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Tables of Contents for The Law of Corporations, Partnerships, and Sole Proprietorships
Chapter/Section Title
Page #
Page Count
Preface
xxiii
About the Author
xxv
Table of Cases
xxvii
Sole Proprietorships
1
15
Introduction
1
1
Sole Proprietorship Defined
1
1
Sole Proprietorships in the United States
2
1
Advantages of Doing Business As a Sole Proprietor
2
4
Full Management Authority
2
1
Minimal Formalities and Regulatory and Reporting Requirements
3
1
Low Cost of Organization
4
1
Income Tax Benefits
4
2
Disadvantages of Doing Business As a Sole Proprietor
6
2
Unlimited Liability
6
1
Lack of Business Continuity
7
1
No Diversity in Management
7
1
Difficulty in Transferring Proprietary Interest
7
1
Limited Ability to Raise Capital
8
1
Tax Disadvantages
8
1
Formation and Operation of the Sole Proprietorship
8
4
Using an Assumed Name, Trade Name, or Fictitious Name
9
1
Hiring Employees and Using Tax Identification Numbers
10
1
Sales Tax Permits
11
1
Licensing
12
1
The Role of the Legal Assistant in Sole Proprietorship Matters
12
1
Resources
13
3
United States Small Business Administration
13
1
State and Local Government Offices
13
1
State Statutes
13
1
Secretaries of State
14
2
Partnerships
16
56
Introduction
17
1
An Introduction to Partnerships
17
5
Partnership Defined
18
1
Partnerships in the United States
19
2
Law Governing Partnerships
21
1
The Partnership As a Separate Entity
21
1
Partners' Rights and Responsibilities
22
13
Partners' Rights in Partnership Assets
23
1
Partners' Rights in Dealing with Each Other
23
2
Partners' Duties in Dealing with Each Other
25
1
Partners' Duties to Contribute to Partnership Losses
26
1
Partners' Duties to Work for Partnership Without Remuneration
26
1
Partners' Duties to Submit to a Vote of the Majority of the Partners
26
1
Partners' Fiduciary Duties to the Partnership and Other Partners
26
1
Partners As Agents
27
1
Liability of Partners
28
1
Relationship Between Partners and Others
28
4
Statement of Partnership Authority
32
1
Statement of Denial
33
1
Partnership Powers
34
1
Partnership Property
34
1
Advantages of Doing Business As a General Partnership
35
2
Participation and Flexibility in Management
35
1
Minimal Formalities and Regulatory and Reporting Requirements
35
1
Low Cost of Organization
36
1
Income Tax Benefits
37
1
Diversified Capital Resources
37
1
Disadvantages of Doing Business As a Partnership
37
3
Unlimited Liability
38
1
Loosely Structured Management
38
1
Lack of Business Continuity
39
1
Difficulty in Transferring Proprietary Interest
39
1
Limited Ability to Raise Capital
39
1
Legal and Organizational Expenses
40
1
Tax Disadvantages
40
1
Organization and Management of a General Partnership
40
15
Management and Control
41
1
Oral Partnership Agreements
42
1
Partnership Agreements
42
13
Financial Structure of a Partnership
55
2
Partnership Capital
55
1
Profits and Losses
56
1
Dissolution, Dissociation, Winding Up, and Termination of the Partnership
57
5
Dissociation, Dissolution, and Winding Up
57
1
Events Causing Partner's Dissociation
58
1
Effect of Partner's Dissociation
59
1
Statement of Dissociation
59
1
Events Causing Dissolution and Winding Up of Partnership Business
60
1
Dissolution Agreement
61
1
Notice to Third Parties
61
1
Winding Up
61
1
Distribution of Assets
62
1
Other Types of Partnerships and Similar Organizations
62
1
Partnership Association or Limited Partnership Association
63
1
Joint Ventures
63
1
Mining Partnerships
63
1
The Role of the Legal Assistant in Partnership Matters
63
2
Resources
65
7
State Statutes
65
3
Legal Form Books
68
1
Secretary of State or Other Appropriate State Authority
68
1
State and Local Government Offices
68
4
Limited Partnerships
72
42
Introduction
73
1
An Introduction to Limited Partnerships
73
3
Limited Partnership Defined
74
1
Limited Partnerships in the United States
74
2
Law Governing Limited Partnerships
76
1
The Limited Partnership As a Separate Entity
76
1
Partners' Rights and Responsibilities
76
5
General Partners' Rights and Responsibilities
77
1
