Organizing the corporation

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              a)On De Facto Doctrine--states following the prior version of the Model Act have abolished the de facto doctrine, thus making all purported “shs” jointly and severally liable for all liabilities incurred as a result of the purported “incorporation.” However, statutes based on Revised Model Business Corporation Act require a person acting on behalf of the enterprise to know that there was no incorporation before liability attaches.

              b)On Estoppel Doctrine--the effect of both acts is an unsettled issue.

              c)On Liability--under the prior Model Act, liability extends to investors who also exercise control or actively participate in policy and operational decisions. It is expected that the Revised Model Act will be interpreted in the same manner.

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