Exam 33: Nature and Formation of Corporations

Identify each of the following corporations by type. a. Dr. Smith and Dr. Jones are both medical doctors who practice together. They incorporate their medical practice so that they can offer themselves and their employees better employment benefits. b. A group of concerned citizens obtains a corporate charter from the state to form a local Water Planning and Management Corporation that is authorized to do water planning on a local level and to grant permits for such purposes as the installation of ditches, and the encouragement of good water usage practices in their jurisdictional area. c. Agatha and Betty, who are sisters, form a corporation in which they are the sole shareholders. They plan to operate a large retail store that sells collectibles. Agatha is the president and Betty is the chairperson of the board of directors. d. Bill and Carl form a corporation to prevent spouse and child abuse. The corporation operates a shelter for battered women and homeless children. e. Zeron Corporation is incorporated in the state of West Virginia. It decides to expand its business to Kentucky. What type of corporation is it in West Virginia? What type of corporation is it in Kentucky?

A corporation owned by one person is treated under the law as separate from that person.

Whether a corporation is a de facto corporation may be challenged by:

General Supply owns all the stock of Playne Pencils. A Playne employee commits a tort for which the employer is liable. The suit results in a judgment for $1 million against Playne. Playne's assets total $650,000, but General Supply's assets are in the millions. In which of the following situations would the judgment have to be paid by General?

A promoter who enters a preincorporation contract in the name of the corporation usually remains liable on the contract even if the corporation adopts it.

A corporation is a domestic corporation in the state in which it is incorporated.

A corporation is considered a citizen under the Fourteenth Amendment provision that, "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States."

What powers does a corporation normally possess?

Discuss what is required in most states to form a corporation.

Under the RMBCA, a newly formed corporation need not hold an organizational meeting.

If an act is ultra vires, it is beyond the legal authority of the corporation.

What are the consequences of a defective incorporation?

Most incorporation statutes have adopted an intermediate position regarding the revocability of preincorporation subscriptions, making them irrevocable for a stated period without regard to whether they are supported by consideration.

A corporation is a creature of the state and may be formed only by substantial compliance with a state incorporation statute.

Which of the following would not usually be found in the articles of incorporation of a corporation?

A corporation is considered to be a person within the meaning of the Fifth Amendment protection against self-incrimination.

The possible consequences of a defective incorporation include which of the following?

A corporation is considered a citizen:

The incorporators would typically do which of the following?

Identify and give the basic characteristics of each of the following specialized types of corporations. a. Professional corporations b. Public corporations c. Nonprofit corporations