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Tagged Posts: piercing the corporate veil’

When a Corporation Fails To Exist (Legally) (Part IV)

October 27, 2016

In Hill v. County Concrete Co., Inc., Hill and Newman hired an attorney to form a construction services corporation to be known as “C&M Builders, Inc.” (C&M).[1]  The attorney advised Hill and Newman that the corporate name was available and that they could proceed with their business preparations, upon which Hill and Newman ordered checks, painted trucks, and opened a bank account, all imprinted with, or in the name of, C&M.  But for whatever reason, the attorney did not attempt to file the Articles of Incorporation until the end of February 1989, more than 3 months later, and when he did, the corporate name C&M was no longer available. … Read the rest

When a Corporation Fails To Exist (Legally) (Part III)

October 20, 2016

Corporation by Estoppel

In Cranson v. I.B.M. Corp., Cranson decided to invest in a corporation that was soon to be formed.[1] Upon being advised by the attorney that the corporation had been formed, Cranson received a stock certificate for his shares and was shown the corporate seal and minute book.  The company started conducting business, through corporate bank accounts, with auditors maintaining corporate books and records, and under a lease for the office space entered into by the corporation. … Read the rest

When a Corporation Fails To Exist (Legally) (Part II)

October 13, 2016

De Facto Corporation

Cantor v. Sunshine Greenery, Inc., a 1979 case out of New Jersey, is one of the best known cases on the doctrine of de facto corporation.[1]  In that case, Cantor was the landlord and Sunshine Greenery the tenant.  On December 16, 1974, Cantor prepared the lease naming Sunshine Greenery as the tenant, which was signed by Brunetti as president of Sunshine Greenery.  Cantor knew that Brunetti was starting a new corporation but did not request a personal guarantee from Brunetti. … Read the rest

When a Corporation Fails To Exist (Legally) (Part I)

October 6, 2016

We advise and write frequently on personal liability of business owners.  Certain entity forms, such as corporation and limited liability company (LLC), generally offer protection from personal liability for business owners.  Although we discussed in our previous blog series “LLC Law Update: Piercing the Corporate Veil” situations where courts “pierce the corporate (or LLC) veil” to hold business owners liable for business debts, veil piercing is more of an exception than the norm for properly formed and operated entities. … Read the rest

Comparison of LLC Statutes

August 10, 2015

Other Considerations

So, now that you have done your research, you decide to form your LLC in Delaware and file the required forms in Delaware.  Is that all you need to do?  It depends on where you actually conduct business.  Most, if not all, states require foreign LLCs (i.e., LLCs formed under the laws of another jurisdiction) to register or apply for authority to do business in that state, if the LLC does business there.  What constitutes “doing business” in a particular state is often debatable, but having a principal place of business or regularly engaging in transactions would most likely count as such, subjecting the entity to the state’s foreign LLC filings, fees, and taxes.… Read the rest

Comparison of LLC Statutes

August 6, 2015

Court System: Who Will Hear My Case?

At times, even with careful planning and drafting, business relationships may turn sour and amicable resolution impossible.  This is where being a Delaware entity might prove to be decisively advantageous.  Delaware houses the nation’s oldest business court, the Delaware Court of Chancery established in 1792.[1]  As a court of equity, it has broad jurisdiction over disputes involving the internal affairs of Delaware business entities and has developed a respected body of case law interpreting Delaware business law.… Read the rest

Comparison of LLC Statutes

August 3, 2015

Series Availability: The Latest Option

Another interesting difference among LLC statutes is the availability of series LLC.  This relatively new concept is said to have its origin in offshore financial institutions as a way of allocating assets and risks among a series of companies.  Series LLC offers numerous advantages, which include flexible structure, greater protection against liability, and lower filing fee and administrative burdens, but is also fraught with uncertainty, particularly with respect to its treatment under federal bankruptcy law and the laws of states that do not recognize series LLCs. … Read the rest

Comparison of LLC Statutes

July 30, 2015

Fiduciary Duties: Do Managers Owe Special Duties to the LLC or Its Members?

A fiduciary duty is a legal duty to act solely in another party’s interests.  For those familiar with the context, a fiduciary duty is often likened to the duties of a trustee to hold property in trust.  Fiduciary duties generally encompass the duty of care (i.e., duty to act in good faith and exercise reasonable care in carrying out their obligations to the LLC) and the duty of loyalty (i.e.Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.