Fundamentals of Business Organizations for Paralegals

by Bouchoux, Deborah E.

• ISBN13: 9780735543409
• ISBN10: 0735543402
• Edition: 3rd
• Format: Paperback
• Copyright: 2003-08-01
• Publisher: Wolters Kluwer

Summary

Instructors will welcome this thorough but brief summary of all the forms of business organizations in the United States, carefully craft for use in shorter course. Written with the clarity and directness that has made Bouchoux's other text so widely adopted, FUNDAMENTALS OF BUSINESS ORGANIZATIONS FOR PARALEGALS provides a basic and thorough understanding of topics in a direct and concise format. The book is structured for ease of teaching and learning: shorter and more straightforward approach saves time in the classroom thorough discussions of each form of business organization includes the nature of the entity, advantages and disadvantages, formation, operation and management, transferability of ownership, dissolution, and tax consequences each chapter explores the role of the paralegal and outlines common tasks useful exhibits and charts highlight important topics sample forms are integrated throughout the book internet resources in each chapter direct readers to sites that may provide additional information, forms, or agreements key terms are defined in the margins for easy reference, and a complete glossary appears at the end of the book brief case illustrations in each chapter stimulate class discussion and ensure student understanding

Table of Contents

Preface	xxv
Acknowledgments	xxvii
1 Introduction to Business Organizations and Agency Law
A. Introduction	1	(2)
1. Sole Proprietorship	1	(1)
2. General Partnership	1	(1)
3. Limited Partnership	1	(1)
4. Limited Liability Partnership	2	(1)
5. Limited Liability Company	2	(1)
6. Business Corporation	2	(1)
7. Professional Corporation	2	(1)
8. S Corporation	2	(1)
9. Close Corporation	3	(1)
B. Considerations in Selection of Business Enterprise	3	(1)
C. How Business Is Conducted in This Country	4	(1)
D. Agency in Business Organizations	4	(4)
1. Formation of Agency Relationship	5	(1)
2. Authority of Agents	6	(1)
3. Duties of Agents and Principals	7	(1)
4. Liability for Agent's Torts	7	(1)
5. Termination of Agency	8	(1)
6. Agency in Business Relationships	8	(1)
E. Role of Paralegal	8	(1)
Case Illustration: Agent's Duty of Loyalty	9	(1)
Key Features of Agency Relationships	9	(1)
Internet Resources	9	(1)
Key Terms	10	(1)
Discussion Questions	10	(1)
2 Sole Proprietorships
A. Characteristics of Sole Proprietorships	11	(1)
B. Advantages of Sole Proprietorships	11	(1)
C. Disadvantages of Sole Proprietorships	12	(1)
D. Formation of Sole Proprietorships	13	(3)
1. Licensing Considerations	13	(1)
2. Name Considerations	14	(1)
3. Business and Sales Tax Permits and Other Formalities	14	(2)
E. Taxation of Sole Proprietorships	16	(1)
F. Role of Paralegal	16	(1)
Case Illustration: Personal Liability of Sole Proprietors	17	(1)
Key Features of Sole Proprietorships	17	(1)
Internet Resources	17	(1)
Key Terms	18	(1)
Discussion Questions	18	(1)
3 General Partnerships
A. Introduction	19	(2)
B. Partnership Property	21	(1)
1. Contributions to the Partnership	21	(1)
2. Property Rights of the Partnership and of Partners	21	(1)
C. Advantages of General Partnerships	22	(1)
D. Disadvantages of General Partnerships	22	(1)
E. Formation of General Partnerships	23	(1)
F. Operation of General Partnerships	24	(1)
1. Duties and Rights of Partners	24	(1)
2. Management of the Partnership	24	(1)
3. Compensation, Profits, and Accounting	25	(1)
G. The Partnership Agreement	25	(3)
H. Transferability of Partnership Interest	28	(1)
