Business Forms-

Legal Ramifications of Selecting a Business Form Creation Control Liability Termination

Sole Proprietorship AdvantagesDisadvantages

Partnership –Two or more parties own the business and bear joint and several liability for the business

Partnership - Special Issues Joint Ventures Limited Partnerships

Corporations Separate legal entity that is covered under the corporate veil

The Corporate Form Shareholders Owners Board of Directors Run the Big Picture Officers/ Managers Run the Daily Operations Note: Board and Officers are Agents of the Shareholders

The Incorporation Process Select a name and an agent for service of process File a Certificate of Incorporation Adopt Bylaws Specify your initial Board Obtain resignation of incorporators Hold first directors meeting gives you the CORPORATE VEIL

Where do you Incorporate? More than 50% of corporations are in Delaware –cumulative voting –staggered boards –limited liability for directors –high taxes

Flaws in the Incorporation Process De Jure Corporation De Facto Corporation Corporation by Estoppel gives you the corporate veil even if you have a flaw

Piercing the Corporate Veil Alter Ego Theory Undercapitalization

Types of Corporations Closely Held Privately Held Publicly Held

Directors - Corporate powers are expressed by or under the authority of the Board –inside directors –outside directors Management of the Corporation

Duties of Directors Fiduciary Duties –duty of care –duty of loyalty

Duties of Directors Duty of Care- –Business Judgment Rule –Disinterested Decisions –Informed Decisions –Reasonable Supervision

Duties of Directors Duty of Loyalty –Corporate Opportunities -

Duties of Directors Translate to certain essential duties –authorizing major corporate actions –advise and counsel management –effectively audit –review investments –monitor management’s performance

How do Directors Protect Themselves? D & O Coverage –Personal coverage –Corporate Reimbursement

Corporations

Special Issues S Corps LLC’s