Last week we discussed considerations for what state to form your business in. Entrepreneurs most also decide what type of business to form. This post focuses on how to form your business. To legally incorporate under the Model Act, applicable to Minnesota corporations, an incorporator must sign and file the corporation’s Articles of Incorporation with the Secretary of State’s office. …
There may be several factors in considering what state is best to form a new entity. In this article, we will consider some of those factors. The formation and governance of corporations and LLCs are controlled by statutes in all 50 states. Those statutes have been interpreted by the courts in each of the states; which in some cases may…
A common question often arises when forming a business as to what is the difference between a LLC and an S-corp. There are a number of similarities and some distinguishing factors which may impact the decision on which entity to form. In forming both a s-corp. and a LLC, articles are filed with the secretary of state to commence the…
If you serve on the board of directors of a corporation or if you are a shareholder in a corporation, you may have come across the “business judgment rule”. What is the business judgment rule and who is it meant to protect? Generally speaking, the business of a corporation is committed to its officers and directors. The business judgment rule…
We all need the occasional break. Working all day, every day for a business owner can seem like the only way to get ahead and serve your clients however if you never take a break you never refresh and replenish. July and August are often vacation months and this week while not taking a traditional vacation myself, I do want to…
Few people go into a business relationship thinking about when the partnership will fail. Partnership agreements can help ensure that the business does not fail (at least not due to internal fighting) as well as set a path towards amicable separation should disputes arise. Of course, not all business relationships end with litigation or acrimoniously. Many partnerships have only minor…
If you business relationship has found its way to litigation or is on its way to litigation, you have likely heard the term “derivative” claims. But what is a “derivative” claim? What is the difference between a “derivative” claim and a direct claim? Hopefully this post provides some insights to help distinguish the two types of claims for you. A…
We previously discussed what a Special Litigation Committee was and what the SLC does. The benefits on whether to appoint an SLC depends on which side of the derivative claim you find yourself. From the company’s perspective, the SLC can save the company significant time and expense in investigating the derivative claim before protracted litigation. From the disgruntled owner’s perspective,…
If your dispute with your partner has ended up in litigation, or maybe you have a friend or family member who has had a business dispute end up in litigation, you may have heard the term “SLC”. But what does that mean? SLC is an abbreviation for Special Litigation Committee. The SLC wields enormous power in the context of derivative…
Whether it be a small business owned with family, with friends, or with strict business partners, none of us go into business hoping for litigation. The Operating Agreement for a limited liability company (“LLC”) and the Bylaws for a corporation each respectively govern the internal relations amongst the business owners and with the business. The freedom to contract under the…