Corporate Legal Questions

As a general rule, the directors hire and fire the officers, including the president. That's why you hear in the media about CEOs with "golden parachutes," big bonuses if they are fired. If you would like to pay me to review your corporation's prior articles, bylaws, and employment contract with you, my partner and I can see if there is anything we can do for you. The directors of non-profits are either elected by members or by the remaining directors. Each corporation does it either one way or the other. Which way is it in your corporation? If the members elect the directors, and you are popular among the members, you might be able to wage an election to vote your own slate of directors onto the board so that they can rehire you. Another choice is to start a new corporation and ask all your members to leave the old corporation and come with you to the new one. Even as a fired president, you owe a fiduciary duty to the corporation regarding confidential information you have regarding the corporation, which might include its membership list. Before starting to carry out any of these strategies, you really need to hire and obtain advice from an attorney with knowledge and experience regarding such corporate battles. Dana Sack  ... Read More

Don't try to hide from the process server. Eventually, a good process server will either find you or provide the attorney with a lengthy and thorough description of all the efforts to serve you and how you have hidden, which will convince a judge to authorize serving you by publication. This is expensive, and if you lose the case, you will end up owing the other side reimbursement for that expense, too. If the judge authorizes service by publication, you won't see it in the newspaper, the trial will go ahead without you, judgment will be entered against you, and the other side will be entitled to sieze your bank account, garnish your wages, and record the judgment in any county where you own or might someday own real property. That means you won't be able to buy or sell real estate or borrow or refinance any loan secured by real estate, without paying off the judgment. The judgment will appear on your credit report. This could interfere with buying a car on credit, applying for a job, or even to rent an apartment. If you have owner's insurance or renter's insurance on your home, it should provide you with a lawyer to defend the case, even if the insurance company might not pay any ultimate judgment. You might need to hire your own attorney to convince the insurance company that it must defend you. If you appreciate this free advice, please remember to refer me to any of your friends or acquaintences who need a lawyer. Referrals are still our best source of new business. Dana Sack... Read More

This is a complicated set of circumstances. It depends on, among other things, the terms of the insurance application and policy, whether the companies involved report consolidated results for tax or books, and a host of other fact inquiries. If you want to discuss the metter with a lawyer you may reach out, but this idea is far more complicated than it presents. Thatcher Stone   646 873 7521  ... Read More

Giving your stock to your brother is a bad idea. If your brother inherits the stock from you, he gets a stepped-up basis in the stock and can turn around and sell it with no capital gains tax. If you make a gift of the same stock to him now, his basis will be the same as your tax basis in the stock, probably very low, close to zero. When he tries to sell the corporation, he will have to pay tax on the difference between the selling price and your old tax basis. There are a variety of ways to separate the right to received the profits from the company and day-to-day control of the company. Ultimately, whoever owns the stock can get control of the company. As long as your brother goes along, it can be done, but once he owns the stock, he will have the right to kick you out, even if he elects not to do so. If you appreciate this free advice, please remember to refer me to anyone you know who needs a lawyer. Referrals are still our best source of business. My firm and I are described at www.sackrosendin.com. Do you have a revocable living trust to avoid probate, instead of a will? Probate takes too long, is expensive, and is annoying. Save your family a lot of trouble by having a revocable living trust. Some people refer to it as a living will. Revocable means you can change it, add and subtract property from it, and even cancel it completely, whenever you want. For $1500.00 I write such a trust, plus a back-up pour-over will to cover any property that somehow doesn't make it into the trust, and convey one parcel of real property to the trust, usually the family home. Dana Sack Sack Rosendin, LLP One Kaiser Plaza, Suite 340 Oakland CA 94612 510-286-2200... Read More

As long as your son agrees, yes, you or the corporation can sell shares to new investors. Any such shares are "securities." Any sale of securities, including stock in your corporation, must comply with both state and federal securities laws. The sale must comply with the securities laws of every state where any of your investors live. These state and federal securities laws require that the stock be "registered," unless the sale qualifies for an exemption. Registration requires a huge amount of paperwork. It is complicated, time consuming, and expensive. You want to make sure that every sale qualifies for an exemption. The biggest penalty for failing to register stock which is not exempt, is that you will be personally liable for return to the purchasers of any money they invest. There are also fines and penalties. In order to protect you and your investors, you want to get signed documents from every investor to assure that the sale of stock to each of them is exempt. I can prepare those documents for you. I would prepare a stock subscription agreement and an investor questionnaire for each investor, and I would review each signed questionniare, in order to make sure that each investor qualifies for some exemption. I would also prepare a shareholders agreement restricting everyone's right to sell or transfer their shares and providing for annual distributions that were at least enough to cover everyone's tax liability for their shares of the corporation's taxable income. Depending on anything else you want to include and the number of different states where you investors live, I can probably write all three agreements and review the questionnaires for less than but close to $2000.00. If you would like to discuss this with me directly, please call me at 510-286-2200. You can learn more about me and my law firm at www.sackrosendin.com. What business is your company in? Dana Sack  ... Read More

