Applied Corporate Law cheat sheet

A corporation is a legal person separate from its shareholders; it owns property, contracts, sues and is sued in its own name, and its shareholders generally bear no personal liability for corporate debts.

De facto and de jure corporations: a de jure corporation satisfies all statutory formation requirements; a de facto corporation substantially complies in good faith with a statute the organizers believe exists, plus actual use of corporate power.

Piercing the corporate veil requires (1) such unity of interest and ownership that the separate personalities of corporation and individual no longer exist and (2) treating the acts as those of the corporation alone would sanction fraud or promote injustice.

Duty of care: directors must act in good faith with the care an ordinarily prudent person in a like position would exercise; the business judgment rule presumes informed, disinterested decisions and shields them from liability absent breach.

Duty of loyalty: directors and officers must disclose conflicts, refrain from usurping corporate opportunities, and avoid self-dealing; conflicted transactions are voidable unless fair to the corporation or duly authorized by disinterested directors or shareholders.

Ultra vires acts are beyond the corporation's stated purpose; modern statutes permit any lawful business purpose and allow shareholders to enjoin unauthorized acts or hold officers liable.

Shareholder derivative suits require demand on the board or futility; the demand is excused where a majority of directors lacks independence or the demand would be wrongfully refused.

Promoters who enter pre-incorporation contracts are personally liable unless the contract expressly disclaims promoter liability, and the corporation is not liable until it adopts the contract.

Cumulative voting: shares multiplied by director seats; a shareholder may cast all votes for one candidate, allowing minority representation proportional to (shares held / total shares) × (seats + 1).

Client intake: identify the entity, jurisdiction, governing documents, and authorized signatories before advising; conflicts checks must precede substantive advice.

Contract review sequence: parties and capacity, recitals and purpose, operative terms, representations and warranties, covenants, conditions, indemnities, remedies, governing law and dispute resolution.

Indemnification clause analysis: distinguish third-party claims from direct claims, cap and basket mechanics, carve-outs for fraud and willful misconduct, and survival periods.

Due diligence checklist for a stock purchase: charter and bylaws, cap table, material contracts, IP assignments, litigation, tax, employment, and regulatory licenses.

Board minutes should record date, quorum, attendees, resolutions, material disclosures, and conflicts; absent minutes, approvals may be challenged as unproven.

Legal opinion letters state assumptions, scope limitations, and qualifications (e.g., bankruptcy, equitable remedies, and choice-of-law exceptions) and are not guarantees.

Statute of limitations and contractual survival periods differ; a claim may be time-barred even where the contract's survival clause is still running.

Privilege protection: attorney-client privilege covers communications seeking legal advice; the crime-fraud exception and waiver by disclosure to third parties apply.

Regulatory filings: determine whether the transaction triggers antitrust (Hart-Scott-Rodino thresholds), securities, or sector-specific approval before closing.