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 updated in August of 2022 by the Wex Definitions Team]