Restatement of the Law Second

Conflict of Laws 2d

Chapter 13. Business Corporations

Topic 1. Creation, Recognition and Dissolution

Copyright (c) 1971 The American Law Institute


 In order to incorporate validly, a business corporation must comply with the requirements of the state in which incorporation occurs regardless of where its activities are to take place or where its directors, officers or shareholders are domiciled.


 a. Incorporation defined. Incorporation, as the term is used in the Restatement of this Subject, is the process of forming a corporation. The more important attributes which an organization normally acquires through incorporation are stated in the Introductory Note to this Chapter.

 b. Method of incorporation. Each state determines for itself what things must be done to secure incorporation under its local law. The method of incorporation, being a matter of local law, is not a problem with which the Restatement of this Subject is concerned. In most states a corporation is formed by complying with the conditions prescribed by general statute. In some states, however, a corporation may be formed by a special act. The constitutions of several States of the United States prohibit special acts of this character.

 c. Domestic and foreign corporations. A corporation is a domestic corporation with respect to the incorporating state. With respect to other states, it is a foreign corporation.

 A corporation incorporated in one State of the United States is a foreign corporation with respect to other States of the United States.

 A corporation incorporated in the District of Columbia, or in a territory of the United States, is "domestic," as the term is used in this Section, with respect to the District or territory. Elsewhere, it is a foreign corporation.

 d. Incorporation can take place in a state where the corporation conducts no business and where none of the directors, officers or shareholders are domiciled provided that this is permitted by the local law of that state. If the requirements of the state of incorporation have been met, the fact of incorporation will be recognized in other states (see s 297).

 e. Throughout this Restatement, when it is said that "the corporation can act, " the meaning is that the corporation can act in a corporate capacity.


 See State v. Topeka Water Co., 61 Kan. 547, 60 P. 337 (1900); Cumberland Telegraph & Telephone Co. v. Louisville Home Tel. Co., 114 Ky. 892, 72 S.W. 4 (1903); Lancaster v. Amsterdam Improvement Co., 140 N.Y. 576, 35 N.E. 964 (1894); Oakdale Mfg. Co. v. Garst, 18 R.I. 484, 28 A. 973 (1894); 2 Beale, Conflict of Laws 731-733 (1935); 17 Fletcher, Cyclopedia of Private Corporations 148-149 (1960).

 Comment c: See 2 Beale, Conflict of Laws 735-736 (1935); Stevens, Corporations 966 (2d ed. 1949).

REST 2d CONFL s 296

1971 WL 34668

REST 2d CONFL s 296