Other Corporate Structures Flashcards
What are the requirements for shareholders to eliminate corporate formalities?
- Must be a nonpublic corporation in Virginia
- Shareholders must unanimously agree in articles and bylaws to forego corporate formalities
Shareholder Agreements Limiting Formalities are valid for…
10 years, unless otherwise indicated.
What are the effects of limiting formalities?
- The court will not pierce the corprorate veil even if you fail to observe formalities.
- It is likely subchapter S corporation status. As a rule, a corporation is taxed as a corporation (twice). By contrast, partnership tax passes through. S corporations pass through too.
- But, they must have no more than 100 shareholders and only 1 class of stock.
What are the formation requirements for LLCs?
- Organizers must file articles of organization
- May adopt an operating agreement
What is the control structure for LLCs?
Owners (called members) may control the company, or may delegate the control to a team of managers.
What is the limited life of an LLC?
LLCs will dissolve upon consent of all members or as provided otherwise in the articles/operating agreement.
What is the limited liquidity of an LLC?
A full membership interest may not be transferred without consent of at least a majority of all members or a majority of the managers if the LLC is managed by managers.
LLCs have _______ taxation.
pass-through
How do you form a Virginia Business Trust?
File articles of trust with state corporation commission that create a trustee and beneficial owners.
What are the liabilities of a Virginia Business Trust?
Directors, officers, and shareholders have the same rights and liabilities as in a regular corporation.
But, directors and officers may consider the impact of their actions on stakeholders other than shareholders in exercising their fiduciary duties
