Question

The owners of Elsie Components made a good faith effort to incorporate. Not realizing that all of the pre­scribed procedures were not followed, the entity established a corporate charter and entered into good faith business dealings in the corporate name with Miner Company. A valid statute exists under which the business could have been incorporated legally. Despite the defects in the incorporation process, an appropriate court held that Elsie Components was a corporation. What type of entity is Elsie Components?

Answer 1

Answer: De facto corporation

Explanation:

De facto corporation also referred to as the corporation by estoppel these terms are mostly used by the courts in rudimentary law jurisdictions in order to describe the circumstances under which an organization or a business has failed or lagged to become or get the status of de jure corporation i.e. referred to as an organization by law. Nonetheless it will still be viewed and treated as an organization thus shielding the shareholders from any liability.