Limited Partners' Rights and Responsibilities
77
4
The Relationship Between General Partners and Limited Partners
81
1
Advantages of Doing Business As a Limited Partnership
81
2
Limited Liability for Limited Partners
81
1
Income Tax Benefits
82
1
Transferability of Partnership Interest
82
1
Business Continuity
82
1
Diversified Capital Resources
83
1
Disadvantages of Doing Business As a Limited Partnership
83
2
Unlimited Liability
83
1
Prohibition on Control of Business
84
1
Formalities and Regulatory and Reporting Requirements
84
1
Legal and Organizational Expenses
84
1
Organization and Management of a Limited Partnership
85
12
Management and Control
86
1
Limited Partnership Certificate
86
3
Execution and Filing of the Limited Partnership Certificate
89
1
Amendment to Limited Partnership Certificate
89
1
Limited Partnership Agreement
89
8
Changes in Partnership
97
4
Admission of New General Partners
99
1
Admission of New Limited Partners
99
1
Withdrawal of General Partners
100
1
Withdrawal of Limited Partners
100
1
Financial Structure of a Limited Partnership
101
1
Partnership Capital Contributions
101
1
Withdrawal of Contributions
102
1
Profits and Losses
102
1
Derivative Actions
102
1
Dissolution, Winding Up, and Termination of the Limited Partnership
103
4
Dissolution Versus Winding Up
103
1
Causes of Dissolution
103
2
Cancellation of Certificate of Limited Partnership
105
1
Winding Up
105
1
Settlement and Distribution of Assets
106
1
The Role of the Legal Assistant in Limited Partnership Matters
107
1
Resources
108
6
State Statutes
108
1
Legal Form Books
109
1
Secretary of State or Other Appropriate State Authority
110
1
Government Tax Offices
110
4
Limited Liability Companies
114
44
An Introduction to Limited Liability Companies
115
4
Limited Liability Company Defined
115
1
Limited Liability Company Characteristics
116
3
Limited Liability Companies in the United States
119
1
Law Governing Limited Liability Companies
120
4
State Law and the Uniform Limited Liability Company Act
120
2
IRS Rulings
122
1
Securities Laws
123
1
Limited Liability Company Rights and Powers
124
1
Members' Rights and Responsibilities
125
2
Members As Agents
125
1
Transferability of Interest
126
1
Members' Statutory Rights
126
1
Rights Granted by the Operating Agreement
126
1
Organization and Management of a Limited Liability Company
127
9
Organizers of the Limited Liability Company
127
1
Articles of Organization
127
4
Management and Control of the Limited Liability Company
131
1
Matters Requiring Consent of All Members
132
2
The Operating Agreement
134
1
Annual Reporting Requirements
135
1
Financial Structure of a Limited Liability Company
136
1
Member Contributions
136
1
Member Reimbursement
136
1
Distributions to Members
136
1
Dissolution of the Limited Liability Company
137
3
Member's Dissociation
137
1
Dissolution of the Limited Liability Company
138
1
Winding Up the Limited Liability Company
139
1
Distribution of Assets
139
1
Articles of Termination
140
1
Advantages of Doing Business As a Limited Liability Company
140
2
Limited Liability for All Owners
141
1
Unrestrictive Ownership
141
1
Ability to Raise Capital for the Business
141
1
Beneficial Tax Treatment
141
1
Flexibility of Management
142
1
Disadvantages of Doing Business As a Limited Liability Company
142
3
Limited Transferability of Ownership
142
1
No Business Continuity
143
1
Possibility of Piercing the Limited Liability Company Veil
143
1
Income Tax Uncertainty
143
2
Lack of Uniformity in State Laws
145
1
Transacting Business As a Foreign Limited Liability Company
145
4
Transacting Business As a Foreign Limited Liability Company
146
2
Application for a Certificate of Authority
148
1
Name Registration
148
1
Other Types of Unincorporated Limited Liability Entities
149
1
Professional Limited Liability Companies
150
1
Limited Liability Partnerships
150
1
The Role of the Legal Assistant
150
5
Drafting Limited Liability Documentation
152
2
Limited Liability Company Research
154
1
Resources
155
3
State Statutes
155
1
State Authorities
155
1
Internal Revenue Code
155
1
Form Books and Treatises
156
