Review Topics/Questions What is meant by the term “corporate veil” with respect
ID: 380446 • Letter: R
Question
Review Topics/Questions
What is meant by the term “corporate veil” with respect to corporations?
What is meant by the term “piercing the corporate veil” and what is the result if it is “pierced”?
Where would one go to find a Washington statute dealing with corporations?
Why are so many corporations incorporated in the state of Delaware even when they are not based there?
If a Washington state corporation incorporated under the laws of the state of Delaware, what is it required to maintain in Washington?
Who was the “right” to manage a corporation?
How many classes of stock with voting rights must a corporation have?
What are the categories of the five major changes that a corporation can undergo?
What is a derivative lawsuit?
What is meant by the term “business judgment rule”?
Define what is meant by the term “promoter” with respect to a corporation.
Explain the difference between a de jure corporation and a de facto corporation.
What is meant by the term par value?
What purpose is served by the bylaws of a corporation?
What are the characteristics /elements of a partnership?
Explanation / Answer
Corporate veil- in simple terms when you set up an organization by framing a LLC or another business structure, you are making a lawful substance. It can go into contracts, buy products and ventures, assume obligation, and record suit against others. Legitimately, it has the majority of similar rights and powers that you have in your own life.
Since your business is a different element, in the event that it gets sued, defaults on an advance, or creditors can't put a claim on your own advantages — from a certain point of view. This is called "the corporate veil."
Piercing the corporate veil- it shows how the shareholders are personally liable for the actions of the corporations. The phrase piercing the corporate veil is utilized to depict the activity of a court to hold corporate investors and LLC proprietors by and by obligated for the obligations and liabilities of a partnership.
Organizations are separate elements from their investors and in ordinary conditions, if an enterprise is sued, the individual investors and officers can't be brought into the claim.
Be that as it may, there are cases in which the enterprise's officers and investors could be sued for carelessness or for obligations; the activity of getting these investors to be sued is called "piercing the corporate veil" or "lifting the corporate veil."
Two main reasons for the incorporations in the state of Delaware:-
A). Bi-partisan political consensus in Delaware to keep the Delaware corporation statute modern and up-to-date, and to rely on Delaware’s corporate law specialists for advice in how to do this.
B). Delaware has an exceptional court, the Court of Chancery, to run on corporate law question without juries. Corporate cases don't stall out on dockets behind the large number of non-corporate cases. Rather, Delaware enterprises can anticipate that their lawful question will be tended to expeditiously and expertly by judges who have some expertise in corporate law.
In the event of a preference of a Delaware entity, reincorporation (conversion of a Washington company to a Delaware company while the original date of incorporation still remains the same) can easily be arranged under Delaware Corporation Law.
Right to manage corporation- Shareholders do not have the right to manage the company in which they hold an interest, and even their right to appoint the people who do is largely theoretical. They are entitled only to such part of the income as the directors declare as dividends, and have no right to the proceeds of the sale of corporate assets — except in the event of the liquidation of the entire company, in which case they will get what is left; not much, as a rule.
Large corporations may have many different types of stock: different classes of common stock, preferred stock, stock with par value and no-par stock, voting and nonvoting stock, outstanding stock, and treasury stock.
Shares have diverse assignments, contingent upon who holds the shares. The two principle sorts of stock are favoured stock and regular stock, each with rights that frequently contrast from the privileges of the other. Preferred stock has components of both obligation and value. Holders of preferred shares have a profit inclination and have a privilege to partake in the circulation of advantages in liquidation. Holders of normal stock have an alternate arrangement of rights, specifically, the privilege to vote on critical corporate choices.
Several emerging trends are impacting organizational life. Of these emerging trends, five will be examined: globalization, diversity, flexibility, flat, and networks.
There are many issues to consider in managing business change - whether the changes you're planning are minor or major. The first step in managing your people through change is identifying the type of changes you are making to your business and on that basis changes can be done.
Derivative law suit- A law suit brought by an investor of a partnership for its sake to uphold or guard a legal right or claim, which the company has neglected to do.
A derivative activity, all the more prominently known as a Stockholder's Derivative Suit, is gotten from the essential right of the organization to look for review of lawful grievances through the courts. The method to be followed in such an activity is administered by the tenets of government Civil Procedure and state arrangements, where relevant.
Business judgment rule- A lawful rule that makes officers, chiefs, directors, and different specialists of a partnership insusceptible from obligation to the organization for misfortune acquired in corporate exchanges that are inside their power and influence to make when adequate proof exhibits that the exchanges were made in Good Faith.
Promoter- in common a person who starts a business or you can say is the founder of the business is the promoter.
A promoter follows up for the benefit of a partnership before it is shaped. The promoter might be, however doesn't need to be, an indistinguishable individual from the enterprise's join. The partnership won't be obligated for any agreements went into by the promoter for its sake preceding unless it receives the agreement, either by coordinate activity of the governing body, or through inferred activity, by tolerating the advantage of the agreement.
A de jure corporation is one that has totally satisfied the statutory customs forced by state company law to be allowed corporate presence. In examination, a de facto corporation is one that has acted in compliance with common decency and would be a conventional enterprise yet for inability to agree to some specialized necessities.
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