I'm an online legal provider. Texas has a 6.25% sales tax and no income tax, until your company gets above $1 million of sales minus costs of goods sold, and even then, that franchise tax is around 1% California sales taxes vary by county, but all are over 8%, and the income tax is 10.4%. As a California resident, you pay state income tax on your taxable income worldwide. Personally, you might want to "reside" in an apartment or condo near one of your Texas offices, and vote, pay your income taxes, and register your drivers license there, and spend a lot of time at your "vacation second home" in California. Check with whoever prepares your tax return regarding what that person will require in order to treat you as a Texas "resident" and not a Californian. As a Subchapter S corporation, you have to file a federal income tax return, even though you don't pay any federal income tax. If you or you and your spouse are the only owners of a limited liabiltiy company, the IRS disregards the entity, you don't file or pay for a separate tax return for the company, and you just show the company's income and expenses on your 1040. Corporations also require that you keep corporate paperwork. You must hold an annual meeting of the shareholder or adopt shareholder resolutions by unanimous written consent, at least once per year, and you must hold at least one director's meeting or adopt director's resolutions by unanimous written consent at least once per year. I once had to charge a client nearly $2000 to prepare 24 years of backdated resolutions. Limited liability companies don't have to have meetings or pass resolutions. The manager or managers just decide things and document their decisions any way they want. Off the top of my head, I don't remember whether or not Texas requires an Operating Agreement to govern the operations of a single-owner Texas LLC. California does not. If you needed an Operating Agreement, either because you have a partner in the business or because Texas might require one, I would charge $1200.00 to prepare it and file the form with State of Texas to establish the LLC.  If you don't need an Operating Agreement, you can do it yourself on the Texas Secretary of State's website. I write all kinds of contracts. I have studied lots of online contracts for webservices and written several. I'm sure I could do a great job for you writing such a contract for $1000.00, paid in advance. To learn more about my law firm and see my personal resumé, go to www.sackrosendin.com. If you would like to discuss this further or meet together, please call me. Dana Sack 510-286-2200    ... Read More

If you hired me to do this, I would start by reviewing the Articles of Incorporation and the Minute Book for the corporation to determine whether or not the corporation really is a "close corporation" or a regular corporation with only one shareholder. To document the transfer, I would prepare a certificate under penalty of perjury for the owner to sign, swearing that he has never sold, assigned, mortgaged, or otherwise transfered any interest in any of the shares to any person. Next, I would need to find out whether it is an S-corporation for state and federal income tax purposes. If it is then I would want to review the trust to make sure the trust qualifies to own shares in an S-corporation. Finally, I would have him sign resolutions adopted by unanimous consent, cancelling the lost share certificate, providing that the shares represented by the cancelled share certificate and all future shares should be registered shares only, recorded on the stock register in the corporation's minute book, and for the registration of those lost shares. If the corporation is not a "close corporation," then it is important to have a complete minute book with Shareholder resolutions adopted each year electing the director and Director resolutions appointing officers and approving any major actions that occurred. Maybe there is a family history of the company that can be used to scatter some approvals of new activities through the 45 years the corporation has existed. The last 5-10 years are the most important. I have recently been doing this kind of catch-up for several companies. One of the grounds for persuading a judge to hold the owner of a corporation personally liable for the debts of the corporation is when the corporation has failed to follow corporate formalities. The most dangerous such failure is signing things with the owner's personal name instead of the name of the corporation and labeling the owner as President or Chief Executive Officer. That's because that mistake can mislead the other side to that transaction regarding who is signing, the corporation or the individual. Corporate minutes are another form of corporate formality which a lawyer will make a huge big deal about to argue that the owner was playing fast and loose with the corporation's assets and credit. If you would like to discuss having me check your minute book and provide the services described above, please call me. Dana Sack 510-286-2200... Read More

If you do the arithmetic to calculate the difference between the value of the loan they offered before and the two loans they are offering you now, you will find that there is not much difference. You are correct that they have defrauded you, but that difference is the total amount of your damages. Those new rates are still great low rates. If you still want to sue them for that small difference, you qualify for small claims court. No lawyers, trials are scheduled very fast, but the defendant can appeal and get a whole new trial, but the plaintiff waives any right to appeal by choosing small claims court. Good luck. Dana Sack 510-286-2200  ... Read More

