corporate law
general business corporation - a separately incorporated legal entity created by state statute organized
for the purpose of engaging in business for profit. They are legal entities separate from their
shareholders. They may act in accordance with the purposed for which they are formed, hold property,
open bank accounts, sue and be sued, etc., in their own name.
basic attributes of a general business corporation - 1. limited liability
2. perpetual existence
3. transferability of ownership
4. centralized management
limited liability - shareholders usually are not liable for corporate debts. Stockholder liability is
generally limited to the consideration paid for the stock. Thus, if the company goes bust owing $500
million to various creditors, the shareholders (owners) are only out what they paid for the stock and the
creditors can't reach shareholders' individual assets to satisfy outstanding debts.
perpetual existence - their existence may be limited, however, by the provisions of their Articles of
Organization or if they are voluntarily or involuntarily dissolved pursuant to applicable state law.
transferability of ownership - except as provided by the Articles of Organization, bylaws, or other
agreements and state and federal securities laws, shareholders may freely transfer ownership of shares.
An example of this is your ability to buy and sell shares of publicly traded companies like Microsoft or
Pfizer at will.
centralized management - a corporation is managed by its Board of Directors. The shareholders elect
the Board of Directors and must approve fundamental transactions such as mergers and amendments to
the Articles of Organization. The Board of Directors appoints officers who carry out the board's
directives.
State of Incorporation - rules, terminology and forms governing and applicable to corporations and
other business entities differ from state to state, but the general principles remain the same.
, two advantage states for incorporation - Delaware and Nevada.
foreign corporation - a corporation formed under the laws of one state doing business in another.
the certificate for foreign corporations in Mass. - includes: (i) the name of the corporation; (ii) the name
of the state or country under whose law it is incorporated; (iii) its date of incorporation and period of
duration if not perpetual; (iv) the street address of its principal office; (v) the name and address of the
corporation's registered agent for receipt of service of process within MA; (vi) its fiscal year; (vii) a brief
description of the activities to be conducted within the Commonwealth: and (viii) the names and usual
business addresses of its current directors and officers.
close corporations - are general business corporations that have a small number of shareholders, no
ready market for their stock and substantial majority shareholder participation in corporate
management.
S corporations - are small business corporations treated as partnerships for federal tax purposes--with
income, losses, credits, and deductions passing directly through to shareholders.
Uniform Partnership Act - a partnership as an association of two or more competent persons to
conduct, as co-owners, a business for profit.
differences of general partnerships and corporations - 1. no limited liability
2. no perpetual existence
3. no transferability
4. no centralized management
partnership agreement - will contain the rules by which the partners have agreed to conduct the
business. A typically important part is Exhibit A: the list of who owns what percentage of the business.
policies governed by the Uniform Partnership Act - 1. each partner shares equally in the profits and
losses of the partnership.
2. all partners have equal rights in the management and conduct of the partnership business.
general business corporation - a separately incorporated legal entity created by state statute organized
for the purpose of engaging in business for profit. They are legal entities separate from their
shareholders. They may act in accordance with the purposed for which they are formed, hold property,
open bank accounts, sue and be sued, etc., in their own name.
basic attributes of a general business corporation - 1. limited liability
2. perpetual existence
3. transferability of ownership
4. centralized management
limited liability - shareholders usually are not liable for corporate debts. Stockholder liability is
generally limited to the consideration paid for the stock. Thus, if the company goes bust owing $500
million to various creditors, the shareholders (owners) are only out what they paid for the stock and the
creditors can't reach shareholders' individual assets to satisfy outstanding debts.
perpetual existence - their existence may be limited, however, by the provisions of their Articles of
Organization or if they are voluntarily or involuntarily dissolved pursuant to applicable state law.
transferability of ownership - except as provided by the Articles of Organization, bylaws, or other
agreements and state and federal securities laws, shareholders may freely transfer ownership of shares.
An example of this is your ability to buy and sell shares of publicly traded companies like Microsoft or
Pfizer at will.
centralized management - a corporation is managed by its Board of Directors. The shareholders elect
the Board of Directors and must approve fundamental transactions such as mergers and amendments to
the Articles of Organization. The Board of Directors appoints officers who carry out the board's
directives.
State of Incorporation - rules, terminology and forms governing and applicable to corporations and
other business entities differ from state to state, but the general principles remain the same.
, two advantage states for incorporation - Delaware and Nevada.
foreign corporation - a corporation formed under the laws of one state doing business in another.
the certificate for foreign corporations in Mass. - includes: (i) the name of the corporation; (ii) the name
of the state or country under whose law it is incorporated; (iii) its date of incorporation and period of
duration if not perpetual; (iv) the street address of its principal office; (v) the name and address of the
corporation's registered agent for receipt of service of process within MA; (vi) its fiscal year; (vii) a brief
description of the activities to be conducted within the Commonwealth: and (viii) the names and usual
business addresses of its current directors and officers.
close corporations - are general business corporations that have a small number of shareholders, no
ready market for their stock and substantial majority shareholder participation in corporate
management.
S corporations - are small business corporations treated as partnerships for federal tax purposes--with
income, losses, credits, and deductions passing directly through to shareholders.
Uniform Partnership Act - a partnership as an association of two or more competent persons to
conduct, as co-owners, a business for profit.
differences of general partnerships and corporations - 1. no limited liability
2. no perpetual existence
3. no transferability
4. no centralized management
partnership agreement - will contain the rules by which the partners have agreed to conduct the
business. A typically important part is Exhibit A: the list of who owns what percentage of the business.
policies governed by the Uniform Partnership Act - 1. each partner shares equally in the profits and
losses of the partnership.
2. all partners have equal rights in the management and conduct of the partnership business.
