Capitol Lien - Items filtered by date: February 2017
Wednesday, 29 March 2017 00:00

Corporate Entity Considerations

When an individual does business, the law considers he or she a “sole proprietor.” Sometimes a business or organization grows beyond one individual, and there might be cause to consider forming an entity. Entities can provide for the division of ownership, division of profits, formalization of governance, insulation from liability, and some preparation for continuation of business, all depending on entity type and certain choices and conduct as an entity.
Common entity types include general partnership, limited partnership, limited liability partnership, limited liability limited partnership, corporation, and limited liability company. Each is briefly introduced below. 
general partnership (GP) is often referred to merely as a “partnership,” though it is helpful – and more precise – to call it a general partnership. General partnerships are the oldest form of business organizations. To form a general partnership, nothing more is required than that two or more persons agree to carry on business together; however, there are potential advantages to formalization of the partnership agreement and registration of the partnership. Typically, in a general partnership, management, profits, and rights to partnership assets are split equally among the partners, and there is no insulation of partners from the partnership’s liability. A limited partnership (LP) can involve partners that are “limited” as distinguished from “general,” though there must always be at least one of each, a general partner and a limited partner. Formal documentation and registration in the appropriate office are necessary to formalize the formation of a limited partnership. In a limited partnership, there can be distinctions between the management participation, division of profits, and rights in partnership assets as between general partners and limited partners. Typically, though general partners are exposed to liability for partnership obligations, limited partners are not.
A limited liability partnership (LLP) is a general partnership that has completed a formal election to insulate partners from liability for partnership obligations. Likewise, a limited liability limited partnership (LLLP) is a limited partnership that has completed a similar formal election. The formal election involves preparing, signing, and filing specific documents, and there can be consequences – including that the election is ineffective – even for relatively minor errors; consider consulting an attorney for more information on this point.
A corporation (Corp. or Inc.) is formed by the filing of articles of incorporation. A corporation is significantly different than a partnership insofar as its existence is entirely separate from anyone else; a partnership requires partners, but not so for a corporation. For a corporation, the division of ownership, division of profits, and formalization of governance all depend on the formative document (usually articles of incorporation) and other governing documents (usually including bylaws). There are standard rules provided in state statutes, but there are myriad combinations and permutations possible by agreement. Typically, shareholders are insulated from liability – beyond risking whatever amount they invested to purchase shares.
A limited liability company (LLC) is a formed by the filing of articles of organization. A limited liability company is somewhat like a hybrid, having some similarities to a corporation and some similarities to a partnership. For a limited liability, the division of ownership, division of profits, and formalization of governance all depend on the formative document (usually articles of organization) and other governing documents (usually including a member control agreement and an operating agreement). As with corporations, there are standard rules provided in state statutes, but there are myriad combinations and permutations possible by agreement. Typically, members are insulated from liability – beyond risking whatever amount they invested to purchase membership interests.
Note that, while the formation and structure of an entity has some effect on issues like insulation from liability, conduct also has some effect. The behavior of owners and management can affect whether the structure has a “typical” effect; forming an entity is an event, but behaving as an entity is a process.
Also note that there are important considerations and requirements regarding taxation of entities and the tax consequences of particular structures, choices, and conduct that are beyond the scope of this article. Consider seeking advice from a qualified professional regarding the tax-related aspects of entities.
NOT INTENDED TO PROVIDE LEGAL, ACCOUNTING OR OTHER PROFESSIONAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.
Published in Legal
Wednesday, 22 March 2017 08:43

March 2017

Tennessee- Bill to Combat Fraudulent Liens
Proposed Senate Bill 726 would allow public officials to remove liens fraudulently filed with the Division of Business Services without a court order. The Tennessee Secretary of State's office began working with the Administration Office of the Courts on the bill after an investigation led to a 320 count indictment and ten arrests.
Mississippi- Legislation Amends Requirements for Conversion Filings.
Mississippi- Corporation and LLC Annual Reports due by April 15th.
Hawaii- Business Entity Annual Reports due March 31st for entities with anniversaries in January through March.
Nebraska- Biennial Reports due by April 1st.