No. Your HOA should hold the new election ASAP. Any contracts the HOA enters into that are favorable to it and that it wants to keep and enforce, might not be enforceable, since any action by the current board and any action by any officer appointed since the election might be held by a court to be without authority and voidable by the other side. It is also possible that anyone with a claim against the HOA, such as service providers or anyone injured on the common area, might not be limited to suing the HOA and might be able to sue and collect from the individual owners themselves. There are a lot of rules and many of them are not obvious and there justification might not be obvious, but they have been enacted and are required in order to protect the homeowners. None of them are designed to protect anyone else. So learn and follow all the rules and be grateful for them. If you would like me to help your HOA Board or members understand what is required of them, please give me a call. Dana Sack 510-286-2200  ... Read More

I have never done it. To change the name, go to www.sos.ca.gov/forms and fill out and file the form for amending the Articles of Incorporation of the corporation. Then you will need to fill out similar forms to notify the California Attorney General, the California Franchise Tax Board, and the IRS. I expect that each will want a copy of the Amendment to Articles of Incorporation stamped by the Secretary of State's office to show it has been accepted. I also expect that each of those agency has its own name-change or amendment form which you can get off their websites. Good luck. Dana Sack 510-286-2200  ... Read More

Yes. You can name your company in his name, but don't have him own it. If you try to do anything with the corporation which could be construed as involving conflicting interests, the other side might legitimately require you to have someone appointed as the child's guardian, tasked with protecting his best interests. If the child owns the corporation, for example, the corporation could not, or at least should not, compensate you for your services or even reimburse you for expenses of the corporation which you pay with your own funds, without either court approval or approvaly the child's guardian. When she or he turns 21, he or she will be entitled to sue you for every bad decision you made, with the benefit of 20-20 hindsight. On the other hand, in a family limited partnership, you could be the sole general partner, empowered to make all decisions, and any children who were named as investors would be silent partners. Why do you want to do this? I expect that there is a better way to accomplish what you want to do. I can set up a basic family limited partnership for you for $1500.00. Dana Sack 510-286-2200... Read More

Yes, you have substantial claims, but some of them are going to expire 3 years after the event, and some already hae expired 2 years after the event. You must hire an attorney and file your lawsuit immediately. My law firm is not taking on any more contingent fee lawsuits at this time. "Contingent fee" means you don't pay the lawyer anything until he collects a judgment or settlement from the other side. Since you don't have money to pay us now, you need to findl a contingent fee lawyer. Good luck. Hurry. Dana Sack 510-286-2200  ... Read More

I am sorry but you are asking such general questions that any reputable attorney would not even try to guess at the answers.  As for how long a lawsuit takes, it could be 45 days if the other side does not answer or it could take years if there is a genuine dispute that goes to trial and possibly appealed.  On average you are looking at 1.5-3 years for a case that goes to trial depending on the county.  That is not counting the time for appeals.  Every case is different with different parties, facts, attorneys and judges.  All of which effect the outcome of a case.   For more information visit us at www.Sylkatis-Law.com & www.LorainDivorceAttorney.com... Read More

Yes, it is a legal principal older than the Bible and Christianity called "restitution." The government can punish the wrongdoer by imposing fines and incarceration, but that doesn't do much for the victim. All of society benefits from the the wrongdoer being taught a lesson, hopefully being deterred from doing it again, being separated from society for a time so that he might calm down and learn his lesson before returning to society, and being punished. However, the victim does not receive any more of those benefits than everyone else in the community. Therefore, society reserves the right to require, either in addition to or, as in this case, partially in lieu of fines or incarceration, restitution to the victim. the victim in this case has lost a tooth, required dental treatment to restore the tooth or otherwise deal with the gap, may have lost time from work, and endured the pain and humiliation of the assault. He deserves some sort of compenation, separate and in addition to the punishment society imposes that benefits all of us. The DA in this case has accomplished that by offering you the opportunity to reduce your son's sentence in exchange for compensation paid directly to the victim. if you didn't like paying restitution to the victim, you could have let your son pay his full 5 year debt to society. You're lucky. Many times, the DA is only interested in maximum jail time and fines. Here he gave you an opportunity to reduce your son's jail time by paying restitution to the victim. He did  you and your son a huge favor. Not everyone is made such an offer. You should be grateful, not mad. Dana Sack  ... Read More

