Kiritsis & Associates

 

WHAT ROLE DO INCORPORATORS PLAY IN STARTING CORPORATIONS IN NEW YORK?

Aug 16, 2021

Kiritsis Law Group  212-922-0005

Author John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

 

A safe choice in electing an incorporator may be an individual from the law firm’s secretarial staff. Incorporators under the New York Business Corporation Law may be potentially exposed to substantial personal liability, since they are often tasked with carrying out the wishes/intents of the pre-incorporation phase founders.  It should also be noted, that the identifying information of the incorporators may be subject to being part of the public record.  Generally, it may not be a good idea from an asset protection perspective for any of the would be corporate shareholders to also be the corporation’s incorporator.

 

Listed below are some frequently encountered issues, that may need to be resolved for the proper and smooth start-up of a business organization, choosing to carry its business activities as a Corporation:

What is the Corporation's proposed name selection?

Will the Corporation elect to operate for profit or non for profit?

Will the bylaws indicate if Corporation is for profit or non profit Corporation?

Can shareholder action be taken without a proper meeting?

How many directors are to serve on the Board of Directors?

Will the Corporation have a corporate seal?

Will the Corporation's bylaws be subject to being amended by a simple majority?

Will the Corporation's bylaws be subject to being amended by a super majority?

In case of a lawsuit, will the corporation be required to pay for its directors and officers' legal defense fees?

Will the Corporation have the legal ability to issue stock certificates upon proper request?

Should the Board of Directors' initial members be named in the Articles of Incorporation?

Will the Corporation have a President?

Will the Corporation have a Vice President?

Will the Corporation have a Treasurer?

Who is going to be the Corporation's corporate secretary?

When will the internal affairs governing documents of the Corporation become legally binding?

Who will be the designated organizer for the Corporation?

Will the directors be shielded from personal liability exposure from a Corporation's claim against such directors?

What are some basic information with regards to the President?

What are some basic information with regards to the Vice President?

What are some basic information with regards to the Secretary?

What are some basic information with regards to the Treasurer?

Are transactions between the Corporation and its directors/officers permitted?

Who can sign and effectively legally bind the Corporation, as far as, real estate contract documents are concerned?

What day to day activities will individual directors/officers be allowed/authorized to do on behalf of the Corporation?

Will the directors of the Corporation be authorized to lease office space on behalf of the Corporation?

Who is the contact person of the corporate commercial tenant, with regards to  correspondence with the underlying commercial landlord?

Will officers/directors be authorized to enter into employment agreements with the corporation?

Which corporate officers will be authorized to legally bind corporations with regards to employment agreements?

What are the contact information of the individual officers?

Who are the Corporation's key employees from the perspective of taxation and corporate governance, respectively?

Will the Corporation have non-Board member key employees?

Who are the Corporation's initial shareholders?

What will be the contributions of each of the initial shareholders?

What shareholder voting requirements are needed for approving corporate action at properly conducted shareholder meetings?

What shareholder vote requirements are needed to approve corporate action via written consent (absent a shareholder agreement)?

What are the shareholder voting requirements needed for changing the corporate bylaws?

When and where will the initial Corporation shareholder meeting will be held?

What are the logistics of scheduled corporate shareholder meetings?

Will the Corporation issue stock certificates?

Will fringe type of benefits be offered by the Corporation?

What benefits (if any) will be offered by the Corporation to its shareholders, officers and/or directors?

Who will be the Corporation's registered agent?

Who will be the Corporation's accountant?

Who will be the Corporation's lawyer/general counsel?

Who will be the Corporation's insurance professional?

Who will be the Corporation's banker/financier?

Has a founder's type of agreement been entered PRIOR to the date of incorporation?

Is the underlying business of the Corporation an already existing business or is it an entirely new start up? 

Will the Corporation be treated as a C Corp for tax related purposes?

Will the Corporation elect S Corp tax treatment?

Will the Corporation have, own and/or operate LLCs/Subsidiaries?

