A.FORMALITIES IN ORGANIZING CORPORATION
.

1.CERTIFICATE OR ARTICLES OF INCORPORATION
— province jurisprudence governs the content of the articles, which are filed with the secretary of the province. Normally, the articles must stipulate the corp name, figure of portions and categories of stock authorized, reference of the corp & # 8217 ; s initial registered office, name of initial registered agent, and the name and reference of each incorporator.

a ) Purpose Clause

— under most legislative acts, no luxuriant intent clause is needed. It is sufficient to province that the intent of the corp is to prosecute in any lawful concern activity.

B ) State of Incorporation

— incorporators need to see how flexible the province & # 8217 ; s corporate jurisprudence is versus the costs tie ining with integrating in that province

2.ORGANIZATIONAL Meeting
— make fulling the articles in proper signifier creates the corporation, after which an organisational meeting is held by either the incorporators or dirs named in the articles. Matters determined at meeting:

1 ) Incorporators elect managers, if no dirs are named in the articles ;

2 ) Directors choose officers ;

3 ) Directors ratify pre-incorporation minutess ;

4 ) Directors authorize issue of portions

5 ) Directors adopt by-laws ( if necessary ) , corporate seal and stock certification

B.DEFECTS IN FORMATION PROCESS — & # 8221 ; DE JURE & # 8221 ; AND & # 8220 ; DE FACTO & # 8221 ; CORPS
— when there is a defect or abnormality in formation, the inquiry is whether the corp exists & # 8220 ; de jure, & # 8221 ; & # 8220 ; de facto, & # 8221 ; & # 8220 ; by estoppel, & # 8221 ; or non at all. This issue normally arises when a 3rd party seeks to enforce personal liability on manque shs. Another method of disputing corporate position, used merely by the province, is aquo warranto proceeding.
Note: where at that place has non been conformity with the legislative act, we apply rules of de facto, de jure and corp by estoppel. Where there has been conformity with the legislative act, we apply rules of neglect of corporate fiction, a/k/a & # 8220 ; piercing the corporate head covering, & # 8221 ; which is an exclusion, instead than a regulation.

1.DE JURE CORPORATION
— this exists when the corp is organizedin conformity with the legislative act
. Its position can non be attacked by anyone — non even the province. Most tribunals require merely & # 8220 ; significant conformity & # 8221 ; ; others require exact conformity with the mandatary
demands
.

2.DE FACTO CORPORATION
( well abolished ) — this exists when there is insuf

ficient conformity as to the province ( i.e. , province can assail in quo warranto continuing ) , but the stairss taken are sufficient to handle the endeavor as a corp with regard to its traffics with 3rd parties. Requirements:

1 ) Colorable or evident effort ;

2 ) Good religion ;

3 ) Some usage of corporate franchise ; Then Nutmeg State will acknowledge position as to all but province

3.CORPORATION BY ESTOPPEL

a ) Definition

— estoppel is an just evidentiary regulation which prevents a party from denying the being of a fact notwithstanding that he fact is non true. Therefore, certain parties are estopped from asseverating faulty incorporation when they have dealt with the corp as though decently formed.

B ) Example

— shs who claimed corp position in an earlier dealing are estopped to deny that position in a suit brought against the corp. The estoppel theory usually does NOT use to exclude suits against manque shs by civil wrong claimants or other nonvoluntary creditors.

degree Celsius ) Overlap With De Facto

— many of the facts which we would indicate to back up a claim of de facto position are the same 1s we point for estoppel. However, significant abolishment of de facto construct doesn & # 8217 ; t needfully get rid of estoppel.

vitamin D ) De Facto is For All ; Estoppel is For One

— estoppel depends on relationship between party and corp.

4.WHO MAY BE HELD LIABLE
— when a manque corp is non a de jure or de facto or a corp by estoppel, the modern tendency imposes personal liability against merely those proprietors who actively participated in direction of the endeavor.

5.EFFECT OF Legislative acts
:

a ) On De Facto Doctrine

— provinces following the anterior version of the Model Act have abolished the de facto philosophy, therefore doing all purported & # 8220 ; shs & # 8221 ; jointly and independently apt for all liabilities incurred as a consequence of the purported & # 8220 ; incorporation. & # 8221 ; However, legislative acts based on Revised Model Business Corporation Act necessitate a individual moving on behalf of the endeavor tocognize
that there was no incorporation before liability attaches.

B ) On Estoppel Doctrine

— the consequence of both Acts of the Apostless is an unsettled issue.

degree Celsiuss ) On Liability

— under the anterior Model Act, liability extends to investors who besides exercise control or actively take part in policy and operational determinations. It is expected that the Revised Model Act will be interpreted in the same mode.