The reference to 501 (c)(3) is a tax provision that probably has very little to do with corporate power and authority. Normally shareholders vote for members of the Board but with a not for profit the rules may be different. It depends on the certificate of incorporation and by-laws if it is a corporation. Call me for a consultation if you have both handy. 646 873 7521.... Read More

If your church is set up as a corporation or limited liability company, then nothing can be hidden from the Board Members. Sounds like a good reason to have a small board with lots of committees, and have the committees include lots of non-board volunteers to get the work done. Put one board member on each committee to communicate back and forth between the board and those committees, excepting the Executive Committee and the Compensation Committee, which might be board members only. If you are not a corporation, then you can do whatever you want. Yes, it is appropriate to keep the pastors' compensation secret and private. On the other hand, the members probably should know which pastors are compensated and which are pure volunteers, even if they aren't told how much. If non-pastor board members are receiving compensation, the general membership probably would like to know that, even if they aren't told how much. I urge your church to establish itself as either a corporation or a limited liability company in order to protect the members of the church against third party claims. Without such a legal entity, a plaintiff's attorney might try to treat all of you as agents or partners for each other and make all of you liable for the mistakes of any member. For example, if someone signed a contract for a lot of money over a long period of time, like health insurance or fire insurance, the other side could come after all of you or any of you and all your assets in order to get paid. Same result if a member using a car, truck or bus to do church business cause substantial damage to property or personal injuires or death. Your personal homes and savings could be seized and sold to satisfy the judgment. We charge $1000.00 plus about $200.00 in expenses paid to others to form a corporation, and $1200.00 plus expenses to set up a limited liability company. Dana Sack 510-286-2200   Dana Sack 510-286-2200... Read More

We've seen this kind of problem lots of times, and we have spent a lot of time setting up companies to try to guard against such fallings out and unnecessary conflicts. You and your partner have enough problems trying to develop the product, customers, and protect your space in the marketplace, without fighting with each other.  Our first assignment would be to identify whether or not your partner is up to no good and try to mediate and negotiate getting the business back on track with protections against such conflicts in the future. First, we'll need to know a lot more about the company, starting with the type of company, who owns what shares, and who has what controls.  Please see my resume and a description of my law firm regarding our qualifications to assist you.We charge $300.00 per hour plus expenses, bill monthly, and expect to be paid promptly after delivery of bills. We would want a $5000.00 deposit before beginning. The deposit would be applied to late payments and restored as soon as the late payment is received. At the end of the assignment, the deposit would be applied to the last invoice and any balance remaining would be paid to you immediately.Dana Sack 510-286-2200... Read More

I urge you to use a Certified Tax Specialist. I am not one. The IRC sections for establishing an irrevocable trust look straightforward enough, but there all kinds of traps for the unknowing. You want someone specially trained and who does them often enough to keep up with the latest legal rulings and articles on the subject. www.calbar.org has a list of Certified Tax Specialists. Not all irrevocable trusts can own S-corporation shares. Make sure your attorney checks those requirements, too. Failure to comply will automatically and retroactively convert your S-corporation to a C-corporation, with the resulting negligence penalties and interest. Good luck. Dana Sack 510-286-2200... Read More

No. You can't have it both ways. It is possible to keep separate financial records and then consolidate them at the end of the year in order to produce a single tax return. However, once you merge there is only one entity. All of the directors and officers owe their fiduciary duty to that single entity. They cannot remain loyal to only half the entity. They cannot keep secrets from the other half of the entity. That means that if a majority of the directors did not want to allow half the entity to "pull out," they could prevent such a pull-out. It might even be argued that the directors who stated a loyalty to either of the former entities would be barred from voting. This might mean that ONLY directors who opposed the pull-out would even be entitled to vote. Two entities can share office space, share staff, share web access and phones, in order to save money, and still exist as separate entities, with separate decision making boards and officers, and tax returns. This way the directors and employees of each group could remain loyal to their own group, and without assuming loyalty to the other. Whenever a conflict arises, directors and employees must decide which entity they will be loyal to and resign and not take any action or vote on behalf of the other entity. Staying separate avoids that problem.  We charge $300.00 per hour plus expenses, bill monthly and expect bills to be paid promptly. I would expect that such an arrangement could be negotiated and drafted for not more than $2000.00. I would represent one side or the other, but the other side could agree to reimburse the side I represent for half of those fees, and the side I represent could instruct me that my assignment was to make the agreement as fair and even to both sides, as possible. If you would like help negotiating an agreement for such a "sharing" arrangement, please call me.  Dana Sack 510-286-2200  ... Read More