In today’s business environment, it is more important than ever to have a knowledgeable business attorney by your side. An excellent legal professional specializing in business law can add immediate value to your business. Often times, people realize the value of a business attorney when it’s too late. For example, the time to negotiate your business rights is at the beginning of a business transaction when parties are still amicable, not when you are in dispute. At the Law Offices of Lloyd Lee, PC, we provide the highest level of professional legal advice and service.
Contracts | Negotiations | Buy or Sell Business
The Law Offices of Lloyd Lee, PC has significant experience in the areas of contract drafting, contract review, contracts negotiation, and deal structuring. Make sure to consult with a business attorney before signing any documents.
We have extensive experience drafting contracts for any and all types of business situations. Do not make the mistake of attempting to write your own contract. Often times, our clients have previously attempted to write or review their own contracts only to discover that they have made a big mistake. When a business deal sours, people immediately look at their written contract only to find that they do not have the necessary rights to enforce their positions. If you choose to do business, make sure you do it right. Consult with an experienced business attorney before entering a binding agreement.
A good business attorney can identify important rights that will effect your business, and then make sure you are protected in the agreement. There are many creative ways to structure a deal to make all parties happy, and a creative business attorney can be the single difference between making or breaking a deal. Call our law group today.
Disputes | Litigation | Breach of Contract
We will protect your rights. We have successful experience dealing with enforcement of contracts, cease-and-desist letters, and breach of contract issues including arbitration and settlement discussions. When litigation arises, we utilize our strong network of attorneys to assist clients with aggressive representation.
Entity Formation
We are experienced in entity formation including setup of Corporations, S-Corporations, Limited Liability Companies, Limited Partnerships, General Partnerships, and Sole Proprietorships.
Corporations
Articles of Incorporation, Shareholder Agreements, Bylaws, Buy-Sell Agreements, Share Distribution, S-Corporations, Annual and Special Meetings, Board Minutes, Sale or Transfer of Stocks / Buy-Outs, Acquisition, Dissolution, Investors, 501(c)(3) Non-Profits.
Articles of Incorporation
The Articles of Incorporation are the legal documents filed with the State of California to create a corporation. In California, the Articles of Incorporation have a filing fee and requires you to disclose the name of the corporation, the purpose, the agent’s name for service of process, and the number of shares you authorize to issue.
Shareholder Agreements
Shareholder agreements govern the relationship amongst shareholders and serves as a mechanism to establish rights of shareholders and resolve disputes. Every corporation is required to have a shareholder agreement and it is highly recommended that you consult with an attorney prior to entering a shareholder agreement. Boiler-plate shareholder agreements may not be sufficient to protect your rights. Shareholder agreements are not filed with the Secretary of State, rather they are kept at the Corporation’s location. It is also highly recommended that shareholders establish a Buy-Sell Agreement amongst the shareholders to further protect you and the corporation from disputes.
Bylaws
Bylaws govern the corporation’s board of directors including election of board members and officers, board meetings, and many other important functions of the day-to-day affairs of the corporation. One important component of bylaws is establishing whether the corporation requires majority or unanimous votes, and when these vote counts apply. Bylaws are not filed with the Secretary of State, but instead kept on record with the Corporation.
Buy-Sell Agreements | Buy-Outs
Buy-Sell Agreements, also known as Buy-Out Agreements, are a negotiated document that governs situations where a shareholder is no longer involved with the corporation. For example, if a shareholder decides to leave the corporation and no longer wants to work, the Buy-Sell Agreement will provide a mechanism for buying-out the departing shareholder. Another example, if a shareholder dies or becomes medically disabled, the other shareholders have a mechanism to buy out the deceased / disabled shareholder. This can avoid many problems for the corporation. Without a Buy-Sell Agreement, the deceased / disabled shareholder could transfer his percentage ownership of the LLC by his will, living trust, or probate. The result is that the deceased’s husband or wife or children could become your new business partner which often problematic.
The Buy-Sell Agreement also provides a mechanism for determining the purchase price. Also many companies purchase insurance in case a triggering event occurs.
Share Distribution
When a corporation is formed, the corporation must issue shares to the shareholders. The corporation must keep detailed records shares issued.
S-Corporations
S-Corporations are regular corporations that choose to make a Subchapter S election under Chapter 1 of the Internal Revenue Code. The corporation’s income and losses pass through to the shareholders who then report the income on their individual income tax returns.
There may be significant tax advantages to electing Subchapter-S status. It is recommended that you consult with a tax professional before making the election.
Annual and Special Meetings
Shareholders and Directors must hold regular meetings to maintain the formalities of the corporation. Failure to properly notice and hold meetings could result in the corporation losing its entity status, which could expose shareholders to personal liability for the corporation’s actions.
