You’ve Got A World Changing Idea…Now What About Forming A Corporation
Ok, so you’ve decided on forming a corporation, great! Read on to learn more about the different types of corporations available to you.
Close corporation status requires:
- No more than 35 shareholders.
- The articles of incorporation must contain a statement that the corporation is a close corporation and it must specify that the corporation’s shares may not be held by more than 35 shareholders.
- Shareholders’ Agreement: The shareholders must agree to which matters they (rather than the board) will control in a written shareholders’ agreement.
- All share certificates, or in the case of uncertificated shares the transaction statement, must contain a specific, restrictive legend indicating that the corporation is a closed corporation.
Unlike regular corporations, close corporations are not required to hold annual shareholder and director meetings. A close corporation form may be more suitable for those corporations with a single/few shareholder(s), in which the shareholders plan to be substantially involved with the corporation’s operation and management. This differs from a regular corporation, where shareholders often appoint directors and officers to operate and manage the corporation.
On the other hand, for those corporations who may seek investment from several investors, close corporation status would not be preferable since the corporation is limited to 35 shareholders and a close corporation’s shares contain transfer restrictions. Also, for those corporations primarily operated by a board of directors and officers, in which shareholders are minimally involved, close corporation status would not be preferable since annual director and shareholder meetings would be a desirable and beneficial part of a corporation’s operation.
- Accountancy Corporations
- Acupuncture Corporations
- Architectural Corporations
- Audiology Corporations
- Chiropractic Corporations
- Clinical Social Worker Corporations
- Dental Corporations
- Law Corporations
- Marriage, Family, and Child Counseling Corporations
- Medical Corporations
- Nursing Corporations
- Optometric Corporations
- Osteopathic Corporations
- Pharmacy Corporations
- Physicians’ Assistant Corporations
- Physical Therapy Corporations
- Psychological Corporations
- Podiatry Corporations
- Shorthand Reporting Corporations
Fun fact: Wilkinson Mazzeo has recently started using “PC” because we’ve incorporated as a Professional Corporation. While you may have assumed that the PC meant, “politically correct,” now you know that it means Professional Corporation!
Disclaimer: Although this article may be considered advertising under applicable law and ethical rules, the information in this article is presented for informational purposes only. Nothing herein should be taken as legal advice and this content does not form an attorney-client relationship. If you would like further information ,Wilkinson Mazzeo would love to hear from you, so please feel free to reach out with any questions!
FROM THE EDITOR
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