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Technology & Entrepreneurial Ventures Law Group, P.C.
25 Years of Trust.     25 Years of Bonded Team Relationships.     25 Years of Excellence.

 

 

 

CLIENT UPDATE
Published for the Clients and Friends of Zegarelli Associates Professional Corporation

THE END IS BEGINNING, AGAIN

The end of 1996 is approximately one month away! Please take the time to consider your year-end planning. For example, you may want to take certain tax deductions in the current tax year or finalize your Will, etc. Call us to discuss your plans. We can help.

THE CORPORATE STRUCTURE

Corporations are fictitious entities created by the individual states; therefore, the particular structure of a corporation depends upon the state in which it is formed. Most corporations share the common denominator of having shareholders, a board of directors and officers:

Shareholders

• Shareholders are the owners of the corporation. Shareholders are not liable for the corporation debts, the exception being that shareholders cannot commit fraudulent or criminal acts. Also, shareholders can be liable for corporate debts if the shareholders do not maintain the corporate formalities, such as record keeping and separate bank accounts. When the shareholders are liable for corporate debts, it is called "piercing the corporate veil."

• Shareholders share the positive net worth of the corporation in the event of a dissolution. If a corporation dissolves, after all debts are paid, the shareholders are entitled to the balance of the net worth. Shareholders are paid last, because, as owners of the corporation, their investment in the corporation is at risk of forfeiture if the corporation is bankrupt or has no positive net worth. Shareholders are not liable for greater than their investment in the corporation.

• Although sometimes difficult to observe in a small closely held corporation, the corporation is operated by the board of directors, not the shareholders. The shareholders elect the board of directors. Therefore, corporations are operated with a representative form of governance. There are two types of shareholder voting structures, "cumulative voting" and "non-cumulative/straight voting." Cumulative voting allows significant minority shareholders an opportunity to guarantee themselves representation on the board. Straight voting removes this opportunity so that a 51% shareholder will have exclusive control of electing the board of directors.

• A shareholder does not have the capacity to sign contracts. The only substantive acts taken by shareholders are voting for the board of directors, and approval of certain statutory actions like dissolving or selling all of the corporation assets.

Board of Directors

• The board of directors is responsible for directing and approving all actions taken by the corporation. Board of director decisions are arrived at generally by a majority vote.

• Generally, board of director members do not have authority to act individually, and, therefore, do not sign contracts. The board has authority to act as a group only.

• Board of director members are generally not liable for corporation acts, but the board members can be liable to the shareholders for a breach of their fiduciary duty to run the corporation for the benefit of the shareholders. This is called a "shareholder derivative suit."

Officers

• Officers of a corporation are high-level employees, such as president, secretary and treasurer. Officers implement the decisions of the board and have capacity to sign contracts for the corporation. The board of directors is like the brain of the corporation, the officers are like the arms and legs.

• Officers are merely agents of the corporation; therefore, if an officer is clearly acting for the corporation, then the officer will not be liable for the corporation acts or debt. For example, an officer should not sign documents merely in his or her name, but in the form of "XYZ, Inc. by Chris Doe, President."

Understanding the above becomes especially important when negotiating with investors, for example, who may inquire as to whether they will have board of director seats and officer positions in addition to being shareholders. For example, a person could be a shareholder and officer, but not be on the board, or be on the board without being a shareholder or officer.

See also Legal Link: Chain 2, Link 1, Choosing a Business Entity.

CHECKMARKsm

As you may have heard us say (over and over and over), "protect your trademark." Remember that we offer our Checkmarksm Service. Our Checkmark Service is a service provided by Zegarelli Associates to verify the status of your trademark registrations on a consistent basis. The service can be elected for a 3-month, quarterly, semi-annual or annual verification. At the intervals, we will automatically perform a computerized search on your trademarks and/or service marks to assist in preventing others from registering similar marks. We perform the searches extremely cost effectively: $25 logon fee, plus research time and print charges. Often, the total fee is less than $65 per search.

