Shared Flashcard Set


Law of Georgia Corporations
2007 Business Organizations Preparation

Additional Law Flashcards




Six Fact Patterns
Organization of corporation
Issuance of stock
Directors and officers
Fundamental corporate changes
Federal securities
Formation Requirements
Formation Requirements: People
Must have one or more incorporators to execute (sign) the articles of incorporation and deliver them to the Secretary of State. Incorporator can be a person or an entity (like another corp)
Articles of Incorporation
Info contained in
Stmt of purpose
Capital structure
Two purposes:
K btwn corp and SHs
K btwn corp and state

Information that must be included:
Corporate name (must incl Corp, Ltd, Inc, or Co)
Names and addresses of all incorporators
Name of registered agent and registered office in Georgia.
Address of principal office, which can be in any state

Statement of purpose:
May be general, such as to "engage in any lawful activity after first obtaining necessary state agency approval"
If articles silent, then general lawful purpose and unlimited duration are presumed.
Specific statement of purpose: acting outside of scope of specific statement of purpose is "ultra vires" act. Ultra vires contracts are valid, but SH's can seek an injunction, and responsible officers and directors are liable to the corporation for ultra vires losses.

Capital Structure:
AoI must include authorized stock, number of shares per class, voting rights and preferences of each class. Alternatively, the AoI can let the Board determine all of these things before issuing stock for the first time.
At least one class of stock must be given unlimited voting rights and one class must be entitled to receive the corp's net assets upon dissolution.
Act for Incorporation
Must deliver AoI to SecState of Georgia, together with request to publish the corp's formation. Must also pay fees. SecState will file docs if they are complete, and his filing is conclusive proof of valid formation.

After that:
if the AoI named any directors, those directors will elect officers, adopt bylaws, and conduct any other necessary business, OR
if AoI did not name directors, then incorporators will meet to elect directors who will then hold their meeting, OR
if AoI did not name directors, then incorporators can elect directors but then also go on to choose officers and adopt bylaws.
Legal significance of formation of corporation
1) Internal affairs of a corp are governed by GA law

2) A corp is a separate legal entity, which can sue and be sued, hold property, be taxed.

3) The managers and SHs of the corp are not personally liable for the corp's debts. Are only liable up to the price of their stock.
De Facto Corporation
Corporation by Estoppel
De Facto Corporation
a) there is a relevant incorporation statute (exists in every state)
b) parties made a good faith, colorable attempt to comply with it
c) some exercise of corporate privileges

If applicable, then treated as corp for all purposes except action by the state.

Corp by Estoppel:
One dealing with a business as a corp, treating it as a corp may be estopped from denying the business' corporate status. Generally only available in contract, not tort.
Bylaws are not required to form corp, but virtually all corps have them. The Board or incorporators adopts them, but only Board or SHs can repeal them. AoI always take precedence over conflicting bylaws.
Pre-incorporation K's
Corp is only liable on pre-inc K's if it adopts the K. Can be express or implied adoption.

Promoter remains liable on pre-inc K's until there has been novation, which is an agreement by the promoter, the corp, and the third-party for the corp to be solely liable for the K.

Remember: adoption makes corp liable, but only novation releases promoter from liability.
Foreign Corp
Defined as any corp from state other than Georgia.

If transacting business within Georgia on a regular basis, then must get a certificate of authority from SecState. Must have registered agent and office in Georgia, as well as pay fees to Georgia.

Failure to comply with 30 days: civil fine and corp may be sued, but loses right to sue others.
Issuance of Stock
Defined: when corp sells its own stock.

Subscriptions: post-incorporation subscriptions are revocable until the Board accepts the offer. But a pre-incorporation subscription is irrevocable for 6 months unless provided otherwise or all subscribers agree.
Supporting users have an ad free experience!