Law Outlines Corporations Outlines
The following is a more accessible plain text extract of the PDF sample above, taken from our Corporations Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Choice of Organizational Form
Formation
Corporation: Requires formal action with the state (File Articles/Certificate, etc.)
General Partnership: Generally created by contract BUT may be formed by operation of law as simply defined as "an association of two or more persons to carry on as co-owners a business for profit"
Limited Partnership: Requires the filing with the state of a certificate of partnership setting forth the rights and duties of the partners
Typically, also execute a written partnership agreement
LLC: (1) Requires the filing of articles of organization, (2) ALSO enter into an operating agreement (a.k.a. "regulations" of the LLC), (3) ALSO enter into the "limited liability company agreement" (a.k.a. member control agreement")
Limited Liability
Corporation: A shareholder's liability is limited to original investment EXCEPT (1) where the corporation is not properly formed, (2) for unpaid capital contributions that the shareholder has agreed to make, or (3) where the veil of limited liability is pierced for equitable reasons.
General Partnership: The partners, as individuals, can be held jointly and severally liable for partnership obligations
Limited Partnership: General partners have the same unlimited liability as in the case of a general partnership. Liability of limited partners is limited to the amount of their investment in the partnership UNLESS they "participate" in management
"Participation" does not include such activities as advising the general partner or voting on certain critical transactions
NOTE: A limited partnership can be structured such that a corporation is the general partner and the individuals are all limited partners thereby allowing limited liability for all the individuals involved
LLC: Limited liability for all members and managers BUT may be liable (1) where the corporation is not properly formed, (2) for unpaid capital contributions, or (3) where the veil of limited liability is pierced for equitable reasons.
Management
Corporation: Centralized in the board of directors BUT the board delegates day-to-day operations to officers of whom the board appoints
By default, in most statutes, directors are elected by a plurality of shares entitled to vote
General Partnership: Management authority vested in all the partners
Limited Partnership: General partners have responsibility for most management decisions. Limited partners may not participate in management ELSE may lose limited liability
LLC
Member-managed: all members have authority to make management decisions
Manager-managed: members are not agents of the entity and make only major decisions
Continuity of Existence
Corporation: Exists in perpetuity
General Partnership: (1) At-will (default) or (2) for a definite period of time
At-will: Dissolved on the death, bankruptcy, or withdrawal of any partner
For a definite period of time: Exists for period of time set forth in partnership agreement. If no such time stated, it is an at-will general partnership
Limited...
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