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CORPORATE / COMMERCIAL
The firm is counsel to domestic and foreign
corporations. We negotiate purchases and sales of businesses,
mergers and acquisitions. The firm prepares contracts and other
business documents and is experienced in litigation between corporations,
partnerships and limited liability companies. Mr. Modelewski was
formerly counsel to The Town of Huntington and The County of Suffolk,
two of the largest local municipal corporations in the State of New
York. We can assist you in forming a business entity that will
best suit your needs, and provide advice and counsel as your business
grows.
THE
CORPORATE ENTITY
The corporation, which is the predominant business form
in New York, is a separate legal entity created by statute. In
New York State, business corporations are governed by the Business Corporation
Law. A New York corporation may be formed by one or more natural
persons who are eighteen years of age or older. The corporation
combines the elements of limited liability, perpetual existence, and
free transferability of interests. In addition, a small corporation
may elect to incorporate and be taxed in much the same way as a partnership
under Subchapter S of the Internal Revenue Code. Many businesses,
of all sizes and kinds, elect to do business in the corporate form.
In New York, incorporation requires filing for approval,
with the Secretary of State, of a Certificate of Incorporation which
identifies and details the legal aspects of every corporation. Incorporation
also requires payment of certain taxes and filing fees, the drafting
of by-laws, and the recording of minutes of the meetings of the board
of directors.
Management of a corporation is vested in the board of directors.
Members of the board are elected by the shareholders. Shareholders,
as the equity owners of the corporation, have the power to approve or
disapprove certain major policy decisions such as merger, dissolution,
or sale or mortgage of substantially all the corporate assets.
Shareholders do not, however, hold actual title to corporate assets;
the assets are held in the name of the corporation.
THE PARTNERSHIP
A partnership is an association of two or more persons to
carry on as co-owners of a business for profit. A "person",
under the law, may be a corporation, and hence, a corporation may be
a member of a partnership if in furtherance of its corporate purposes.
Each partner has unlimited personal liability and full rights
of participation in management of the business of the partnership. A
general partnership may be formed without a written partnership agreement
and may arise by an implied agreement among the partners to associate
themselves in business for profit.
Each partner contributes capital (cash or other property)
or labor or both to the partnership. A partner is not required
to contribute capital, and may contribute labor only. A partnership
is based upon an agreement, either oral or written. Certainly
it is advisable that there be a written agreement. A partnership
agreement, though oral, may still be enforced, and courts sometimes
find that a partnership exists simply from the conduct of the individuals
involved in business.
New York Law requires a general partnership to file, in
every county in which it does business, a certificate indicating the
name and address of the partnership and the full name and address of
each partner. The major disadvantages of a general partnership are unlimited
personal liability, lack of management flexibility, and the lack of
continuity of existence (it only lasts for the life of the partners).
With regard to liability, each of the general partners can lose their
capital contribution in the partnership, and their personal assets as
well. Each partner is jointly and severally (individually and
collectively) liable for the torts or other wrongful acts of other partner(s),
employees and agents of the partnership committed within the context
of partnership business. Each partner is an agent for the other
partners and for the partnership itself in connection with partnership
business. To be successful, a partnership requires a special bond
of trust between partners.
LIMITED LIABILITY COMPANY LAW
A limited liability company or "LLC" is defined as an unincorporated
organization of one or more persons having limited liability for the
contractual obligations and other liabilities of the business, and is
not a partnership or a trust. The New York Limited Liability Company
Law is quite comprehensive and also provides "freedom of contract"
in structuring capitalization, management, economic rights and tax classification.
An LLC is sometimes referred to as a "hybrid" creation comprising aspects
of the corporate form and the partnership form. The LLC combines
the corporate limitations on personal liability of the owners with the
partnership's operating flexibility by its members as well as the opportunity
for "pass through" tax treatment, under Subchapter S of the
Internal Revenue Code.
The operating agreement is a document which outlines
the rights of the members, the duties of its managers and the business
and financial arrangements of the LLC. It is similar to a shareholders
agreement or corporate by-laws which governs the operation of individual
corporations.
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