Business & Corporate Law
Formation, Transactions, & Governance
Forming a business is an important step in anyone’s life and is often entered into after extensive planning and organization. If you are considering forming your own business, you should contact an experienced business law attorney for assistance in navigating state and federal business formation laws.
As a new business owner, you have the option to set up your company in a number of different ways. The most common types of entities include:
- Limited liability companies
- “S” Corporations
Each entity comes with its own organizational structure and state and federal requirements. Limited liability companies have become a popular entity because the entity is easy to maintain and offers better protection to members than a partnership offers. However, each entity is unique and certain entities may work best for certain types of businesses or have different tax consequences.
After deciding on the choice of entity, you must then select a name and then file any required organizational documents with the Virginia State Corporation Commission. Once the business is formed under state law, other documents must be prepared in order to complete the organization or entity. Depending on the type of entity, those additional documents may include bylaws, shareholder agreements, organizational consents or minutes, stock certificates, operating agreements or partnership agreements.
One of the purposes of forming a new business is providing protection from liability to yourself and any future members, managers, officers, or directors. Corporations offer a high level of protection to shareholders, officers, and directors. Partnerships provide the most fluidity because they do not need state filing and can simply be formed by something as simple as a handshake. However, partnerships do not offer any protection to partners. As a result, if any lawsuit arises which is brought against a partnership, the claim can seek damages from all partners if the partnership does not have enough assets to cover the liability.
A corporation, on the other hand, protects officers, directors, and shareholders from this type of liability, and only the corporation itself will be responsible in the event of a claim.
Limited liability companies emerged as a happy medium between corporations and partnerships. These limited liability entities provide liability protection to members and a more flexible tax structure than corporations. An experienced business law attorney will be able to advise you on which entity works best for your unique situation.
Business Law Transactions
Business law is a broad term which covers a number of different transactions affecting both individuals and companies. While business law sounds quite foreign, business transactions occur on a daily basis and are simply a part of owning a company. If you need assistance in forming a new company or in negotiating a transaction with another company, you should seek the advice of an experienced business law attorney.
Business law includes the following types of transactions and documents:
- Asset Purchase Agreements
- Business Formation
- Bylaws and Company Agreements
- Buy-Sell Agreements
- Employment and Independent Contractor Agreements
- Stock Purchase and Sale
- Business operation and maintenance
Many of these are routine business documents which need to be drafted and reviewed before the company enters into any negotiations with an outside company. An experienced business law attorney will be able to ensure that your documents cover all potential disputes or breaches and protect your company from any foreseeable future legal disputes.
Business formation is an important part of any new business and an attorney should be consulted to make sure all documents are carefully reviewed and timely submitted. As a new business owner, you have many options relating to choice of entity. Each type of corporate entity has different advantages and disadvantages, and an experienced business law attorney can help you make the decision regarding which type will work best for your business.
However, business formation is only one part of the overarching role of business transactions. Businesses also require ongoing maintenance and updates to agreements and contracts. Corporations and limited liability companies often undergo ownership and management changes over the years, all of which should be documented through meeting minutes and other corporate documents.
Other business transactions take place as a business grows and needs to either acquire another company to continue its growth or is ready to sell the business itself to a buyer. Business law attorneys are an essential part of any major purchase or sale agreement and ensure that all due diligence is being timely completed and both parties continue to comply with all terms of the agreements. The buying and selling of businesses is a large part of business law and requires careful consideration of the transaction, as well as a good working relationship with the other party.
Business agreements and contracts are necessary when contemplating any major transactions with another company or even another individual. These contracts are put into place to mitigate any further contract disputes or prevent disputes from occurring. However, if the business contracts are breached or another outside event occurs, you may have need of a business litigation attorney to assist you in protecting your company and your interests.
Contracts serve an important role in all business transactions and provide a blueprint for the transaction and what is to occur going forward. Parties on either side of a business contract enter into a contract not with the belief that the transaction will end in a dispute, but simply to protect their company. However, unfortunately many business transactions do end up in disagreements or disputes which can have legal consequences depending on the contract language.
Business litigation often involve the following types of disputes:
- Breach of contract
- Breach of fiduciary duty
- Shareholder disputes
- Corporate agreement disputes
These disputes can lead to severe consequences when related to important contracts and agreements that result in the loss of money or other business consequences. These types of business disputes can also attract the attention of federal authorities if they involve stockholder impropriety and it is therefore important to protect your business from any actions caused by a shareholder or director.
The Corporate Structure
Business litigation can involve a number of different disputes based on different entity structures. Corporations are typically a more common type of corporate structure and this type of structure can lead to not only ordinary contract disputes, but also major fiduciary duty disputes due to shareholder and director responsibilities. If a director or shareholder oversteps their boundaries or engages in illegal action, the company or other member can bring an action against this person. An initial company agreement or bylaws provide regulations on appropriate actions that shareholders and directors can engage in, and will involve the appropriate remedy for breaching these fiduciary duties.
Business disputes are also brought between two different corporate entities as the result of mergers and acquisitions or contracts with suppliers and buyers. Mergers and acquisition require the preparation of purchase agreements which outline the transaction and provide for all “what if” language to cover any potential breaches. Other contracts involving suppliers and buyers will detail the provisions of any transaction, as well as what will be considered a breach of contract (such as 7 days late on payment).