© 2013 Delmar Cengage Learning CHAPTER 7 CORPORATIONS © 2013 Delmar Cengage Learning

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. © 2013 Delmar Cengage Learning

An Introduction to Corporations LAW GOVERNING CORPORATIONS State statues Common law and case law Federal statutes © 2013 Delmar Cengage Learning

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. © 2013 Delmar Cengage Learning

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. © 2013 Delmar Cengage Learning

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 © 2013 Delmar Cengage Learning

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 © 2013 Delmar Cengage Learning

Types and Classifications of Corporations Business corporations Professional corporations Nonprofit corporations S Corporations Statutory close corporations Parent corporations Subsidiary corporations Sister or affiliate corporations © 2013 Delmar Cengage Learning

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   © 2013 Delmar Cengage Learning

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 © 2013 Delmar Cengage Learning