Corporation Formation and Types

Incorporation: The process of creating a corporation by filing articles of incorporation with the state government.
Types of Corporations:
- C Corporation: A corporation that is taxed separately from its owners, with profits taxed at the corporate level and again at the individual level.
- S Corporation: A corporation that passes corporate income, losses, deductions, and credits to shareholders for tax purposes.
- Non-Profit Corporation: A corporation that is exempt from federal income tax and is formed for charitable, educational, or religious purposes.
Corporate Structure:
- Shareholders: Own the corporation and elect the board of directors.
- Board of Directors: Responsible for making major business decisions and overseeing the corporation's management.
- Officers: Responsible for the day-to-day operations of the corporation.

Voting Rights: Shareholders have the right to vote on major corporate decisions, such as electing the board of directors and approving mergers and acquisitions.
Dividend Rights: Shareholders are entitled to receive dividends, which are portions of the corporation's profits.
Inspection Rights: Shareholders have the right to inspect the corporation's books and records.
Derivative Suits: Shareholders can bring lawsuits on behalf of the corporation to enforce the corporation's rights.

Duty of Care: Directors must act with the care that an ordinarily prudent person would exercise in a similar situation.
Duty of Loyalty: Directors must act in the best interests of the corporation and avoid conflicts of interest.
Duty of Good Faith: Directors must act in good faith and make decisions based on the corporation's best interests.
Business Judgment Rule: Directors are protected from liability for their business decisions as long as they have acted in good faith and with due care.

Role of the Board of Directors: The board of directors is responsible for overseeing the corporation's management and making major business decisions.
Audit Committee: A committee of the board of directors responsible for overseeing the corporation's financial reporting and internal controls.
Executive Compensation: The board of directors is responsible for setting the compensation of the corporation's executives.
Stakeholder Engagement: The corporation's management and board of directors should engage with stakeholders, such as shareholders, employees, and customers.

Bankruptcy: A legal process where a corporation is unable to pay its debts and seeks protection from creditors.
Types of Bankruptcy:
- Chapter 7: Liquidation bankruptcy, where the corporation's assets are sold to pay off creditors.
- Chapter 11: Reorganization bankruptcy, where the corporation restructures its debt and continues to operate.
Insolvency Tests: Tests used to determine whether a corporation is insolvent, including the balance sheet test and the cash flow test.
Creditor's Rights: Creditors have the right to file claims against the corporation in bankruptcy and to receive payment for their claims.

Incorporation is the process of creating a corporation by filing articles of incorporation with the state government.
There are three main types of corporations: C Corporations, S Corporations, and Non-Profit Corporations.
C Corporations are taxed separately from their owners, with profits taxed at the corporate level and again at the individual level.
S Corporations pass corporate income, losses, deductions, and credits to shareholders for tax purposes.
Non-Profit Corporations are exempt from federal income tax and are formed for charitable, educational, or religious purposes.

The corporate structure consists of shareholders, a board of directors, and officers.
Shareholders own the corporation and elect the board of directors.
The board of directors is responsible for making major business decisions and overseeing the corporation's management.
Officers are responsible for the day-to-day operations of the corporation.

Shareholders have the right to vote on major corporate decisions, such as electing the board of directors and approving mergers and acquisitions.
Shareholders are entitled to receive dividends, which are portions of the corporation's profits.
Shareholders have the right to inspect the corporation's books and records.
Shareholders can bring lawsuits on behalf of the corporation to enforce the corporation's rights.

Directors have a duty of care to act with the care that an ordinarily prudent person would exercise in a similar situation.
Directors have a duty of loyalty to act in the best interests of the corporation and avoid conflicts of interest.
Directors have a duty of good faith to act in good faith and make decisions based on the corporation's best interests.
The business judgment rule protects directors from liability for their business decisions as long as they have acted in good faith and with due care.

The board of directors is responsible for overseeing the corporation's management and making major business decisions.
The audit committee is a committee of the board of directors responsible for overseeing the corporation's financial reporting and internal controls.
The board of directors is responsible for setting the compensation of the corporation's executives.
The corporation's management and board of directors should engage with stakeholders, such as shareholders, employees, and customers.

Bankruptcy is a legal process where a corporation is unable to pay its debts and seeks protection from creditors.
There are two main types of bankruptcy: Chapter 7 (liquidation bankruptcy) and Chapter 11 (reorganization bankruptcy).
Insolvency tests are used to determine whether a corporation is insolvent, including the balance sheet test and the cash flow test.
Creditors have the right to file claims against the corporation in bankruptcy and to receive payment for their claims.