Whether for a corporation or in any business or political setting, bylaws are the rules that govern the procedures of the particular entity. In a corporation, the bylaws is the set of rules which address, for example, when meetings will be held, and what the duties of the officers are. Though it’s a standard document […]
Novices to LLCs tend to think that this is the document governing the actual operations of the company. Not so. The operating agreement, also sometimes known as the LLC Agreement (or some variation), is the governing document for the LLC itself. It may be very short, defining merely who the members are and what their […]
Need? No. But if I were a litigation attorney who made money off of people’s mistakes, I’d say “Don’t have one and let the chips fall where they may — better yet, let state law govern your rights and duties.” But I’m in the business of preventative law. So, yes, you should have an operating […]
No, no, and no. In California, all that’s required for a contract (which is what an operating agreement is) to be effective, other than for residential real estate contracts, is a signature. And if the contract provides for an alternate method of signature, like exchanging documents in PDF format over email so that the signatures […]
Unanimous voting rights can bog down the governance of any enterprise, especially where there are several owners. Sometimes it’s necessary when, say, you have only two owners and they both want to be sure to be included in every decision. Typically, though, unless required by law, you’ll want to avoid unanimous voting requirements, opting instead […]
Voting rights in your entity are an important element of its governance. Sometimes a minority investor, or group of investors, may want the right to vote (or veto) certain business decisions, even though they don’t have the equity to sway a vote. Nevertheless, you may want to give them certain veto rights as part of […]
Capitalization can mean a couple of things. At first it usually refers to the contributions of money or property that the owners (shareholders or members) have contributed to the business, their “capital contributions”. Later on, or as a result, or in anticipation of such contributions, it may refer to a capitalization chart or table, which […]
A shareholder is typically an individual or entity that has an ownership stake in the corporation (a C Corporation or an S Corporation, among others). Shareholders become shareholders by putting money or property into the corporation, or by being granted stock in the corporation (which might have its own tax consequences, frequently overlooked until the […]
Capitalization can mean a couple of things. At first it usually refers to the contributions of money or property that the owners (shareholders or members) have contributed to the business, their “capital contributions”. Later on, or as a result, or in anticipation of such contributions, it may refer to a capitalization chart or table, which […]
Good question. This concept often gets confused with “authorized shares”. Issued shares are those shares that the corporation has actually “issued”, i.e., transferred to a shareholder. This can be in the form of a certificate, and that can be typical in a small business. In larger businesses, the ownership of issued shares is usually a […]