Partnerships
Can Partners receive salaries?
Partners are not entitled to remunerations for services performed for partnerships unless the partnership agreements state otherwise or except for reasonable compensation fro winding up services.
What happens if a dissociation does not end in a dissolution of the partnership?
if there are more than 2 partners in the partnership, then the partnership will purchase the interest for a buyout price. this is normally the amount that would have been distributed to the person on the date of dissociation.
The buyout price will not be available to partners in a wrongful dissociation until the end of the term.
How are Corporations Formed?
Corporations are formed when they MUST file: (1) articles of incorporation; (2) naming req. of (Corp, Inc, Co, or Ltd);
What is De facto?
incorporators who made a good faith effort to create a corporation but failed due to some technical defect may be able to avoid personal liability under the de facto doctrine.
For Board of directors voting, there needs to be a quorum. A quorum is a majority of fixed numbers of directors/numbers prescribed/if no prescribed number majority of number in office immediately before meeting begins. Once a quorum is established, a majority of the quorum is needed to to act. Quorums can be destroyed by leaving. Also, directors who are present when action is taken is assumed to have assented unless they object at the beginning of the meeting, dissent/abstain and its recorded in the minutes, or file a written notice of dissent.
How do Partners share profits?
Partners are entitled to equal shares of profits by default unless partnership agreements state otherwise.
Partners are charged with the share of the partnership losses in proportion to partner's share of distributions.
what is the cause of a dissociation?
1. engaging in wrongful conduct adversely/materially affect partnership business.
2. committing willful/persistent breach of partnership agreement/duty/obligation.
3. engaging in conduct not reasonably practicable to carry on business with person as partner.
4. Debtor in bankruptcy
5. Person dies.
Where can a corporation register their office/agent?
A registered office MAY be the same as any of its places of business or any place where it conducts affairs; AND registered agent is an individual, domestic corporation or a foreign corporation.
What is Corporation by Estoppel?
this bars a third party from denying the existence of a corporation if that party has treated the business as a corporation.
Who are the officers in a corporation?
Officers in a corporation are appointed and given authority (agency) by the Board of directors or bylaws.
Partners cannot transfer their managerial powers in a partnership, but can transfer their financial interest.
If a transferee becomes partner, then they are liable for partner's obligations known to them at the time they became a partner.
How can a partnership be dissolved?
1. Partnership at will - partnership gives notice of express will to withdraw.
2. Partnership by agreement: (1) Fulfillment of partnership terms or project. (2) If a partner is dissociated for any of the reasons listed above, the partnership with the remaining partners may dissolve within 90 days of: (1) an agreement of the half of the remaining partners and (2) 90 days of a partner's dissociation.
3. Judicial dissolution by dissociation
When do corporations appoint officers to the corporation?
If named in the AOI, initial directors will hold organizational meetings at the call of the majority to appoint officers, adopt bylaws, and carry on any other business brought before the meeting.
If not named in AOI, incorporator(s) shall hold organizational meeting at the call of the majority to elect directors and complete aforementioned organization OR to elect a board of directors who shall complete the organization.
Must companies issue stock?
A corporation MAY issue the number of shares of each class or series authorized by the AOI. At all times, there must be outstanding one or more shares that together have unlimited voting rights and one or more shares that are entitled to receive the net assets of the corporation upon dissolution.
How do Shareholders Vote?
Shareholders vote on directors by a plurality votes cast by the shares entitled vote in the election at a meeting at which a quorum is present.
If there is vacancy on the BoD, the shareholders can fill it.
Shareholders may remove directors with or without cause.
- If cumulative voting is authorized, unless the entire board of directors is to be removed, a director may not be removed if the number of votes sufficient to elect him under cumulative voting is voted against his removal.
- If cumulative voting is NOT authorized, a director may be removed only if the number of votes cast to remove him exceeds the number of votes case not to remove him.
- Director may not be removed at a meeting unless the notices late the purpose/one of the purpose as removal of directors
- DIRECTORS CANNOT REMOVE DIRECTORS.
How does a dissociation take place?
Wrongful reasons include: (breach of express provisions in the agreement; leaving before the expiration of term/completion of undertaking in joint venture).
How are assets disposed following a dissolution?
What are a Corp's Bylaws
Corps must adopt bylaws to prevent piercing of corporate veil. These do not have to be filed or made public. They may contain any provisions for managing business of corporation.
Are shareholders liable to the Corporation?
Shareholders are not liable to the corporation or its creditors aside from the consideration paid for the stock they own.
Shareholders CAN become personally liable by their own actions/conduct.
How often should corporation hold meetings?
1. Annual meeting-Corporation shall hold a meeting of shareholders annually at corp's principal office. failure to hold meeting doesn't affect validity of corp. action, but a substitute annual meeting may be called.
- Corp. can operate indefinitely without annual meetings, but the longer they do, the more vulnerable they are to piercing the corporate veil due to not abiding by corporate formalities.
Special meetings-Corporation shall hold a special meeting of shareholders.
-ON Call of BoD. -Close Corp. within 30 days after the holders of at least 10% of all the votes entitled to be cast on any issues proposed to be considered sign, date, and deliver to the corp's secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held.
-Only business within the purpose(s) described in the meeting notice may be conducted.
What are the effects of a dissociation?
The right to participate in the partnership ends, the duties and obligations also end. however, this does not discharge the debt/obligation/liability incurred while a partner.
Every corporation properly incorporated has the purpose of engaging in any LAWFUL business unless a more limited purpose is set forth in the AOI.
What is a Defective Incorporation?
When there is a defective incorporation, the promoters (the people who filed the documents can be protected from liability under Defacto theory and Corp by Estoppel.
What are the duties of Board of Directors?
1. Directors do not have to be residents of state of inc. or a shareholder.
Board must consist of at least one human director, number can be increased or decreased but never zero.
Directors are elected first at the annual shareholder meetings and each annual meeting thereafter.
Regular meetings may be held w/out notice of date/time/place/purpose.
Special meetings require notice to be sent by usual mens of communication not less than 5 days before meeting. Special meetings can be called by the president OR any two directs.
meetings can be held in or out of state of inc.
What are Record dates?
Date on which a corporation determines the identity of its shareholders. A record date may not be more than 70 days before the meeting of action requiring a determination of shareholders. The record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders' meeting is the close of business on the day before the first notice is delivered to shareholders.