d.l.hall,attorney,pllc
14555 North Scottsdale Road
Suite 160
Scottsdale, Arizona 85254
Lee's Ferry
Call (480.596.4045) or email Dennis
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d.l.hall,attorney,pllc 14555 North Scottsdale Road Lee's Ferry Call (480.596.4045) or email Dennis |
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What is a Corporation?
You may do business in various entities, or forms of association. These include the corporation, sole proprietorship, joint ventures, partnerships, limited partnerships, and limited liability companies. A corporation is an independent legal entity with an existence separate and apart from its owners, the shareholders.
When an individual, rather than a limited liability company, partnership, or corporation, owns the business, the business has no legal existence apart from its owner. Failure to form a business entity results in business being done as a sole proprietor (if alone) or a partnership (if with others). In a sole proprietorship, the business is the same as the proprietor, with the individual retaining all business liabilities. Unlike a sole proprietorship (or its cousin when more than one owner is involved, the partnership), a corporation is a separate legal entity, or, in effect, an artificial person, independent of the individuals who compose or own it.
How is a Corporation Created?
An Arizona corporation can be created only by or under authority from the state. A corporation only exists when the Arizona Corporation Commission files the articles of incorporation submitted to it by the incorporators. Once filed, the corporation is under the sole direction of the board of directors (and the officers, if they have been named in the articles of incorporation) and the authority and liability of the incorporators ceases.
Arizona law does not look favorably upon "de facto" corporations, i.e., corporations people intend to form, but fail to do so properly with the Arizona Corporation Commission. The case law holds that Arizona statutes do not recognize "de facto" corporations. Great care should be taken in properly forming an Arizona corporation.
The Arizona Corporation Commission controls formation of Arizona corporations.
Arizona Corporate Law
Title 10 of the Arizona statutes control Arizona Corporations. These statutes are based on the Model Business Corporations Act ("MBCA"), but contain critical differences from other states that have adopted some form of the MBCA.
Officer, Director Liability
Arizona law imposes liability on corporate officers and directors if they knowingly participate or acquiesce in corporate torts.
Corporate directors are not personally liable for torts committed by the corporation or by one of its officers merely by virtue of the office they hold. To be held liable, the directors or officers must participate or have knowledge amounting to acquiescence or be guilty of negligence in the management or supervision of the corporate affairs causing or contributing to the injury.
Shareholder Liability
A parent corporation is responsible for actions of its subsidiary when the subsidiary has become a mere instrumentality, so overshadowed by the parent corporation that the separate corporate identity should be disregarded to prevent perpetration of a fraud.
Call (480.596.4045) or email Dennis.
Arizona Limited Liability Companies
This Web site has been prepared by d.l.hall,attorney,pllc for informational purposes only and is not legal advice.Readers should not act upon this information without seeking professional legal advice.
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