Introduce the indirect question with

Would you mind telling me ………… ?

1. Is it obligatory for a corporation to be registered in the state where it is going to do business?

2. Must a corporation do business only in the state where it’s been organized?

3. Can a corporation be organized in one state and do business in another state?

4. Do corporations pay any fees for registration? Are the fees high?

5. Does the corporate management have to issue stock certificates?

(C)

Make each of the following questions a part of the sentence. Start with

It’s interesting to know …..

I would like to know ……….

I’d like to clarify ………

What I really want to know is ………

1. What does the ownership provide for the shareholders?

2. Where does shareholders' voting take place?

3. When do the shareholders realize their exclusive right to vote?

4. Can the shareholders make changes in the corporate bylaws?

5. Must the shareholders take part in reorganization of the corporation?

6. What is the primary role of the board of directors?

7. How are annual meetings arranged?

8. Are officers and managers compensated for their work? How?

9. What decision can the board make when the corporation needs a big amount of money?

10. How are real property problems solved?

11. What does duty of care mean?

12. Who are the top corporate officers?

13. What are corporation officers responsible for?

Part II. Meetings

You will find the information on this part in the Appendix 1 to this paper pages

Exercise 8.

A) Create a chart

A corporation should follow proper corporate formalities in order to comply with applicable laws and to maintain its corporate existence. Any failure to follow these formalities might result in the loss of corporate status; loss of limited liability, leaving the owner and shareholders personally responsible for corporate debts; and potential loss of corporate tax benefits.

Besides, a huge part of proper corporate formalities concerns keeping and maintaining necessary documentation.

Distribute the following into 2 columns: Corporate Formalities (activities) and Types of documents.

Accounting and bookkeeping records; Holding shareholder and director meetings (annual and special); Bank records; Signing documents as a corporation; Permits and licenses; Stock records;

Keeping corporate records (financial and corporate documents); Contracts; Corporate records; Intellectual property records; Filing documents with the state annually (corporate report, federal and state corporate tax); Correspondence; Business forms; Maintaining bank accounts (separate corporate bank accounts); Employee records; Drawing up financial statements (income and cash flow); Tax records.

Corporate formalities	The types of documents to keep for a corporation

B) Read this text and the examples of some companies’ corporate governance (Appendix 3)

Corporate Governance

The system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community. Since corporate governance also provides the framework for attaining a company's objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.

Corporate governance became a pressing issue following the 2002 introduction of the Sarbanes-Oxley Act in the U.S., which was ushered in to restore public confidence in companies and markets after accounting fraud bankrupted high-profile companies such as Enron and WorldCom.

Most companies strive to have a high level of corporate governance. These days, it is not enough for a company to merely be profitable; it also needs to demonstrate good corporate citizenship through environmental awareness, ethical behavior and sound corporate governance practices

Presentation Task

Company Corporate Governance

Find in Internet any US or UK or Australian etc company/ The link Investor relations will provide another link Corporate Governance. Another way of search is to print in the search window, for example,

Part II. Corporation Documents

Exercise 9

Foundation documents

Provide each document title with the appropriate definition:

Articles of Incorporation
Certificate of incorporation
Bylaws
Memorandum of Association
Articles of Association

1. - A foundation document that contains the regulations governing the relationships between the shareholders and directors of the company, and are a requirement for the establishment of a company under the law of the United Kingdom and many other countries.

2. - Rules and regulations adopted by an organization, corporation or similar entity for its internal administration and management. For example, by laws often identify the duties of officers, the schedule of meetings, the rules of voting etc.

3. - A legal document that sets out the company's name, where the registered office of the company is situated (in England, Wales or Scotland) and what it will do (its objects). The object of a company may simply be to carry on business as a general commercial company or support community activities in a club or association.

4. - A legal document that must be filed with a state in order to incorporate. Among the things it typically must include is the name and address of the corporation, its general purpose and the number and type of shares of stock to be issued...

5. - A legal document that constitutes the authorized state body’s approval of the foundation documents and that authorizes the legal entity’s operations in a particular state.

Commentary that explains the U.S. foundation documents

Document filed with a U.S. State by the founders of a corporation. After approving the articles, the state issues a certificate of incorporation; the two documents together become the Charter that gives the corporation its legal existence. The charter embodies such information as the corporation's name, purpose, amount of authorized shares, and number and identity of directors. The corporation's powers thus derive from the laws of the state and from the provisions of the charter. Rules governing its internal management are set forth in the corporation's Bylaws, which are drawn up by the founders.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place of business.

