Corporate Practice Series Portfolio No. 71-2nd, The Maryland Corporation: Legal Aspects of Organization and Operation, provides a comprehensive analysis of Maryland's corporate law along with practice pointers to guide the practitioner through its nuances and vagaries. The discussion focuses on the formalities of corporate formation, the issuance of stock and distributions to stockholders, extraordinary corporate acts, and the dissolution and forfeiture of a corporation. The portfolio also devotes significant attention to the powers, rights, and liabilities of stockholders, directors, and officers. Close corporations, nonstock, and foreign corporations are discussed as well.

Portfolio 71-2nd: The Maryland Corporation: Legal Aspects of Organization and Operation

I. Introduction

II. Forming and Organizing the Corporation
    A. The Articles of Incorporation
         1. Required provisions in the articles of incorporation
              a. Who can incorporate
              b. Corporate name
              c. Corporate purpose
              d. Resident agent and principal office
              e. Capital stock
                   (1). Number of authorized shares
                   (2). Par value
                   (3). Classes of stock
                   (4). Terms of stock
              f. Number and names of initial directors
         2. Optional provisions
    B. Organizational Meeting
         1. Adopt bylaws
         2. Elect officers
         3. Other business
    C. Good Standing

III. Stock Issuances
    . Introductory Material
    A. Subscriptions
    B. Conditions to Issuance
         1. Issuance may not be in violation of the charter or bylaws
         2. Board of directors must adopt a resolution describing the issuance
         3. Conditions applicable after initial stock issuance
    C. Preemptive Rights
    D. Consideration for Stock or Convertible Securities
    E. Stock Certificates
    F. Fractional Shares
    G. Stock Ledger

IV. Distributions to Stockholders
    . Introductory Material
    A. What Is a ‘Distribution’?
    B. Restrictions on Making Distributions
         1. The equity insolvency test
         2. The balance sheet test
         3. Time for measuring effect of distributions for purposes of the tests
         4. Distributions of indebtedness
         5. Unlawful distributions
    C. Stated Capital, Capital Surplus, and Earned Surplus
    D. Stock Dividends and Stock Splits

V. Stockholders: Powers, Rights, and Liabilities
    A. Who Is a Stockholder
    B. Management Rights of Stockholders
    C. Voting by Stockholders
         1. Quorum, voting requirements
         2. Proxies
         3. Voting by fiduciaries, pledgees, and stock held by more than one person
         4. Voting of stock held by a corporation
         5. Voting trusts
         6. Voting agreements
    D. Stockholders Meetings
         1. Annual and special meetings
         2. Place and notice of meetings
         3. Stockholder proposals
         4. Informal actions
         5. Record date and closing of transfer books
    E. Stockholder Inspection Rights
    F. Liabilities of Stockholders
         1. Liability for nonpayment of stock
         2. Liability for unlawful distributions
         3. Other liabilities
    G. Piercing the Corporate Veil
    H. Duties of Controlling Stockholders to Minority Stockholders
    I. Stockholders’ Derivative Suits

VI. Directors: Powers, Rights, and Liabilities
    A. Management Role of Director
    B. Number, Qualification, Election, and Term of Office
    C. Removal and Resignation of Directors
    D. Vacancies
    E. Director Meetings, Notice of Meetings
    F. Quorum, Action of the Board
    G. Committees
    H. Standard of Care Required of Directors
    I. Corporate Opportunity Doctrine
    J. Exculpation of Directors
    K. Interested Director Transactions
    L. Statutory Liability

VII. Officers: Powers, Rights, and Liabilities
    A. Offices
    B. Election and Removal
    C. Authority and Duties
    D. Liabilities
    E. Financial Assistance to Officers and Employees

VIII. Indemnification
    . Introductory Material
    A. Mandatory Indemnification
    B. Permissive Indemnification
    C. Advancement of Expenses
    D. Officers, Directors, Agents, and Employees
    E. Insurance

IX. Charter Amendments and Restatements
    A. Articles of Amendment
    B. Articles of Restatement
    C. Articles of Amendment and Restatement

X. Extraordinary Actions
    A. Permissible Actions and Forms of Consideration
         1. Consolidations and mergers
         2. Share exchanges
         3. Transfer of assets
         4. Consideration
    B. Procedures for Approval
         1. General procedures
         2. Exceptions
         3. Short-form mergers
    C. Effective Date
    D. Effect of Transaction
         1. Effect of consolidation or merger
         2. Effect of share exchange
         3. Effect of transfer of assets
    E. Articles of Consolidation, Merger, Share Exchange, or Transfer
         1. General requirements
         2. Specific requirements
              a. Articles of consolidation
              b. Articles of merger
              c. Articles of share exchange
              d. Articles of transfer
         3. Duties of the SDAT
    F. Taxes and Other Requirements
         1. Bills of sale, confirmatory deeds, etc.
         2. Certificate of conveyance
         3. Bulk Transfers Act
         4. Personal property taxes
         5. Sales tax
    G. Consolidation or Merger of Foreign Corporations Owning Property in Maryland
    H. Abandonment

XI. Rights of Objecting Stockholders
    A. Remedies Available
    B. General Procedure for Demanding Fair Value
    C. Consequence of Written Demand and Demand for Appraisal
    D. Determination and Payment of ‘Fair Value’

