General Characteristics of the Corporation
Separate entity with perpetual existence
Transferability of ownership interest
The Economics of the Firm
one who makes decisions based on expected return of venture
thought process looks at expected return which equals weighted average of all possible outcomes
one who prefers not to take risks and willing to pay to avoid risks
most people are risk adverse
one willing to take risks
Shirking: the avoidance of work
All risks can be classified as controllable or non-controllable risks
Employee’s incentive to work
Introduction to the Law of Corporations
Basic Terms and Concepts
two levels of delegation of authority
Shareholders elect board of directors
Board of Directors appoint officers
Articles of Incorporation (a.k.a. certificate of incorporation, corporation charter) Constitution of corporation governing internal structure and operation of corporation.
in order to amend board must recommend, shareholders vote §10.03
board may change articles w/o shareholder approval if non-fundamental change.
adopted by board at first meeting
details of internal governance of corporation
easier to amend then articles of incorporation
Equitable Limitations on Legal Possibilities
RMBCA §3.02. Laundry list of what a corp. may do.
RMBCA §12.02. A corp.’s
actor for determining the validity of the gift is whether or not it provides a tax benefit. If the gift generates a tax benefit then it is valid against Ultra Vires. See Theodora Holding
Corporate Social Responsibility Trends
The primary mission of a corporation is to earn revenue for it’s shareholders. See Dodge.
Formation of Corporations and Related Issues
The Choice of Organizational Form
Corporations have perpetual existence and the same powers as an individual to carryout its business and affairs. RMBCA §3.02.
Unless the articles state otherwise, a SH is not personally liable for the acts or debts of the corporation. RMBCA §6.22(b).