I. Dissolution and Winding Up	29	(1)
1. UPA Approach	29	(1)
2. RUPA Approach	29	(1)
3. Winding Up	30	(1)
J. Taxation of Partnerships	30	(1)
K. Joint Ventures	30	(1)
L. Role of Paralegal	31	(1)
Case Illustration: General Partner's Acts Bind Partnership	31	(1)
Key Features of General Partnerships	31	(2)
Internet Resources	33	(1)
Key Terms	33	(1)
Discussion Questions	34	(1)
4 Limited Partnerships
A. Introduction to Limited Partnerships	35	(1)
B. Rights and Duties of Partners	36	(1)
1. General Partners	36	(1)
2. Limited Partners	36	(1)
C. Advantages of Limited Partnerships	37	(1)
D. Disadvantages of Limited Partnerships	38	(1)
E. Formation of Limited Partnerships	39	(2)
1. Contents of the Limited Partnership Certificate	39	(1)
2. Filing the Certificate of Limited Partnership	39	(2)
3. Amending the Certificate of Limited Partnership	41	(1)
4. Foreign Limited Partnerships	41	(1)
F. Limited Partnership Agreement	41	(1)
G. Transferability of Limited Partnership Interests	42	(1)
H. Dissolution and Winding Up of Limited Partnerships	43	(1)
I. Taxation of Limited Partnerships	43	(1)
J. Role of Paralegal	44	(1)
Case Illustration: Control by Limited Partners Leads to Liability	44	(1)
Key Features of Limited Partnerships	45	(1)
Internet Resources	45	(1)
Key Terms	45	(1)
Discussion Questions	46	(1)
5 Limited Liability Partnerships
A. Introduction	47	(1)
B. Advantages of LLPs	48	(3)
1. Partial Shield States	48	(1)
2. Full Shield States	49	(2)
C. Disadvantages of LLPs	51	(1)
D. Formation of LLPs	51	(2)
E. Operation of LLPs	53	(1)
F. Transferability of Interest and Admission of New Partners	54	(1)
G. Dissolution and Liquidation of LLPs	54	(1)
H. Taxation of LLPs	54	(1)
I. Growth and Trends in LLPs	55	(1)
J. Role of Paralegal	55	(1)
Case Illustration: Limited Liability of LLP Partners	55	(1)
Key Features of LLPs	56	(1)
Internet Resources	56	(1)
Key Terms	57	(1)
Discussion Questions	57	(2)
6 Limited Liability Companies
A. Introduction	59	(1)
B. Advantages of Limited Liability Companies	60	(1)
1. Limited Liability and Full Management	60	(1)
2. Flexible Management	60	(1)
3. One-Person LLCs	60	(1)
4. Pass-Through Tax Status	61	(1)
C. Disadvantages of LLCs	61	(1)
D. Formation of LLCs	61	(5)
1. Articles of Organization	62	(1)
2. Operating Agreement	62	(4)
E. Transferability of Interest	66	(1)
F. Dissociation and Dissolution of LLCs	66	(1)
G. Taxation of LLCs	67	(1)
H. LLPs Versus LLCs	67	(1)
I. Role of Paralegal	68	(1)
Case Illustration: Non-Liability of LLC Members	68	(1)
Key Features of LLCs	69	(1)
Internet Resources	69	(1)
Key Terms	69	(1)
Discussion Questions	70	(1)
7 Introduction to Corporations
A. Introduction	71	(1)
B. Corporate Powers and Purposes	72	(1)
C. Types of Corporations	73	(2)
1. Domestic Corporations	73	(1)
2. Foreign Corporations	73	(1)
3. Federal or State Corporations	73	(1)
4. Public Corporations	73	(1)
5. Privately Held Corporations	73	(1)
6. Nonprofit Corporations	74	(1)
7. Close Corporations	74	(1)
8. Professional Corporations	74	(1)
9. S Corporations	74	(1)
10. Parent and Subsidiary Corporations	74	(1)
D. Advantages and Disadvantages of Incorporation	75	(2)
1. Advantages	75	(1)
2. Disadvantages	75	(2)
E. Role of Paralegal	77	(1)
Case Illustration: limited liability of Corporation	78	(1)
Key Features of Corporations	78	(1)
Internet Resources	79	(1)
Key Terms	79	(1)
Discussion Questions	80	(1)
8 Formation of Corporations
A. Introduction	81	(1)
B. Preincorporation Activities	81	(1)
1. Activities by Promoters	81	(1)
2. Preincorporation Share Subscriptions	82	(1)
C. Selection of Jurisdiction in which to Incorporate	82	(1)
1. Delaware Incorporation	83	(1)
