slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Corporations PowerPoint Presentation
Download Presentation
Corporations

Loading in 2 Seconds...

play fullscreen
1 / 20

Corporations - PowerPoint PPT Presentation


  • 90 Views
  • Uploaded on

10. Corporations. History & Nature of Corporations Organizational and Financial Structure of Corporations Management of Corporations. McGraw-Hill/Irwin Business Law, 13/e. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 10. Corporations. Shareholders’ Rights & Liabilities

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Corporations' - koen


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
corporations

10

Corporations

History & Nature of Corporations

Organizational and Financial Structure of Corporations

Management of Corporations

McGraw-Hill/Irwin Business Law, 13/e

© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

corporations1

10

Corporations

Shareholders’ Rights & Liabilities

Securities Regulation

Legal & Professional Responsibilities of Auditors, Consultants, and Securities Professionals

McGraw-Hill/Irwin Business Law, 13/e

© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

organization and financial structure of corporations

Organization and Financial Structure of Corporations

42

C

H

E

A

P

T

R

“Our business is company creation.”

Ann Winblad, venture capitalist, quoted in Fortune (Sellen and Daniels, Oct. 1999)

learning objectives
Learning Objectives
  • Promoters and preincorporation transactions
  • Incorporation and defective attempts
  • Financing for-profit and nonprofit corporations
  • The nature and operation of shares

42 - 5

slide6

Promoter Activities

  • As a fiduciary, a promoter incorporates the business, organizes the initial management team, and raises the initial capital
  • Promoter is liable for contracts made during preincorporation period unless corporation adopts preincorporation contracts made by promoter (adoption) and third party agrees to replace promoter with corporation (novation)
    • See Crye-Leike Realtors v. WDM, Inc.

42 - 6

slide7

Steps in Incorporation

  • Prepare articles of incorporation
  • Sign and authenticate articles by one or more incorporators
  • File articles with secretary of state and pay fees
  • Receive articles of incorporation stamped “Filed” by secretary of state, with fee receipt
  • Hold organizational meeting to adopt bylaws, elect officers, and transact other business

42 - 7

slide8

Incorporation Details

  • Articles of incorporation (or charter) is the basic document stating rights and duties of corporation, its management, shareholders
  • Other provisions (consistent with law) may be added to articles of incorporation or included within corporate bylaws
  • If the attempt to incorporate fails, corporate shield does not exist to protect shareholders, officers, and directors from personal liability

42 - 8

slide9

De Jure Corporation

  • De jure corporation: exists when promoters and incorporators substantially comply with each mandatory (shall, must) requirement to incorporate the business
    • Filing articles of incorporation is conclusive proof that corporation exists (MBCA)
  • De facto corporation: exists when promoters fail to comply with all mandatory rules, but comply with most mandatory requirements

42 - 9

slide10

Financing Corporations

  • For-profit corporations are financed by sale of securities (e.g., shares, debentures, bonds, long-term notes payable), bank loans, and short-term financing (e.g., inventory financing)

42 - 10

slide11

Financing & Securities

  • For-profit corporations are financed by sale of securities, bank loans, and short-term financing
  • Equity securities, better known as stock or shares, create an ownership relationship, thus stockholders or shareholders own a corporation
  • Debt securities – bonds, debentures, notes payable – create creditor-debtor relationship between corporation and security holder

42 - 11

slide12

Shareholder Classes

  • Corporations may issue classes of shares with specific rights: common or preferred
  • Common shareholder claims are subordinate to creditor or preferred shareholder claims, but common shareholders have exclusive right to elect corporate directors
  • Preferred shareholders receive liquidation and dividend preferences over common shareholders

42 - 12

slide13

Details About Shares

  • Authorized shares: shares a corporation may issue according to articles of incorporation
  • Issued shares: shares sold to shareholders
  • Outstanding shares: held by shareholders
  • A board of directors may issue options for purchasing the corporation’s shares
  • Warrants: options evidenced by certificates
  • Rights: short-term certificated options

42 - 13

slide14

Purchase of Shares

  • Under the terms of a share subscription, a prospective shareholder promises to buy a specific number of shares at a stated price
  • The board must issue shares for an adequate dollar amount of consideration (par value)
  • Shares may be issued in return for any tangible or intangible property or benefit to the corporation (MBCA)

42 - 14

slide15

Transfer of Shares

  • Share certificates are registered with the corporation in name of a specific person
  • Indorsement of a share certificate on back by registered owner and delivery of certificate to another transfers ownership of shares
  • Generally, shares in a publicly held corporation are freely transferable

42 - 15

test your knowledge
Test Your Knowledge
  • True=A, False = B
    • A promoter is always liable for contracts made during the preincorporation period.
    • A U.S. business may incorporate in any state.
    • A de facto corporation exists when promoters and incorporators in fact comply with each mandatory requirement to incorporate.
    • Warrants are stock options evidenced by certificates.

42 - 16

test your knowledge1
Test Your Knowledge
  • True=A, False = B
    • Preferred shareholders have the exclusive right to elect corporate directors and the exclusive right to dividend payments.
    • For-profit corporations are financed only by issuing securities in the form of shares.
    • The MBCA permits shares to be issued in return for any tangible or intangible property or benefit to the corporation.

42 - 17

test your knowledge2
Test Your Knowledge
  • Multiple Choice
    • Which of the following is not a debt security:
      • (a) Stock
      • (b) Bond
      • (c) Debenture
      • (d) Note
      • (e) none of the above

42 - 18

test your knowledge3
Test Your Knowledge
  • Multiple Choice
    • The Steel Inc. Board of Directors plan to issue dividends this year. Which of the following is false?
      • (a) Preferred shareholders receive their dividends before common shareholders
      • (b) Creditors receive their dividends before common shareholders
      • (c) Common shareholders receive their dividends before either creditors or preferred shareholders

42 - 19

thought question
Thought Question
  • Do you believe that a company’s stock price reflects a company’s value or success in (a) the marketplace, and (b) society?

42 - 20