2
Corporations
158
26
Introduction
159
1
An Introduction to Corporations
159
6
Corporation Defined
159
1
The Corporation As a Separate Legal Entity
160
1
Piercing the Corporate Veil
160
2
Law Governing Corporations
162
3
Corporations in the United States
165
1
Corporate Rights and Powers
166
1
Advantages of Doing Business As a Corporation
167
4
Limited Liability
168
1
Beneficial Tax Treatment
168
1
Corporate Expenses
168
1
Employee Benefit Plans
169
1
Choice of Tax Year
169
1
Business Continuity
169
1
Ability to Raise Capital
169
1
Centralized Management
170
1
Transferability of Ownership
170
1
Disadvantages of Doing Business As a Corporation
171
2
Corporate Formalities and Reporting Requirements
171
1
Taxation
172
1
Double Taxation
172
1
Taxes Peculiar to Corporations
172
1
Types and Classifications of Corporations
173
7
Business Corporations
173
1
Professional Corporations
173
1
Nonprofit Corporations
174
1
S Corporations
175
2
Statutory Close Corporations
177
2
Parents and Subsidiaries
179
1
The Role of the Legal Assistant in Corporate Law Matters
180
1
Resources
180
4
State Statutes
180
1
Federal Statutes
181
1
Legal Encyclopedias
181
1
Forms and Form Books
181
1
Secretary of State or Other State Corporation Agency
182
2
Formation of the Corporation
184
52
Introduction
185
1
Preincorporation Matters
185
11
Deciding on the Corporate Structure
186
1
Choosing a Domicile
186
2
Promoters
188
2
Preincorporation Agreements
190
2
Stock Subscriptions
192
1
Gathering Client Information to Incorporate
193
3
Incorporators
196
1
Articles of Incorporation
197
10
Mandatory Provisions
197
4
Optional Provisions
201
5
Statutory Provisions That May Be Amended Only in the Articles of Incorporation
206
1
Execution
206
1
Filing
206
1
Effective Time and Date
207
1
Organizational Meetings
207
14
Organizational Meeting Requirements
209
2
Purpose of Organizational Meeting
211
1
Incorporators' Resolutions
211
2
Board of Directors' Resolutions
213
6
Shareholder Resolutions
219
1
Unanimous Writings versus Minutes
220
1
Bylaws
221
8
Office of the Corporation
221
2
Shareholder Meetings
223
1
Number and Term of Directors
224
1
Meetings of the Board of Directors
225
1
Removal and Resignation of Directors
226
1
Director Compensation
226
1
Director Liability
226
1
Officers
226
1
Stock Certificates
227
1
Dividends
228
1
Fiscal Year
228
1
Corporate Seal
228
1
Corporate Records
228
1
Amendment of Bylaws
229
1
Signatures on Bylaws
229
1
Formation of Special Types of Corporations
229
1
Statutory Close Corporations
229
1
Professional Corporations
230
1
Nonprofit Corporations
230
1
The Role of the Legal Assistant in Corporate Formation
230
1
Resources
231
5
State Statutes
231
1
Secretary of State
231
1
Form Books
232
4
The Corporate Organization
236
58
Introduction
237
1
Authority and Duties of Directors
237
7
Directors' Authority
238
2
Directors' Duties
240
4
Personal Liability of Directors
244
4
Business Judgment Rule
245
1
Imposition of Personal Liability on Directors
245
3
Compensation and Indemnification of Directors
248
2
Compensation of Directors
248
1
Indemnification
248
2
Election and Term of Directors
250
4
Election of Directors
250
1
Number and Qualifications of Directors
250
1
Term of Directors
251
3
Board of Directors Meetings and Resolutions
254
8
Board of Directors Meetings
254
1
Annual Meetings of the Board of Directors
255
1
Notice of Meetings
255
1
Quorum
256
1
Minutes
257
1
Board Actions Without Meeting
257
4
Corporate Minute Books
261
1
Corporate Officers
262
4
Titles and Duties of Officers
263
2
Personal Liability of Officers
265
1
Election and Term of Office
265
1
Shareholders' Rights and Responsibilities
266
4
Shareholders' Preemptive Rights
266
1
Shareholders' Right to Inspect Corporate Records
267
1
Personal Liability of Shareholders
267
3
Shareholder Meetings
270
15
Requirements for Annual Meetings
270
2
Requirements for Special Meetings
272
1
Location
272
1
Notice
272
4
Proxies
276
1
Quorum
277
1
Voting at Shareholder Meetings
278
2
Election of Directors
280
1
Other Acts Requiring Shareholder Approval
280
1
Minutes of Shareholder Meetings
