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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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429 Forbes Avenue, 12th Floor, Pittsburgh, PA 15219-1616
Voice: 412.765.0400
Fax: 412.765.0531
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