Requisites of a de facto corporation
The following are three requisites for a de facto corporation to exist:
[1] The corporation has been formed under an apparently valid statute. This may refer to a corporation law under which the (de facto) corporation has been earlier creation, which has later been declared unconstitutional. This has similarity with the doctrine of operative fact;
[2] There has been not only good faith but also colorable compliance with the requirements set by law; and
[3] The (de facto) corporation has transacted business or has entered into transactions of business as if it were a corporation.
Good faith and colorable compliance with corporation law requires that there has been a certificate of registration or incorporation issued by the appropriate agency. Lack of such issuance gives rise to a presumption of bad faith on the part of the association of persons claiming to be a corporation.
[1] The corporation has been formed under an apparently valid statute. This may refer to a corporation law under which the (de facto) corporation has been earlier creation, which has later been declared unconstitutional. This has similarity with the doctrine of operative fact;
[2] There has been not only good faith but also colorable compliance with the requirements set by law; and
[3] The (de facto) corporation has transacted business or has entered into transactions of business as if it were a corporation.
Good faith and colorable compliance with corporation law requires that there has been a certificate of registration or incorporation issued by the appropriate agency. Lack of such issuance gives rise to a presumption of bad faith on the part of the association of persons claiming to be a corporation.