 

State & Federal Holidays
March 27th
Prince Jonah Kuhio Day
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March 27th
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March 31st
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April 14th
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April 17th
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April 17th
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April 24th
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April 28th
Arbor Day
Nebraska
Published in Jurisdiction Updates
Wednesday, 15 March 2017 00:00

DBAs & Assumed Names

Individuals, that is, human beings, are what the law calls “natural persons.” A natural person’s full name, as given at birth or as later legally changed, is the individual’s true name. Some entities, like corporations and limited liability companies, are formed by the filing of articles of incorporation or articles of organization with an appropriate filing office. The true name of such an entity is whatever name is specified in the filed formative document. Some entities can be formed other than by filing “articles” with any particular office: a general partnership, for example. The true name of a general partnership includes the full name of each partner. There are still further rules for determining the true name of other entities or organizations. 
Sometimes it is useful to use a name other than one’s true name. In that case, one can assume a different name, an assumed name, also sometimes called a “DBA” because one is “doing business as” the assumed name. However, there are requirements for, and limitations on, assumed names. 
In some jurisdictions, including Minnesota, one cannot do business under a name other than one’s true name without registering an assumed name. There are penalties for noncompliance with this requirement, and one could be exposed to claims if somebody else already has rights in a particular name. 
Generally, a new assumed name must be distinguishable from all existing assumed names in the particular jurisdiction. Some characteristics of an assumed name may be “standardized,” also, meaning that “and” and “&” may be considered to be the same and “ViZionarY” and “Vizionary” may be considered to be the same. It is prudent to search for existing assumed names before deciding on a new assumed name.
Also, one cannot use an assumed name that includes a designation as an entity of a type other than what one really is. For example, Murphy Washington could not assume “M. W. Corporation,” and XYZ Corp. could not assume “XYZ Partnership.” 
And while successfully registering an assumed name satisfies a requirement to do so before doing business under that name, it does little more. Specifically, though it would prevent somebody else from registering that assumed name in the same jurisdiction, it does not prevent others from using that name or from registering that name in another jurisdiction. There are legal protections available for trademarks and service marks, and there may be legal protections available to prevent certain other uses of names; consider consulting an attorney for more information on this point. 
Capitol Lien can assist with determining true names, checking the availability of new assumed names, registering assumed names, and filing amendments involving assumed names. 
NOT INTENDED TO PROVIDE LEGAL, ACCOUNTING OR OTHER PROFESSIONAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.
Published in Due Diligence
Friday, 10 March 2017 00:00

The Real Deal with Apostilles

An apostille is a formal certification by a competent authority of the authenticity of the origin of a qualifying document. An apostille facilitates the acceptance of the qualifying document by a foreign authority.
For example, one might obtain a birth, marriage, or death certificate from a U.S. state and also obtain an apostille to satisfy a governmental entity outside the U.S. of the authenticity of the document.
An apostille may be produced on the authenticated document or may be attached to the authenticated document. The official text is comprised of ten standard items of information and is contained within a square stamp or form. 
The identification of the competent authority begins by understanding the source of the document to be authenticated. Generally: (1) a document produced by an instrumentality of a U.S. state can be authenticated by that state’s Secretary of State or a Deputy/Assistant Secretary of State; (2) a document produced by a U.S. federal court can be authenticated by the Clerk or a Deputy Clerk of that court; and (3) a document produced by an instrumentality of the U.S. federal government can be authenticated by the U.S. Department of State. 
An apostille supports the authenticity of the signature and seal (if applicable) on a document but is not evidence of the content of the document; it does not add any official authority to a document, but simply authenticates the document’s origin. 
Apostilles are only applied to “public documents.” Birth, marriage, and death certificates are public documents, as are judgments and divorce decrees, as well as entity organizational documents emanating from the register maintained by an appropriate filing office (e.g., in Minnesota, the Office of the Secretary of State). Academic diplomas and transcripts from public institutions are public documents. Academic diplomas and transcripts from private institutions are not public documents but can be supplemented with an official certification that is a public document, and the certification can be authenticated via an apostille. 
Most, but not all, countries recognize the effect of apostilles, but it is advisable to check with the foreign authority to which you intend to transmit a document before incurring the burden of obtaining the apostille.
NOT INTENDED TO PROVIDE LEGAL, ACCOUNTING OR OTHER PROFESSIONAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.
Published in Due Diligence