MO Corps: Alternative Biz Orgs

Question 1

Eliminating Corporate Formalities – closely held corps: requirements

Answer 1

Unanimous SH election evidenced in articles, by-laws or a filed agreement
Share transfer restriction

Question 2

Closely Held Corps: Consequences

Answer 2

1. No piercing veil even if you fail to observe formalities

2. Possible subchapter S-corp status = no more than 100 SH or 1 class of stock

Question 3

Professional Corps– licensed professionals

Answer 3

Organizers file articles with name PC
SH must be licensed professionals
Corp may practice only one designated profession

Question 4

PC- Consequences

Answer 4

1. professionals liable for own malpractice
2. professionals NOT liable for each other’s malpractice or obligations of corp itself
   * just one profession + LL

Question 5

LLC

Answer 5

Hybrid corporation & partnership owners – who are members have same rights and LL or SHs and partnership tax status

Question 6

LLC Formation Reqs

Answer 6

File articles of organization– may adopt operating agreement (like bylaws)

Question 7

LLC - Control

Answer 7

Members may manage or may delegate to team of managers (BoD)

Question 8

LLC - Limited Liquidity

Answer 8

A full membership interest may NOT be transferred with consent of all members or if in articles

Question 9

LLC- Limited Life

Answer 9

Will dissolve upon unanimous consent of member or as provided in articles

Question 10

Therefore, LLCs

Answer 10

LL + L Life + L Liquidity + L Tax

Question 11

Fundamental Corp Changes

Answer 11

1. Merger (A becomes B); Consolidation (A and B become C); Dissolution (A dissolves)
2. Fundamental Amendment of the Articles; Sale of Substantially all of Corporation’s Assets

Question 12

Procedural Steps for Fundamental Corp Changes

Answer 12

1. Resolution by Board at Valid Meeting
2. Notice of Special Meeting
3. Approval by Majority of all shares entitled to vote, and by Majority of each voting group that is adversely affected by change.
   Except: NO SH Approval required for “short-form” merger where a parent corporation that owns 90% or more of stock in its subsidiary merges with the subsidiary
4. Possibility of dissenting SH right of appraisal
5. File Notice with the State

Question 13

Possibility of dissenting SH right of appraisal

Answer 13

A SH who does not vote in favor of a fundamental change has the right to force the corporation to buy her shares at fair value
Actions by SH to perfect the right
1. Before SH vote, file written notice of objection and intent to demand payment;
2. Do not vote in favor of the proposed change;
3. Make prompt written demand to be bought out

Question 14

What happens if the SH and the corporation cannot agree on fair value?

Answer 14

The court has the power to appoint an expert appraiser to value of shares and appraisal value will be binding