Conflict of Laws Commons^™

Conflict Of Laws - Penal Provisions In Foreign Law - Liability Of Shareholders In De Facto Corporation, James M. Potter S.Ed.

Michigan Law Review

Defendants, residents of Tennessee, while attempting to form a corporation under the laws of Arkansas, inadvertently failed to file the articles of incorporation with the county clerk, although they were filed with the Secretary of State of Arkansas. The resulting business association was an Arkansas de facto corporation. Under Arkansas law the shareholders of a de facto corporation are personally liable for the debts of the corporation. Plaintiff, a creditor who dealt with the corporation, sued in a Tennessee court and asked that the Arkansas rule be applied. The trial court refused to do so on the ground that it …