XII. Business Combinations and Control Share Acquisitions
    A. Business Combinations
    B. Control Share Acquisitions

XIII. Unsolicited Takeovers

XIV. Dissolution
    A. Voluntary Dissolution
         1. Board and stockholder approval
         2. Notice to creditors and employees
         3. Articles of dissolution
         4. Liquidating assets, distributions to stockholders
    B. Involuntary Dissolution
         1. Grounds
         2. Appointment of receiver, order of dissolution
         3. Duties of receiver
    C. Continuing Liability of Stockholders, Directors, and Officers

XV. Forfeiture and Revival
    . Introductory Material
    A. Manner of Forfeiture
    B. Effect of Forfeiture, Effect of Revival
    C. Articles of Revival
    D. Effect of Forfeiture if Charter Is Not Revived

XVI. Close Corporations
    . Introductory Material
    A. Election to Be a Close Corporation
    B. Unanimous Stockholders’ Agreements
    C. Board of Directors
    D. Stock Restrictions
    E. Extraordinary Corporate Actions
    F. Corporate Formalities
    G. Dissolution

XVII. Nonstock Corporations
    . Introductory Material
    A. Formation
    B. Directors and Members
    C. Consolidation, Merger, and Transfer of Assets
    D. Dissolution or Forfeiture of Charter

XVIII. Foreign Corporations
    A. In General
    B. What Constitutes ‘Doing Business’?
    C. Qualification and Registration
         1. Qualification to do intrastate business
         2. Registration to do interstate or foreign business
         3. Other provisions
    D. Mandatory Requirements
         1. Additional requirements
    E. Termination of Qualification or Registration
    F. Effect of Failure to Qualify or Register
    G. Registration of Names

Portfolio 71-2nd: The Maryland Corporation: Legal Aspects of Organization and Operation

Wks. 1 Name Reservation Application

Wks. 2 Basic Form of Articles of Incorporation

Wks. 3 Form of Articles of Incorporation—Open-End Investment Company

Wks. 4 Form of Amended Articles of Incorporation

Wks. 5 Form of Certificate of Correction

Wks. 6 Trade Name Application

Wks. 7 Trade Name Amendment or Cancellation Application

Wks. 8 [Reserved]

Wks. 9 Form of Organizational Consent

Wks. 10 Form of Bylaws

Wks. 11 Combined Registration Application

Wks. 12 Certificate of Change of Principal Office

Wks. 13 Certificate of Change of Resident Agent

Wks. 14 Notice of Change of Address of Resident Agent from Corporation

Wks. 15 Notice of Change of Address of Resident Agent from Resident Agent

Wks. 16 Consent to Serve as Resident Agent

Wks. 17 Form of Articles Supplementary to Be Filed Prior to Issuing Blank Stock

Wks. 18 2010 Maryland Form 1

Wks. 19 Sample Stock Authorizing Resolution for Private Placement

Wks. 20 Form of Unanimous Written Consent of Stockholders in Lieu of Meeting

Wks. 21 Form of Written Consent of Stockholders in Lieu of a Meeting (Less Than Unanimous Consent)

Wks. 22 Form of Unanimous Written Consent of Directors in Lieu of Meeting

Wks. 23 Form of Unanimous Written Consent of Directors and Stockholders in Lieu of Meeting

Wks. 24 Form of Unanimous Written Consent of Directors Advising Approval of Articles of Amendment and Restatement

Wks. 25 Form of Unanimous Written Consent of Stockholders Approving Articles of Amendment and Restatement

Wks. 26 Form of Articles of Amendment

Wks. 27 Form of Articles of Amendment and Restatement

Wks. 28 Form of Unanimous Written Consent of Directors Advising Approval of Articles of Transfer

Wks. 29 Form of Unanimous Written Consent of Stockholders Approving Articles of Transfer

Wks. 30 Form of Articles of Merger—Simple Merger of Two Maryland Corporations (No Dissenting Shareholders)

Wks. 31 Form of Articles of Share Exchange

Wks. 32 Form of Articles of Transfer

Wks. 33 [Reserved]

Wks. 34 Certificate of Conveyance

Wks. 35 Form AT3-45

Wks. 36 Affidavit for Foreign Mergers or Consolidations

Wks. 37 Form of Articles of Voluntary Dissolution

Wks. 38 Form of Letter to SDAT Requesting List of Collectors of Taxes

Wks. 39 Form of Articles of Revival

Wks. 40 Form of Articles of Incorporation

Wks. 41 Form of Organizational Consent—No Board of Directors

Wks. 42 Form of Bylaws—No Board of Directors

Wks. 43 [Reserved]

Wks. 44 Foreign Corporation Qualification

Wks. 45 [Reserved]

Wks. 46 Application for Termination for a Foreign Corporation Qualification

Wks. 47 Foreign Corporation Registration of Name/Renewal of Name Registration

Wks. 48 Foreign Corporation Assumed Name

Wks. 49 [Reserved]

Wks. 50 Cover Sheet for Filings Made in Person

Wks. 51 Cover Sheet for Filings Made by Fax

Wks. 52 Expedited Service Request

Wks. 53 Fee Schedule

Kenneth B. Abel
Ober, Kaler, Grimes & Shriver
Baltimore, Maryland