Nature and Formation of Corporations

This set of flashcards covers key vocabulary and concepts related to the nature and formation of corporations as outlined in the lecture notes.

Legal Entity

A corporation is recognized as having a legal existence separate from its shareholders.

Limited Liability

Shareholders are usually liable only to the extent of their investment in the corporation.

Centralized Management

Management responsibility is separated from ownership, with the Board of Directors elected by shareholders.

Perpetual Existence

Corporations have perpetual existence unless limited duration is specified in the articles of incorporation.

Public Corporation

A corporation created to administer a unit of local civil government or conduct public business.

Private Corporation

A corporation founded by private persons for private purposes, which can be for profit or not-for-profit.

Profit Corporation

A corporation founded to operate a business for profit, which is then paid to shareholders.

Nonprofit Corporation

A corporation where profits must be reinvested back into the firm and cannot be distributed to its members.

Domestic Corporation

A corporation created under the laws of the state in which it is incorporated.

Foreign Corporation

A corporation created under the laws of another jurisdiction, requiring a certificate of authority to do business in a state.

Subchapter S Corporation

A corporation that is taxed as a partnership, with specific requirements outlined in federal tax codes.

Promotor

An individual who organizes and establishes a corporation, arranging for necessary capital and contracts.

Bylaws

Rules and regulations governing a corporation's internal management, which need not be publicly filed.

Articles of Incorporation

The document that establishes the existence of a corporation and must include specific information.

Ultra Vires Acts

Acts that exceed a corporation's express or implied powers, traditionally deemed void.

Piercing the Corporate Veil

The legal concept where a court allows separation from the corporate entity to hold shareholders personally liable.

Defective Incorporation

Refer to errors or omissions in incorporation that may affect corporate status.

Respondeat Superior

A doctrine that holds an employer or principal legally responsible for negligent or unlawful actions of an employee.

Corporate Powers

Powers granted to corporations by state incorporation statutes to conduct business.

As a Citizen

Corporations are citizens of the state(s) where they are incorporations and they have their principal office located for diversity jurisdiction purposes