2. Factors in Selecting a Jurisdiction	83	(1)
D. The Corporate Name	83	(2)
1. Selection	83	(1)
2. Name Availability, Reservation, and Registration	84	(1)
E. Articles of Incorporation	85	(6)
1. Elements of Articles of Incorporation	87	(2)
2. Optional Provisions in Articles of Incorporation	89	(1)
3. Preemptive Rights	89	(2)
4. Filing of Articles of Incorporation	91	(1)
F. Post-Incorporation Activities	91	(6)
1. Bylaws	91	(2)
2. Corporate Supplies	93	(1)
3. Organizational Meeting	94	(1)
4. Annual Report	95	(2)
G. Defects in Incorporation Process	97	(1)
H. Role of Paralegal	97	(1)
Case Illustration: Liability of Promoters	98	(1)
Key Features in Forming Corporations	98	(1)
Internet Resources	99	(1)
Key Terms	99	(1)
Discussion Questions	100	(1)
9 Corporate Financial Structure
A. Introduction	101	(1)
B. Equity Securities	102	(4)
1. Introduction	102	(1)
2. Par Value Stock	103	(1)
3. Consideration for Shares	103	(1)
4. Stock Certificates	103	(1)
5. Classes of Stock	104	(2)
C. Debt Securities	106	(3)
1. Introduction	106	(1)
2. Unsecured Debt	106	(1)
3. Secured Debt	107	(1)
4. Common Features of Debt Securities	108	(1)
D. Taxation of Corporations	109	(3)
1. Introduction	109	(1)
2. Double Taxation	109	(2)
3. State and Other Taxes	111	(1)
E. Role of Paralegal	112	(1)
Case Illustration: Corporations May Deny Dividend Rights to a Class of Stock	112	(1)
Key Features of Corporate Financial Structure	113	(1)
Internet Resources	113	(1)
Key Terms	114	(1)
Discussion Questions	114	(3)
10 Corporate Management
A. Shareholders' Rights and Responsibilities	117	(8)
1. Introduction	117	(1)
2. Inspection Rights	117	(1)
3. Voting Rights	118	(1)
4. Shareholders' Meetings	118	(3)
5. Shareholder Action Without a Meeting	121	(2)
6. Other Shareholder Rights	123	(1)
7. Modern Trends	123	(1)
8. Shareholder Actions	123	(1)
9. Piercing the Corporate Veil	124	(1)
B. Directors' Rights and Responsibilities	125	(6)
1. Introduction	125	(1)
2. Functions of Directors	125	(1)
3. Election, Term, Vacancies, and Removal of Directions	126	(1)
4. Directors' Meetings	126	(1)
5. Meeting Requirements	127	(1)
6. Directors' Action Without a Meeting	127	(1)
7. Compensation and Inspection Rights	128	(1)
8. Directors' Standards of Conduct, Liability, and Indemnification	129	(1)
9. Delegation of Authority	130	(1)
10. Corporate Scandals, Proposals for Reform, and Governance Guidelines	130	(1)
C. Officers' Rights and Responsibilities	131	(2)
1. Introduction	131	(1)
2. Appointment, Tenure, and Functions of Officers	131	(1)
3. Titles of Officers	131	(1)
4. Authority of Officers	132	(1)
5. Officers' Standards of Conduct, Liability, and Indemnification	132	(1)
D. Role of Paralegal	133	(1)
Case Illustration: The Business Judgment Rule	133	(1)
Key Features of Corporate Management	134	(1)
Internet Resources	134	(1)
Key Terms	135	(1)
Discussion Questions	135	(2)
11 Corporate Dividends
A. Introduction	137	(1)
B. Restrictions Relating to Dividends	138	(1)
1. MBCA Approach	138	(1)
2. Legally Available Funds	139	(1)
3. Miscellaneous Restrictions	139	(1)
C. Procedure for Declaring and Paying Dividends	139	(1)
D. Tax Considerations	140	(1)
E. Stock Splits	141	(1)
F. Purchase by a Corporation of Its Own Shares	142	(1)
G. Role of Paralegal	143	(1)
Case Illustration: Directors' Discretion to Declare Dividends	143	(1)
Key Features of Corporate Dividends	143	(1)
Internet Resources	144	(1)
Key Terms	144	(1)
Discussion Questions	145	(2)
12 Changes in the Corporate Structure and Corporate Combinations
A. Introduction	147	(1)
B. Amending the Articles of Incorporation	147	(1)
1. Reasons for Amending Articles	147	(1)
