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CORPORATIONS
    Corporations are creatures of the law.  So are trusts, but they are very different.

     A corporation is a legal person.  It can sue in its own name.  It can be sued.  It can own property.  If a corporation owns a factory building, for example, and one of the stockholders dies, the estate of the stockholder includes his or her shares of stock, but not the factory building.

    A trust is not a legal person. Hanson v. Birmingham, 92 F.Supp 33 (N.D. Iowa 1950).  A trust is a relationship.  So is an estate.  Each is a legal relationship between the trustee (or Executor for an estate), the property held in trust (or in the estate) and the people who benefit from the property held in the trust (or estate), the beneficiaries.  The trustee of a trust holds the legal title of the property in the trust for the benefit of the income beneficiary and ultimately for the benefit of the person entitled to the property in the end.  Property in the trust is referred to as the corpus or principal of the trust (or estate).

    Corporations come in 2 kinds in the U. S.  The first kind is a “for profit” or business corporation.  The other kind is a “not for profit” or charitable corporation.

    In Iowa business corporations are subject in the first instance to Chapter 490 of the Code of Iowa.

    In Iowa, non-profit corporations are subject to Chapter 504A of the Code of Iowa.

    Because they only exist on paper, corporations are artificial persons. In one of the two discussions that follow under this topic, I will explain exactly what those papers are.  They are usually kept in a special form of loose leaf book known as a corporate record book.  So if you can picture a dark red book with dividers for legal papers that have been filed in the office of the Secretary of State, you can picture about all there is to see when it comes to looking at the legal entity known as the corporation.  Stripped naked from the red record book, it’s typically only about half an inch or less of paper.  That’s it.

    Big corporations, usually incorporated in Delaware, are not really different than little corporations incorporated in Iowa.   Each will have the same basic set of paperwork that is the legal skeleton that everything hangs on.  The paramount document is the Articles of Incorporation.  The next in line are the bylaws.  The Articles have to be consistent with the statute that the state of incorporation has enacted.  The Bylaws have to be consistent with the Articles and not inconsistent with the Statute.  A record must be made of the meetings of the shareholders and of the Board of Directors.  That record is in the form of minutes.  Minutes are not a verbatim transcript.  They are merely a concise synopsis of what was done.  Preferably, each Article is numbered, each by-law is numbered and each resolution adopted by the shareholders or by the directors is also numbered.

This page was written on 04190.

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