(Incorporators=1 or more Adult persons, ≠corporation) 

1. Execute the certificate
2. Deliver it to the department of state
3. Hold the organizational meetings

1. Needs corporate name, address of each incorporator
2. Needs statement of duration, if none stated corporation will have perpetual existence
3. Needs corporate purpose statement

1. Authorized stock – minimum # of shares the corporation can sell
2. Issued stock - # of shares the corporation can actually sell
3. Outstanding stock – stock that the corporation has sold and has not reacquired

A signed and notarized certificate acts as conclusive evidence of valid formation and creates a de jure corporation

NY law governs the internal affairs of the corporation even if the corporation does not do business in NY
 
A corporation is a separate legal person (political contributions=$5k; charitable contributions=unlimited; can guaranty non corporation business loans) 
 
SH have limited liability for what a corporation does (corporation liable to itself)

A corporation does not have to have bylaws
 
The certificate controls if it is inconsistent with the bylaws
 
Incorporators at the organization meeting adopt the initial bylaws
 
SH amend or repeal the bylaws/adopt new ones

Promoter cannot make a secret profit on her dealings w/ the corporation (if liable must account for the profit --return profit to corporation)

Issuance of stock occurs ONLY when a corporation sells its own stock(≠individual)

1. Issuance of stock is one way a corporation can raise capital 
1. Investors buy stock and thereby become holders of an “equity security” –owners of the corporation 

Sale to corporation of property acquired BEFORE becoming promoter

[profit = price paid by corp “PPC” – fair market value “FMV” (Prof =PPC –FMV)]

Sale to corporation of property acquired AFTER becoming promoter

[profits = PPC – price paid by promoter “PPP” (Prof =PPC – PPP)]

1. Money (cash or check)

1. Tangible or intangible property

1. Services already performed for the corporation

1. A binding obligation to t pay money or property in the future (e.g., promissory note)

1. A binding obligation to perform future services for the corporation
1. Prohibited forms of consideration are treated as “water”

1. Par means minimum issuance price

1. No par means there is no minimum issuance price – can sell stock for any price

Treasury stock is stock that was previously issued and has been reacquired by the corporation – the corporation may then sell the treasury stock [**BF #3**]

1. Directors are liable for water if they knowingly authorize the water

1. The buyer of watered stock is liable because he is charged w/ notice of par value and has no defense

1. A 3P is not liable if watered stock and transferred to her by a buyer of watered stock if she did not know about the water

Preemptive rights is the right of an existing SH to maintain her percentage of ownership by buying stock whenever there is a NEW ISSUANCE of common stock for MONEY (cash or checks) ONLY

1. Preemptive rights ONLY exist if the certificate EXPRESSLY says so