2. Procedure for Amending Articles	147	(1)
3. Articles of Amendment	148	(1)
C. Restating the Articles of Incorporation	148	(2)
D. Amending the Bylaws of the Corporation	150	(1)
E. Corporate Combinations	150	(8)
1. Introduction	150	(1)
2. Mergers and Consolidations	150	(3)
3. Share Exchanges	153	(1)
4. Purchase of Assets	153	(2)
5. Purchase of Stock	155	(1)
6. Hostile Takeovers	156	(1)
7. Government Regulation	157	(1)
F. Role of Paralegal	158	(1)
Case Illustration: Mergers Must Comply with Fairness Principles	159	(1)
Key Features of Corporate Changes and Combinations	159	(1)
Internet Resources	160	(1)
Key Terms	160	(1)
Discussion Questions	161	(2)
13 Qualification of Foreign Corporations
A. Introduction	163	(1)
B. Basis for Qualification	163	(1)
C. Transacting Business	164	(1)
D. Procedures in Qualification	165	(1)
E. Effects of Qualifying	166	(1)
F. Effects of Failure to Qualify	166	(2)
G. Effects of Changes to Domestic Corporation	168	(1)
H. Withdrawal of Foreign Corporation	168	(2)
I. Revocation of Qualification by State	170	(1)
J. Role of Paralegal	170	(1)
Case Illustration: Failure to Qualify Requires Dismissal of Plaintiff's Claim	170	(1)
Key Features of Foreign Qualification	171	(1)
Internet Resources	171	(1)
Key Terms	172	(1)
Discussion Questions	172	(1)
14 Termination of Corporate Existence
A. Introduction	173	(1)
B. Dissolution	173	(5)
1. Voluntary Dissolution	173	(1)
2. Articles of Dissolution	174	(1)
3. Revocation of Dissolution	174	(2)
4. Dissolution Under the MBCA	176	(1)
5. Involuntary Dissolution	176	(2)
C. Liquidation	178	(1)
1. Introduction	178	(1)
2. Nonjudicial Liquidation	178	(1)
3. Judicial Liquidation	178	(1)
4. Claims Against the Corporation	178	(1)
D. Distributions to Shareholders	179	(1)
E. Role of Paralegal	179	(1)
Case Illustration: Liquidation Available Due to Directors' Wrongful Acts	180	(1)
Key Features of Corporate Dissolution and Liquidation	180	(1)
Internet Resources	181	(1)
Key Terms	181	(1)
Discussion Questions	182	(1)
15 Corporate Variations
A. Introduction	183	(1)
B. Close Corporations	183	(2)
1. Introduction	183	(1)
2. Characteristics of Close Corporations	184	(1)
3. Formation of Close Corporations	184	(1)
4. Operation of Close Corporations	184	(1)
C. Nonprofit Corporations	185	(1)
1. Introduction	185	(1)
2. Formation of Nonprofit Corporations	185	(1)
3. Operation and Governance of Nonprofit Corporations	186	(1)
4. Exemption from Taxation for Nonprofit Corporations	186	(1)
D. Parent and Subsidiary Corporations	186	(1)
1. Introduction	186	(1)
2. Formation and Characteristics of Subsidiary Corporations	187	(1)
3. Liability of Parent for Subsidiary's Debts	187	(1)
E. Professional Corporations	187	(1)
1. Introduction	187	(1)
2. Characteristics of Professional Corporations	188	(1)
3. Formation, Operation, and Liability of Professional Corporations	188	(1)
F. S Corporations	188	(2)
1. Introduction	188	(1)
2. Formation, Operation, and Termination of S Corporations	189	(1)
G. Publicly Traded Corporations	190	(3)
1. Introduction to Investor Protection	190	(1)
2. Securities Act of 1933	190	(1)
3. Securities Exchange Act of 1934	191	(1)
4. State Securities Regulation	192	(1)
5. The Securities Markets	192	(1)
6. Stock Market Indexes	193	(1)
H. Role of Paralegal	193	(1)
Case Illustration: Liability of Parent for Subsidiary's Debts	193	(1)
Key Features of Other Forms of Corporations	194	(1)
Internet Resources	195	(1)
Key Terms	195	(1)
Discussion Questions	196	(1)
Appendix A Secretaries of State and State Corporations Statutes	197	(6)
Appendix B General Partnership Agreement	203	(4)
Appendix C Corporate Bylaws	207	(8)
Glossary	215	(14)
Index	229