1. © 2013 Delmar Cengage Learning
CHAPTER 7
CORPORATIONS
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2. An Introduction to Corporations
CORPORATION DEFINED
A corporation is an artificial entity created by law, separate from its owners or managers.
2. The corporation has certain rights and powers, which it exercises through its agents.
3. The corporation has the capacity to exist perpetually.
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3. An Introduction to Corporations
LAW GOVERNING CORPORATIONS
State statues
Common law and case law
Federal statutes
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4. Corporate Rights and Powers
As “artificial persons,” corporations enjoy many of the same rights as natural persons.
Corporations generally have the same powers as individuals to carry out their business and affairs.
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5. Corporate Rights and Powers
CORPORATE POWERS
Corporations generally have the same powers as individuals to do all things necessary or convenient to carry out their business and affairs.
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6. Advantages and Disadvantages of Doing Business as a Corporation
Corporate formalities, fees and reporting requirements
Double taxation
Certain taxes and fees unique to that form of business
Limited personal liability for shareholders, directors, and officers
Ability to exist perpetually
Ability to raise capital for the business
Centralized management
Transferability of ownership
Choice of tax year
Advantages in hiring employees
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7. Piercing the Corporate Veil
The corporate veil may be pierced and the responsible shareholder, director, or officer
may be held personally liable:
When a corporation is formed to commit
fraud or other illegal activity.
When the corporation is found to be
an individual’s alter ego.
Typically only pierced to right a wrong or cure an injustice
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8. Types and Classifications of Corporations
Business corporations
Professional corporations
Nonprofit corporations
S Corporations
Statutory close corporations
Parent corporations
Subsidiary corporations
Sister or affiliate corporations
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9. TASKS PERFORMED BY PARALEGALS WHO SPECIALIZE IN CORPORATE LAW
The Paralegal’s Role
TASKS PERFORMED BY PARALEGALS WHO SPECIALIZE IN CORPORATE LAW
Drafting corporate documents
Reviewing and updating corporate minute books
Incorporating and dissolving corporations
Preparing foreign qualification documents
Assisting with mergers and acquisitions
Assisting with state and federal securities compliance
Drafting all types of corporate agreements and contracts
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10. The Paralegal’s Role
TASKS PERFORMED BY PARALEGALS WORKING IN CORPORATE LEGAL DEPARTMENTS
Subsidiary maintenance
Shareholder relations
Board of director communications
Coordinating stock transfers and notices to shareholders with the transfer agent
Acting as liaison between the corporation, in-house counsel, and outside counsel
Confirming proper service of legal process and opening files for new lawsuits brought against the corporation
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