RATES & RETAINERS

We are pleased to continue to provide legal services at an hourly rate which remains an excellent value and extremely cost-effective. Please contact your attorney with regard to his or her particular rate for 1997, some rates have increased, although we offer a variety of price ranges so that you usually receive a lower blended rate. We continue to offer retainer-based relationships which can provide an even greater savings for legal services. We accept all major credit cards, and we continue to establish tailored payment plans.

INTERNET ACCESS!

The Internet is hot, and we’re on it! We have successfully implemented communication with clients through the Internet. Out preliminary web page is located at www.sgi.net/zegarelli, and our soon-to-be permanent page will be at www.zegarelli.com. The general mailbox is at info@zegarelli.com. As a general rule, any employee at the firm can be accessed at [initials]@zegarelli.com.

DOCKET PLANNING

Your docket is maintained by the firm to track our "to-do" list for you. Generally, we distribute to you a copy of your docket once per year at year-end. You may request your docket at any time. If we do not distribute a docket to you before year end, then we do not have any pending work identified for you in the computer system. If we send you a copy of the docket, please review it carefully, and call us with any adjustments. For example, if we list that we are awaiting your directive with regard to a matter, and if you thought we were proceeding, then call us so that we can adjust accordingly.

CLIENT SPOTLIGHT

Zegarelli Associates is pleased to feature:

INTERSTELLAR CAFÉ

in the Client Spotlight. Our feature is a start-up coffee house with a sci-fi, UFO, ET theme—we believe that it’s the first such café in this world—and has been reported on by the Associated Press (AP) wire internationally. It’s open 24 hours, has great sandwiches, a fresh juice bar, and an internet enabled computer lab! And, if other worlds are your thing, there’s plenty of UFO and ET resource material for your enjoyment. As a final note, the owners have specifically requested that we indicate that this coffee house caters equally to aliens as well as humans!

The Interstellar Café is located in the South Side of Pittsburgh at 1224 East Carson Street, and may be contacted at 412-481-2233, or in cyberspace at www.ISCAFE.com.

A special note: Because the Holiday Season is approaching, you may want to contact our clients, COOKIE IMPRESSIONS , SIMPLY SIGN-IT and CARITY BAY GIFT COMPANY .

Cookie Impressions has the most delicious gift baskets you’ve ever tasted—and can be made to your order. Their unique specialty, of course, is home-made cookie gift baskets, but they have sports teams and candy baskets, etc. Various pricing and corporate accounts are available. Call Cookie Impressions at 412-264-3399. Simply Sign-It takes your personalized list of annual dates, such as birth dates and anniversaries, and allows you to choose cards in advance. Then, automatically in advance of the annual date, Simply Sign-It will send you the card and all you do is—you guessed it—simply sign it. Call Simply Sign-It at 800-984-8559. Carity Bay Gift Company specializes in sending care packages to your friends and/or children at college. They have moving-in, homecoming, finals packages, etc., and you can order on an annual or semester basis. Call Carity Bay Gift Company at 888-432-4438 (GIFT).

Zegarelli Associates: We represent the entrepreneurial spirit!



Contact us today!  Our firm can assist you with understanding and applying the law to your particular situation.  We Represent the Entrepreneurial Spirit®If you would like to obtain our other firm publications, please go to our mailing list page.
 

Articles and information are for general information only, and often address issues, without expressly indicating, in generalizations. Laws vary between and among jurisdictions.  You should not rely upon any information provided by or on the website, including articles, as applicable to your particular situation. The law, filing fees, etc., change often, so the information in this document may not be current. The laws of various jurisdictions may be different than provided here.  Please contact us at info@zegarelli.com if you are interested in becoming our client--only then would this office be in the position to provide advise with regard to your particular situation.  It is important for you to review Terms of Use.

Unless otherwise specified above, Copyright © 2004,2008 Technology & Entrepreneurial Law Group, PC. All rights reserved.


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Unless otherwise specified above, Copyright © 2004-2014 TEV Law Group, PC. All rights reserved.  Use of this Website governed by our Terms and Conditions. "We Represent the Entrepreneurial Spirit®," "The Entrepreneurial Spirit®," "The Cardinal Entrepreneurial Virtues™," "Vote for the Quote®," and "We will appreciate your business" among others, are marks and registered marks of TEV Law Group, PC.