Exercise 10. Read the document to see the structure and general idea of each Article.

CORPORATE BYLAWS

Excerpts from Corporate Bylaws Sample

Corporate Bylaws consist of a number of Articles divided into paragraphs.

BYLAWS OF

.....(CORPORATION X).....

ARTICLE I

SHAREHOLDERS

1.1 Annual Meeting. A meeting of shareholders shall be held each year for the election of directors and for the transaction of any other business . . .

1.2 Special Meeting. Special meetings of the shareholders, for any purpose or purposes, shall be held when directed by the board of directors, president, or at the request of the holders . . . .

1.3. Election of Directors: Elections of the directors of the corporation shall be by written ballot.

1.4 Notice of Meeting. Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

1.5 Shareholders' List. After fixing a record date for a meeting of shareholders, the corporation shall prepare list of the names of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder.

1.6 Voting Per Share. Unless otherwise provided in the articles of incorporation, each shareholder is entitled to one vote for each outstanding share held by him or her.

Note:

by written ballot – тайным голосованием

notice - уведомление

record date - дата выплаты дивиденда

unless otherwise provided – если не указано иначе

ARTICLE II

BOARD OF DIRECTORS

2.1 Directors: The business and affairs of this corporation shall be managed by its Board of Directors, ____ in number. They shall be elected by the shareholders at the annual meeting of shareholders of the corporation, and each director shall be elected for the term of one year, and until his earlier resignation or removal.

2. 2 Regular Meetings: Regular meetings of the Board shall be held without notice, at least quarterly, at the registered office of the corporation, or at such other time and place as shall be determined by the Board.

2.3 Special Meetings: Special Meetings of the Board may be called by the Chairman on 2 days notice to each director, either personally or by mail, fax or by telegram; special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of a majority of the directors in office.

Note:

resignation - уход с должности

ARTICLE III

OFFICERS

3.1 Officers. The executive officers of the corporation chosen by the directors shall be a President, a Vice-President and a Chief Financial Officer.

3.2 Appointment and Term of Office. The officers of the corporation shall be appointed annually by the Board of Directors.

3.3 Resignation. Any officer of the corporation may resign from his or her respective office or position by delivering notice to the corporation.

3.4 Removal. Any officer of the corporation may be removed from his or her respective office by the Board of Directors whenever they decide so in the best interest of the corporation.

3.5 President. The president shall be the chief executive officer of the corporation who shall have general and active management of the business of the corporation and shall subject to the control of the Board of Directors.

3.6 Compensation. The compensation of the officers of the corporation shall be fixed from time to time by the Board of Directors.

ARTICLE IV

CERTIFICATES OF STOCK. DIVIDENDS

4.1 The stock certificates of the corporation shall be numbered and registered in the share ledger and transfer books of the corporation as they are issued.

4.2 Transfer of Shares. Transfers of shares of stock of the corporation shall be made only on the stock transfer books of the corporation, and only after the surrender to the corporation of the certificates representing such shares.

4.3. Dividends: The Board of Directors may declare and pay dividends upon the outstanding shares of the corporation from time to time and to such extent as they deem advisable, in the manner and upon the terms and conditions provided by the statute and the Certificate of Incorporation.

Note:

share ledger - книга учёта акций

stock transfer book – книга учета передаваемых акций

surrender – передача (to surrender - передать, сдать)

ARTICLE V

AMENDMENTS

These bylaws may be altered, amended, or repealed, and new bylaws may be adopted, by action of the board of directors.

Note:

alter - переделывать

repeal - отменять

Exercise 11

What Article/Paragraph provides

• how the directors shall be elected?

• the term each director is elected for?

• how often shareholders meetings shall be held?

• how often shall board meetings shall be held?

• how shareholders learn about the meetings?

• information on who can initiate special meetings of shareholders?

• how a special meeting of the Board may be called?

• what major executive officers of the company shall be?

• information on the functions of the President?

• information on the requirements of certificates of stock registration?

• information on the term the executive officers are elected for?

• how the Bylaws may be amended or altered?

• how the officers may resign from the office?

• how the officers shall be compensated for the service?

• how shareholders shall vote?

• how shareholders shall transfer the shares of stock?