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BUSINESS FORMATION
"What is a Corporation?"
What sets the corporation apart from all other types of businesses is that a corporation is an separate and independent legal entity apart from the entities or individuals who own, control, and operate it. With respect to state law and tax law, the corporation as a legal "person" which can enter into contracts, pay taxes, incur debts and have relationships completely apart from its owners, the shareholders. Other important characteristics result from the corporation's separate existence, including, but not limited to:
- Business Continuation: A corporation does not cease to exist or dissolve when the shareholders, its owners, change or die;
- The shareholders ("owners") of a corporation are not usually personally responsible for the corporation's debts, making their liability limited to their investment in the corporate entity
"What is a Trade Name"
A corporate, limited liability or partnership name is the name under which the organization is formed, or registered, and must include a distinct qualifier, for example, . inc, llc, pllc, llp, lp, pc.
A trade name is the name under which a business operates or does business. The trade name is NOT the true or real name of the business. For example, MCI Center is the trade name of the DC Arena, LP. It is the name that is most commonly associated with the business and, for legal purposes, links back to the true or legal name that was filed with the jurisdicition in which it operates. A Trade Name is NOT a TradeMark or ServiceMark.
"What are By-Laws"
By-Laws are written provisions describing how day-to-day operations of a corporation will be conducted. A corporation's activities are governed, in order of precedence, by statute, corporate charter, and bylaws.
A corporation's first set of bylaws is adopted by the corporation's first board of directors. The bylaws will normally describe how issues of corporate control will be handled and, to the extent not already covered in the corporate charter or otherwise required by statute, will cover such issues as the number of directors, the method of voting by the directors, offices of the corporation, and provisions for shareholder meetings. Once bylaws are adopted, changes in the bylaws normally will require shareholder approval.
Typically, bylaws will describe:
- Where the corporation's registered office will be maintained;
- Shareholder meeting places and times, including special shareholder meetings;
- Notice of shareholder meetings and how such meetings will be conducted;
- The number, election, and term of directors on the corporation's subsequent boards of directors;
- The power of the board of directors;
- Meetings and procedures of the board of directors;
- Corporate officers and their responsibilities;
- Appointment and removal of corporate officers;
- Handling of corporate stock and the corporate seal;
- Indemnification of corporate directors and officers and employees or agents of the corporation; and
- Procedures for amending the by-laws.
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