If incorporators cannot show substantial compliance with statutes regarding incorporation but can show that they were unaware of any defect and acted in good faith,a court may treat the entity as a(n):
A) de jure corporation.
B) real corporation.
C) de facto corporation.
D) equitable corporation.

Question

Quizplus · Accepted Answer

A de facto corporation is an entity that has been created and is treated as a corporation by its stakeholders and the public, even though there may have been some defect in the incorporation process. If the incorporators acted in good faith and were unaware of any defect, a court may recognize the entity as a de facto corporation. This allows the entity to continue to conduct its business and enter into contracts as if it were a validly incorporated entity. A de jure corporation, on the other hand, is a legally recognized entity that has complied with all statutory requirements for incorporation. A real corporation and an equitable corporation are not recognized legal terms for types of corporations.

If Incorporators Cannot Show Substantial Compliance with Statutes Regarding Incorporation