Creating, Running, and Terminating a Corporation

1. Lessons Chapter 32 CHAPTER 32 Creating, Running, and Terminating a Corporation 32-1 Creating a Corporation 32-2 Financing, Operating, and Terminating a Corporation 32-3 Corporation Powers and Shareholder Rights

2. GOALS Chapter 32 LESSON 32-1 Creating a Corporation Describe what a corporation is and why it is the preferred form of organization for large business firms Identify different types of corporations Discuss how a corporation is formed

3. Chapter 32 ADVANTAGES OF CORPORATIONS • Perpetual life • Limited liability • Transferability of ownership interests • Ability to attract large sums of capital • Professional management

4. Chapter 32 DISADVANTAGES OF CORPORATIONS • Taxes • Federal government taxes net income when it is earned and again after distribution to the shareholders. • Some states also tax the corporation income, and then tax the shareholders on income received. • Cost of incorporation

5. Chapter 32 DIFFERENT TYPES OF CORPORATIONS • Domestic corporation • Foreign corporation • Alien corporation • Public corporation • Private corporation • Nonprofit corporation • Public service corporation

6. Chapter 32 ELEMENTS OF ARTICLES OF INCORPORATION • Name • Duration • Purpose • Stock • Location • Directors • Incorporators • Any other provisions consistent with the law

7. GOALS Chapter 32 LESSON 32-2 Financing, Operating, and Terminating a Corporation Explain how a corporation is financed Discuss the duties of corporate directors and officers Discuss the procedure for terminating corporations

8. Chapter 32 WHAT ARE SHARES OF STOCK? • Units of ownership • Par stock • No-par stock

9. Chapter 32 WHO CONTROLS THE BUSINESS OF THE CORPORATION? • Shareholders • Directors as fiduciaries • Duties of directors • Requirements for directors

10. Chapter 32 POWERS AND DUTIES OF CORPORATE OFFICERS Directors generally employ managing officers and delegate to them necessary authority to conduct the firm’s day-to-day business.

11. Chapter 32 HOW DO CORPORATIONS END? • Specification by the incorporators or by agreement of the shareholders • Forfeiture of the charter • Consolidation or merger • Bankruptcy • Court order

12. GOALS Chapter 32 LESSON 32-3 Corporation Powers and Shareholder Rights Describe the powers of a corporation Discuss the rights of a shareholder

13. Chapter 32 POWERS OF THE CORPORATION • Perpetual succession • Corporate name • Bylaws • Power to conduct business • Other implied powers

14. Chapter 32 RIGHTS OF SHAREHOLDERS • Right to a stock certificate • Right to transfer shares • Right to attend shareholder meetings and to vote • Right to increase capital stock • Right to share the profits • Right to share in a distribution of the capital • Right to inspect corporate books of account