B LAW 210 1st Edition Lecture 13 Outline of Last Lecture I Business Entities Part 1 a Sole Proprietor b General Partnership c Limited Partnership Outline of Current Lecture II Business Entities Part 2 a Corporations b Limited Liability Corporations Current Lecture Corporations o Articles of Incorporation are filed with the State Articles of Incorporation usually include name and address of business address of agent names and addresses of the organizer purpose of business and classes and par value of stock to be issued o Must hold an annual meeting and keep up corporate formalities o A corporation is a legal entity separate from the shareholders o Shareholders have no fiduciary duty unless a close corporation Board of directors has a fiduciary duty of loyalty must place interest of corporation above their own Officers have a fiduciary duty to the corporation o Shareholder own the corporation and elect the Board of Directors and vote on matters that change corporate structure or dissolve the corporation Board of Directors sets corporate policy and decides on corporate matters such as sale of assets or financing Officers manage the corporation and are elected by the Board of Directors the book calls them Managers o Termination Voluntary dissolution occurs when the corporation files Articles of Dissolution with the State Involuntary dissolution occurs because of bankruptcy or piercing of the corporate veil These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Creditors receive proceeds from the liquidation of a corporation prior to the shareholders o Shareholders Directors and Officers generally have no liability for a corporations debts absent fraud or piercing the corporate veil o Double Taxation Limited Liability Corporations o File Articles of Organization with the State Articles usually include name and address of business address of agent whether member or manager managed names and addresses of members date LLC to be dissolved and classes and whether any members are liable for the LLC s debts o Operating Agreement and annual meeting are not required in most states Annual Report is required in most states o Managed by Members or by a Manager appointed by the Members o Each Member has an equal vote but if a Manager is appointed the Member must defer to them o Termination An LLC may be terminated after a certain number of years set by statute or in the Operating Agreement The death bankruptcy or withdrawal of a member does not terminate the LLC o Members have no personal liability o Can choose to be treated like a partnership and avoid double taxation