281
1
Unanimous Consents of Shareholders
281
4
Restrictions on Transfer of Shares of Corporate Stock
285
3
Shareholder Agreements Restricting Stock Transfers
285
2
Considerations in Drafting Shareholder Agreements
287
1
Other Restrictions on Share Transfers
288
1
Shareholder Actions
288
3
Individual Actions
289
1
Representative Actions
289
1
Derivative Actions
289
2
The Role of the Legal Assistant in Organizational Corporate Matters
291
1
Resources
291
3
The Corporate Financial structure
294
32
Introduction
295
1
Capitalization of the Corporation
295
2
Equity Financing
297
11
Authorized and Issued Stock
298
4
Common Stock
302
1
Preferred Stock
303
5
Par Value
308
2
Trend Toward Eliminating Par Value
308
1
Consideration for Par Value Stock
309
1
Accounting for Par Value Stock
309
1
Consideration for Shares of Stock
310
2
Issuance of Stock
312
3
Stock Certificates
312
2
Lost or Destroyed Stock Certificates
314
1
Fractional Shares and Scrip
314
1
Redemption of Equity Shares
315
1
Dividends
316
4
Availability of Funds for Dividends
316
1
Types of Dividends
317
1
Declaration of Dividends
318
1
Right to Receive Dividends
319
1
Stock Splits
320
1
Debt Financing
320
6
Authority for Debt Financing
321
1
Bank Loans
322
1
Bonds
322
4
Public Corporations and Securities Regulations
326
40
Introduction
327
1
The Public Corporation
327
3
Securities and Securities Markets
330
4
Definition of Securities
330
2
Markets
332
2
The Securities and Exchange Commission
334
1
Federal Regulation of Securities Offerings Under the Securities Act of 1933
335
6
Securities Registration
335
4
Prospectus Requirements
339
2
Exemptions from the Registration Requirements of the Securities Act of 1933
341
6
Exempted Securities
343
1
Exemptions for Offerings Involving Limited Dollar Amounts
344
1
Intrastate Offering Exemptions
345
1
Exempted Transactions
346
1
Antifraud Provisions of the Securities Act
347
2
Section 11
347
2
Section 17
349
1
Federal Regulations Imposed on Public Corporations Under the Securities Exchange Act of 1934
349
8
Registration Under the Exchange Act
350
1
Periodic Reporting Requirements
351
2
Liability for Short-Swing Profits
353
1
Proxy Regulations
354
1
Antifraud Provisions Under the Exchange Act
355
2
State Securities Regulations---Blue Sky Laws
357
2
State Regulation of Stock Offerings
359
1
Registration by Filing
359
1
Registration by Coordination
359
1
Registration by Qualification
360
1
Exemptions
360
1
State Securities Regulations---Antifraud Provisions
360
1
The Role of the Paralegal
361
2
Initial Public Offerings
361
1
Periodic Reporting Requirements
362
1
Confidentiality
363
1
Resources
363
3
Mergers, Acquisitions, and Other Changes to the Corporate Structure
366
44
Introduction
367
1
Statutory Mergers and Share Exchanges
367
10
Mergers
369
4
Share Exchanges
373
1
Consolidations
374
1
State and Federal Laws Affecting Statutory Mergers and Share Exchanges
375
2
Statutory Merger and Share Exchange Procedures
377
15
Negotiations and Letter of Intent
378
1
Plan of Merger
378
4
Plan of Exchange
382
5
Due Diligence and Preclosing Matters
387
3
Closing the Statutory Merger or Share Exchange Transaction
390
1
Postclosing Matters
391
1
Asset and Stock Acquisitions
392
2
Asset Acquisitions
392
1
Stock Acquisitions
393
1
State and Federal Laws Affecting Asset and Stock Acquisitions
394
1
Asset and Stock Acquisition Procedures
394
7
Negotiations and Letter of Intent
395
1
Asset Purchase Agreement
395
2
Stock Purchase Agreement
397
1
Due Diligence and Preclosing Matters
398
1
Closing the Asset or Stock Acquisition Transaction
398
2
Postclosing Matters
400
1
Amendments to Articles of Incorporation
401
3
Approval of the Articles of Amendment
401
2
Articles of Amendment
403
1
Restated Articles of Incorporation
404
1
Reorganizations
404
1
Transactions
404
1
Transactions
405
1
Transactions
405
1
Transactions
405
1
Transactions
405
1
Transactions
405
1
Transactions
405
1
The Paralegal's Role in Mergers and Acquisitions
405
5
Qualification of a Foreign Corporation
410
22
Introduction
411
1
Determining When Foreign Corporation Qualification Is Necessary
