If the business will be conducted throughout the United States the corporation will be incorporated in one state and qualified to conduct business as a foreign corporation in other states.

As a matter of fact, most large publicly held corporations in the U.S have chosen Delaware as their state of incorporation. One reason for this is that the Delaware Statute is designed to give management flexibility in structuring and running the business. Besides, the Delaware courts and corporate bar are sophisticated in corporate law matters.

If a corporation is organized under the Delaware Statute，it is a Delaware corporation. This means that it is a domestic corporation to Delaware and has to qualify in order to do business in other states as a foreign corporation. It also means that the law of Delaware will be applied to any dispute concerning the corporations ,s internal affairs no matter where the litigation is brought.

To incorporate f the incorporators must prepare the articles of incorporation (in some states called the charter or the certificate of incorporation), sign it, and then submit it to the secretary of state for filing. The filing brings the corporation into legal existence.

The articles of incorporation should usually include the name of the proposed corpora-tion * the address of its registered office and the name of its registered agent, the purpose of the corporation, its capital structure (the amount of stock to be authorized, the amount of stock to be issued and the types of stock to be issued), and the names and addresses of the incorporators.

After incorporation, the incorporators and subscribers of corporate stock hold a meeting to complete the organization o{ the corporation by electing a board of directors. The board of directors then meets, approves the bylaws, elects corporate officers, calls for the payment of the subscription price for the stock, and makes whatever decisions are necessary to start business.

Bylaws are the rules set by the corporation in governing its own affairs. The corporate bylaws contain provisions establishing the corporate seal and the form of the stock certificate, the number of officers and directors, the method of electing them and removing them from office, as well as the enumeration of their duties. They also specify the time and place of the meeting of the direptors and the shareholders. Bylaws are valid if they are reasonable and consistent with the articles of incorporation and the applicable statutes.

The power to alter, amend, or revoke the bylaws is vested in the board of directors in most instances. However» the board can not repeal, amend, or add to the bylaws if the change will affect the vested rights of a shareholder.

To achieve the goal of limited liability 9 rules of corporate house-keeping should be observed to maintain the separate existence of the corporation. Failure to do so may be a basis for suits to pierce the corporate veil. In such suits the plaintiff will have to prove that the corporation is but an alter ego or instrumentality of its dominant shareholder or another corporation who should therefore be personally liable for its debts.

The significant factors in a successful piercing of corporate veil are 1) undercapitalization t 2) failure to observe corporate formalities such as annual shareholder meetings,

3) nonpayment of dividends, 4) siphoning of corporate funds by the dominant stockholders, 5) nonfunctioning of other officers or directors, 6) absence of corporate records, 7) use of the corporation as an instrumentality for the operation of the dominant stockholders ,and 8) use of the corporate entity in promoting injustice or fraud. In essence，if the liability-causing activity did not occur only for the benefit of the corporation or if the liable corporation has been gutted or left without funds by those controlling it, justice may require the disregarding of corporate entity.4 But mere proof of an attempt to avoid personal liability on the part of the shareholders does not justify piercing the corporate veil, because the law recognizes the separation of the corporation from its shareholders.

Answer the following questions:
1. What is the general rule in selecting a state of incorporation? What will be the consequences of the selection?
2. Why do most of the national corporations incorporate in the tiny state of Delaware?
3. What are the steps of incorporation?
4. What must be done right after incorporation?
5. What is the first thing the board of directors must do?
6. What are corporate bylaws? Are bylaws of equal status with the articles of incorporation?
7. What are the general rules of corporate house-keeping ?
8. What are the grounds for piercing the corporate veil?
9. What is the consequence of a successful piercing of corporate veil?
10. What are the policy considerations for permitting piercing-corporate-veil suits?