Under New York law, which statement about a de facto corporation is true?

• A. A de facto corporation exists automatically without any statute or colorable attempt
• B. A de facto corporation does not exist unless the statute grants recognition
• C. De facto corporations are abolished in NY
• D. A de facto corporation requires a colorable attempt to incorporate and a statute exists

Answer: (D)

Under New York law, the de facto corporation status applies when someone bona fide attempts to form a corporation under a valid statute and conducts business as if it were incorporated, even if the formal filing is incomplete. The key elements are a colorable compliance with the incorporation statute and a statute under which the corporate form could be formed. If both are present, the entity is treated as a de facto corporation for purposes of limited liability and related questions.

Why this is the best fit: It captures that there must be a colorable attempt to incorporate and a statutory framework to operate under, which together allow the de facto status to recognize the entity despite imperfect formation. Without a colorable attempt or without a valid statute, the de facto status does not apply.

Why the other statements don’t fit: De facto status does not arise automatically without any statute or colorable attempt, and New York has not abolished the concept; it exists precisely to cover cases where there is a valid statute and a genuine attempt to comply. It also is not true that de facto status requires no statute at all or that recognition must come from the statute prior to forming.