411
7
State Long-Arm Statutes and Jurisdiction over Foreign Corporations
412
1
Statutory Requirements for Qualification of Foreign Corporations
413
1
Consequences of Not Qualifying As a Foreign Corporation
414
4
Rights, Privileges, and Responsibilities of a Foreign Corporation
418
1
Qualification Requirements
418
5
Application for Certificate of Authority
419
2
Foreign Name Requirements
421
1
Registered Agent and Registered Office
422
1
Amending the Certificate of Authority
423
1
Maintaining the Good Standing of the Foreign Corporation
424
1
Withdrawing from Doing Business As a Foreign Corporation
424
1
Registration of a Corporate Name
425
1
The Role of the Legal Assistant
426
2
Resources
428
4
State Statutes
428
1
Secretaries of State
428
1
Corporation Service Companies
428
4
Corporate Dissolution
432
28
Introduction
433
1
Voluntary Dissolution
434
18
Board of Director and Shareholder Approval of Dissolution
434
5
Articles of Dissolution and Notice of Intent to Dissolve
439
4
Winding Up and Liquidation
443
5
Tax Considerations
448
2
Revocation of Dissolution
450
2
Involuntary Dissolution
452
5
Administrative Dissolution
452
2
Judicial Dissolutions
454
3
The Role of the Legal Assistant in Dissolving Corporations
457
1
Resources
457
3
Employee Benefit Plans
460
30
Introduction
461
1
Qualified Plans
461
1
Laws Governing Qualified Plans
462
2
Employee Retirement Income Security Act of 1974 (ERISA)
462
2
Internal Revenue Code
464
1
Other Laws
464
1
Elements of a Qualified Plan
464
2
The Sponsor
464
1
The Plan
465
1
The Plan Administrator
466
1
The Plan Participants
466
1
ERISA and IRC Requirements Common to All Types of Qualified Plans
466
2
Plan Must Be Established for the Exclusive Benefit of Employees
467
1
Minimum Coverage and Participation Requirements
467
1
Exemptions from the Provisions of ERISA
468
1
Qualified Pension Plans
468
13
Contributions
468
1
The Trust
469
1
Benefits
469
2
Distributions
471
1
Defined Benefit Plans
471
2
Defined Contribution Plans
473
7
Integrated Plans
480
1
Self-Employed Plans
480
1
Individual Retirement Accounts
480
1
Nonqualified Pension Plans
481
1
Employee Welfare Benefit Plans
482
2
Welfare Benefits
482
1
Funding
483
1
Voluntary Employee Benefit Association (VEBA)
483
1
Qualified Plan Adoption and IRS Approval
484
2
Annual Reporting Requirements and Disclosure Requirements
486
1
Form 5500
486
1
Summary Annual Reports
486
1
The Role of the Paralegal in Working with Qualified Plans
486
1
Resources
487
3
Employment Agreements
490
26
Introduction
491
1
Special Considerations for the Employer
492
1
Special Considerations for the Employee
493
1
Drafting the Employment Agreement
493
14
Term of the Agreement
495
1
Description of Duties
496
1
Covenant Not to Compete
496
5
Inventions and Patents
501
2
Trade Secrets
503
1
Compensation
504
1
Employee Benefits
505
1
Termination of Employment
505
1
Arbitration of Disputes
506
1
Vacations
506
1
Assignability of Contract
506
1
Amendment or Renewal of Agreement
507
1
Date and Signatures
507
1
Sample Employment Agreement
507
4
The Role of the Paralegal in Drafting Employment Agreements
511
2
Resources
513
3
Computers and Corporate Law
516
1
Introduction
517
1
Computers in the Law Firm
517
4
Time and Billing
518
1
File Management
519
1
Case Management
520
1
Law Firms on the Internet
520
1
Computer Use by Paralegals Working in the Corporate Area
521
5
Word Processing
522
1
Legal Research
523
1
Document Retrieval
524
1
Calendar Control and Docket Systems
524
1
Software for the Corporate Legal Department
524
1
Interfacing with State Agencies
524
2
The Future of Law Office Automation
526
Appendices
Appendix A Secretary of State Directory
1
2
Appendix B Uniform Partnership Act
3
10
Appendix C Uniform Partnership Act (1994)
13
16
Appendix D Uniform Limited Partnership Act (1976) with 1985 Amendments
29
18
Appendix E Uniform Limited Liability Company Act
47
23
Appendix F Excerpts from the Model Business Corporation Act, As Revised Through 1994
70
41
Appendix G Foreign Corporation Table
111
2
Appendix H Forms
113
Glossary
1
1
Index
1