De Facto Corporation
An entity that has not strictly complied with incorporation statutes but has made a good-faith attempt to incorporate and has operated as a corporation, giving it limited recognition against most parties except the state.
Encyclopedia entry: De Facto Corporation
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de facto corporation
De facto corporation refers to the legal recognition of a corporation , even if the articles of incorporation for a corporation are not properly filed. In other words, a corporation may be said to have de facto corporate status by inadvertently failing to fully satisfy all legal requirements for the creation of corporate existence, but has exercised corporate powers in good faith . To be granted de facto corporation status, three basic requirements must be met:
- The state must have a relevant statute related to incorporation .
- The company must have attempted to comply with the statute in good faith.
- The company is being operated as a corporation and can provide evidence of same.
[Last reviewed in August of 2022 by the Wex Definitions Team
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.