 

 

Citations and possibly useful reference links, may include:

-U.S. Constitution

-New York State Bar Association

-New York City Bar Association

-American Bar Association

-New York State Secretary of State: Divisions of Corporations

-Internal Revenue Code

-Internal Revenue Service

-New York Department of Finance

-New York Business Corporation Law

-New York UCC (Uniform Commercial Code)

-New York LLC (Limited Liability Company) Law

-New York General Obligations Law (GOL)

-New York CPLR

-Delaware Corporate Law

-Delaware LLC Law

-Bankruptcy Code

-Revised Uniform Limited Liability Company Law (RULLCA)

-New York Partnership Law

-New York Trust Law

-New York Constitution

-Gordon v. Doty 69 P.2d 136 (Idaho 1937)

-A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d (Minn 1981)

-Hoddeson v. Koos Bros., 47 N.J. Super. 224 (N.J. Super. Ct. App. Div.1957)

-Ira S. Bushey & Sons, Inc. v. United States, 398 F.2d 167 (2d Cir. 1968)

-Majestic Realty Assoc., Inc. v. Toti Contracting Co., 30 N.J. 425 (1959)

-Town & Country House & Home Serv., Inc. v. Newbery, 3 N.Y.2d 554

-Fenwick v. Unemployment Compensation Comm’n, 133 N.J.L. 295 (1945)

-Martin v. Peyton, 246 N.Y. 213 (1927)

-Meinhard v. Salmon, 249 N.Y. 458 (1928)

-Eisenberg v. Flying Tiger Line, Inc., 451 F.2d 267 (2d Cir. 1971)

-Marx v. Akers, 644 N.Y.S.2d 121

-Auerbach v. Bennett, 47 N.Y.2d 619 (1979)

-A.P. Smith Mfg. Co. v. Barlow, 13 N.J. 145 (1953)

-Kamin v. American Express Co., 86 Misc.2d 809 (N.Y. Sup. Ct. 1976)

-Francis v. United Jersey Bank, 87 N.J. 15 (1981)

-Bayer v. Beran, 49 N.Y.S.2d 2 (N.Y. Sup. Ct. 1944)

-Escott v. BarChris Construction Corp.m 283 F.Supp. 643 (S.D.N.Y. 1968)

-Levin v. Metro-Goldwyn-Mayer, Inc., 264 F.Supp. 797 (S.D.N.Y. 1967)

-Rosenfeld v. Fairchild Engine & Airplane Corp., 309 N.Y. 168 (1955)

-AFSCME v. AIG, Inc., 462 F3d 121 (2d Cir. 2006)

-Crane Co. v. Anaconda Co., 39 N.Y.2d 14 (1976)

-Ingle v. Glamore Motor Sales, Inc. 73 N.Y.2d 183 (1989)

-Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 716 F.Supp 1504 (S.D.N.Y. 1989)

-Morgan Stanley & Co. v. Archer Daniels Midland Co., 570 F.Supp 1529 (S.D.N.Y. 1983)

-Form 1120

-Form 1120S

-Form K-1S

-Form 1099- DIV

-Buckley v. Valeo, 424 U.S. 1 (1976)

 

 

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Our firm has a robust practice area presence regarding business formation and corporate governance. Below are just some of the areas that our firm may be able to help you with:

 

-Incorporations

-New York Incorporation State Filing Forms

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-Corporate Seals

-Corporate Books and Records

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-Shareholder Agreements

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-Corporation Stock Certificates

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-Legal Name Selections for New York Corporations

-Corporate Tax Ids

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-Federal Corporate Income Tax Return

-State Corporate Income Tax Return

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-New York Domestic Business Corporations

-New York Foreign Qualified Corporations

-Shareholder Proxy Battles

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-Bearer Corporate Stock Certificates

-Par Value Corporate Stock Shares

-Par Value Corporate Stock Certificates 

-Corporation LLC Divisions

-Corporation D &  B Numbers

-Bank Letters for Corporations

-Employer Manuals for Corporations

-Corporation Federal Trademarks

-Corporation State Trademarks

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