facto incorporation is recognized despite minor defects in formation if there was good faith effort to comply.

What is meant by "piercing the corporate veil," and under what circumstances might it occur?

Piercing the corporate veil refers to courts ignoring the corporate structure to hold shareholders personally liable, often when the