General Corporate Law
What is corporate law?
Corporate law governs the creation, conduct, and termination of corporations, and thus ensures conformity to legal norms as well as protecting the rights of stakeholders.
What is a corporation?
A separate legal person that is different from its owners, shareholders. The corporation has the capacity to contract, hold title to assets, and be sued or sue.
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What are the four types of business structures?
Sole proprietorship, partnership, limited liability company (LLC), and corporation
What is a difference between a public and private corporation?
Public corporations issue shares to the public on stock exchanges. Private corporations do not have publicly available shares.
What is corporate governance?
Corporate governance outlines the policies and procedures that govern an organization, striking a delicate balance between the rights of various stakeholders, including shareholders, directors, and employees.
Organization and Articles
What are articles of incorporation?
A legal document submitted to the state to create a corporation, which includes its name, purpose, and organization.
What is the role of a corporate charter?
The charter serves as the constitution for the corporation, outlining powers and limitations as approved by the state.
What are bylaws?
Internal rules that a corporation adopts to guide its operations such as procedures for meetings and elections of directors.
Who are the board of directors?
Elected by shareholders to oversee the management of the corporation in conducting its affairs to the best benefits to the shareholders.
What are corporate officers?
The individuals appointed by the board of directors to handle daily operations; for example, the CEO, CFO, and COO.
Shareholders and Ownership
What are shareholders?
Shareholders refer to the owners of a corporation who hold shares that represent some percentage of the company’s equity.
What are the rights of shareholders?
Shareholders have the rights to vote on major issues, receive dividends, inspect records, and sue in case of breach of fiduciary duty.
What is limited liability?
A principle which protects shareholders against personal liability to a corporation’s debts or liabilities beyond their investment.
What are dividends?
Distribution made by a corporation to its shareholders from profits.
What is shareholder agreement?
An agreement between the shareholders specifying the rights and duties of shareholders, as well as how disputes between them would be resolved.
Legal Compliance and Regulation
What does the Securities and Exchange Commission do?
The SEC oversees public corporations to ensure that there is transparency, and this safeguards investors, by the enforcement of securities laws.
Fiduciary duties: Obedience of corporate directors and officers, obliged to act in the best interest of the corporation and its shareholders, through duties of care and loyalty.
Corporate veil piercing: It is the legal doctrine that enables courts to individually consider shareholders liable for a corporation’s actions when it is determined they had misused the corporate structure.
What is insider trading?
The illegal act of trading a company’s stock based on non-public, material information.
What is corporate liability?
A corporation’s legal responsibility for its actions, including breaches of contracts, negligence, or violations of regulations.
These questions provide a foundational understanding of corporate law concepts.
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