Meeting Minutes
The minutes of each board meeting must be recorded by the Secretary of the Corporation. Important steps include taking roll, establishing quorum, recording discussion, and accounting for each shareholder’s or directors’ votes. Often times, shareholders must receive prior notice of the issues to be discussed at meetings.
Sale or Transfer of Stocks | Acquisition
Stock Purchase Agreements are used to acquire or transfer stock from one shareholder to another. It is important to have an attorney review the agreements before signing them.
Dissolution
Dissolution of corporations requires strict compliance with the rules provided by the State of California. Among the many requirements is providing notice to creditors who might wish to make a claim on the corporation’s assets. Be sure to consult with an attorney before commencing dissolution.
Investors
Corporations are often funded by capital investors who exchange money for equity. The process requires strict compliance with the Securities and Exchange Commission. It is strongly recommended that you consult with an attorney before bringing an investor on board. Failure to comply with SEC regulations could be disastrous for the corporation’s founders.
Non-Profits | 501(c)
Non-profits are corporations that make non-profit elections under the Internal Revenue Code 501(c) in order to receive tax exemptions on income. Non-profits are closely regulated and must comply with strict formalities set forth in 501(c). Failure to comply could result in the non-profit paying taxes on all funds raised, and donors could also possibly lose their tax advantages of making a donation.
Limited Liability Companies | LLC
Articles of Organization
Articles of Organization are similar to the Articles of Incorporation but instead are used to setup limited liability companies with the California Secretary of State. The Articles of Organization require the registrant to provide basic information including the name and location of the company as well as information about at least one managing member.
Operating Agreement
The operating agreement governs the rights and responsibilities among all members of the LLC. Many members use boiler-plate operating agreements but do so at their own risk. Each LLC is different and has different expectations among the members. Without providing some specific guidance, the LLC members often end in dispute when one member doesn’t pull his or her weight. It is strongly recommended that you consult with an attorney before entering into a binding operating agreement.
Statement of Information
Once you have filed Articles of Organization, the Secretary of State will require you to file a Statement of Information which provides information on the LLC and its members. You must file the Statement of Information within 90 days of filing the Articles of Organization or face a $250 fine.
Buy-Sell Agreement
Buy-Sell Agreements, also known as Buy-Out Agreements, are a negotiated document that governs situations where members of an LLC are no longer involved. For example, if a member decides to leave the LLC and no longer wants to work, the Buy-Sell Agreement will provide a mechanism for buying-out the departing member. Another example, if a member dies or becomes medically disabled, the other shareholders have a mechanism to buy out the deceased / disabled shareholder. This can avoid many problems for the corporation. Without a Buy-Sell Agreement, the deceased / disabled member could transfer his percentage ownership of the LLC by his will, living trust, or probate. The result is that the deceased’s husband or wife or children could become your new business partner which is often problematic. The Buy-Sell Agreement also provides a mechanism for determining the purchase price. Also many companies purchase insurance in case a triggering event occurs.
Annual and Special Meetings
Like corporations, LLC’s must hold regular meetings to discuss important issues of the company. However, LLC’s face less strict formal requirements than corporations. Many people like LLC’s for their flexibility on business and tax issues. To understand the intricate differences when choosing the proper entity for your business, make sure to consult with a knowledgeable attorney.
Member Minutes
The company’s secretary or other member should keep detailed notes about the discussions and decisions made at each meeting. Also the secretary should ensure that the members comply with the requirements in the operating agreement prior to holding a meeting.
Managing Members | Passive Members
Active members take part in the day-to-day affairs of the LLC. Passive members do not take part in the day-to-day affairs but may be able to vote on major issues. The operating agreement is very important in defining the roles of the active and passive investors.
Buy-outs | Acquisitions | Investors
Limited liability companies can sell equity percentage stakes of the company, and companies often use this as a mechanism to raise capital. It is important to speak with an attorney before selling an equity position in your company. Make sure you define the rights of each party before signing the agreement.
Dissolutions
Dissolution of limited liability companies requires strict compliance with the rules provided by the State of California. Among the many requirements is providing notice to creditors who might wish to make a claim on the company’s assets. Be sure to consult with an attorney before commencing dissolution.
General Partnerships and Sole Proprietorships
Although not always advisable, many people choose to conduct business and general partners or sole proprietors. With sufficient insurance, this may be the path chosen by many business partners. The Law Offices of Lloyd Lee, PC works with general partners and sole proprietors to protect their business interests.
General Partnerships
A partnership exists when two people agree to carry-on a business for profit. It is the simplest of form of business partnership and no written agreement is required.
Liability Issues
The partners of a general partnership are exposed to joint and several liability for all debts and liabilities arising out of the partnership. As such, it is a potentially dangerous way to conduct business even with insurance. It is recommended that you consult with a business attorney before engaging in a general partnership.
