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De Facto Corporation

De Facto Corporation

Definition

Equitable doctrine that permits an association to be treated like a de jure corporation for most purposes, even if no de jure corporation has actually been formed. An association may be deemed a de facto corporation if (1) there is a procedural, administrative, or other defect in the process of incorporation; (2) the incorporators tried, in good faith, to comply with the statutory incorporation requirements; and (3) the association is actually conducting the business as though there were a de jure corporation (e.g., entering a lease on the corporation's behalf).

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