Part 10- Corporations, Chapter 41: History and Nature of Corporations, Doc 5

Here’s a breakdown of the questions and issues discussed: 1. Forming a Business Entity for High-Risk Investments: A group of friends and additional investors plan to form a business that acquires subprime mortgage loans. The entity type should balance investor liability protection and management control. While a corporation provides certain benefits like ease of ownership transfer, an LLC might be preferable for its flexibility, particularly in managing liability and decision-making authority among active and passive investors. 2. Jurisdiction over a Foreign Limited Partnership (LP): The scenario examines if a Maryland court can exercise jurisdiction over entities formed in other states with principal business activities outside Maryland. Since the LP’s general partner was a Maryland corporation, the court might have jurisdiction under Maryland law, though this depends on whether the actions in question have sufficient connection to the state. 3. Jurisdiction in Cross-Border Commerce: DFF, an Ohio corporation advertising in Indiana, is sued in Indiana over a defective product. Indiana courts may have jurisdiction if the advertisement and delivery into Indiana establish a substantial enough connection to the state. 4. Sales Tax Collection for Online Retailers: The case involves Barnesandnoble.com’s obligation to collect sales tax in Louisiana despite no physical presence. The court may consider the recent expansion of state tax authority over online sales, though historically, a physical presence in the state was required. 5. Corporate Tax on Capital Gains: Mead Corporation argues that a capital gain from selling a division should be allocated to its home state (Ohio). The court’s decision would depend on whether the gain is classified as business or non-business income, affecting its allocation for tax purposes. 6. Failure to Qualify to Do Business in a State: A Delaware corporation seeks to enforce a Texas judgment but lacks certification to conduct business in Texas. While failure to qualify can bar access to Texas courts, obtaining the certificate post-judgment may affect enforcement. 7. Qualifications for NCAA to Operate in Texas: The NCAA, an Indiana corporation, may need to qualify as a foreign corporation in Texas due to its substantial activities in hosting the Final Four. Determining if these activities amount to “doing business” involves assessing the frequency and duration of NCAA employees’ presence in Texas. 8. Piercing the Veil in an LLC Lease Agreement: In this case, Gasstop Two LLC seeks to pierce the veil of Seatwo LLC for unpaid rent. Arguments include undercapitalization and personal benefit to members, with a focus on whether the LLC structure was improperly used to evade financial obligations. 9. Veil Piercing in Multi-Corporation Taxi Business: Carlton’s multiple corporations each carry minimum liability insurance per New York law but collectively act as a single business. The court may pierce the corporate veil if the structure was used to evade liability and defraud injury claimants. 10.Parent-Subsidiary Structure for Liability Isolation: For REIS, Inc., forming separate subsidiaries for each shopping mall would isolate liabilities. The parent corporation would oversee management while avoiding operational control over each subsidiary to prevent veil-piercing. 11.Unfair Business Practices and Veil Piercing: Castleberry alleges that Branscum improperly diverted Texan Transfer’s business to a new company, Elite Moving, which resulted in financial losses. The court may pierce the veil if Branscum’s actions show misuse of the corporate structure to evade contractual obligations. 12.Commingling of Funds and Lack of Formalities: Romano, who uses personal accounts for corporate funds and fails to hold meetings, risks veilpiercing due to commingling and lack of corporate formalities. Courts may find her personally liable if corporate separateness is disregarded. These scenarios illustrate various principles, including the importance of corporate formalities, adequate capitalization, and lawful separation between entities to protect against veil-piercing.