SINCE 1974
1. A person or entity to whom some property or privilege is signed over.
2. A person who is appointed to act for another. In the context of an LLC, it is one who receives an interest in the LLC with economic rights, but not voting rights, unless the intent was also to give the assignee voting rights. By comparison, to give away voting and economic rights together, is a transfer with a transferee and a transferor.
A legal agreement where a wealthy person (grantor) sets aside money, in the name of a Delaware Trustee, for the grantor’s future benefit, to protect the grantor’s personal assets from the grantor’s unforeseeable future creditors. By comparison, an LLC is sometimes referred to as a “poor man’s asset protection trust” because an LLC is not an effective method to protect personal assets from personal creditors. Historically, one could not use a self-settled asset protection trust for which the grantor is the beneficiary to avoid creditors, until the advent of new laws about fifteen years ago. There are numerous requirements for this to avoid defrauding creditors, and not all states have them. Delaware is one of the most favored states for these types of asset protection trusts. The trust must be set up for four years before the assets in them are protected from any types of creditors. The grantor must not have creditors with foreseeable claims and should not put more than one-third of his or her assets into this trust. In exchange, the grantor gives up a good deal of control to a third party trustee, who would need to be in Delaware. Usually, these are funded with cash and not real estate, although sometimes they are funded with Delaware LLC interests in other assets. Usually, these trusts contain at least three hundred thousand dollars to justify the administration and start-up costs.
The document that is required in many states (including Florida and Nevada) to be filed in order to form a limited liability company (LLC) (including the name and address of its Registered Agent). The Articles of Organization are prepared by the incorporation service and follow a state form to meet the state’s minimum filing requirements. This document is signed by an authorized person, usually who works for the incorporation service. After the scanned or faxed copy of the Articles of Organization is submitted and the filing fee paid, the state of formation enters the document into an official database of LLCs and lists it on their website as having been chartered. The Evidence of Filing is then returned to the incorporator which in turn sends it to the customer with a copy letter. If the customer orders the Operating Agreement as well, it is also sent to the Customer. In addition to the Articles of Organization, every LLC should have an LLC Operating Agreement to state the members names who own the company and how the LLC is to operate. (Some states use the term Certificate of Formation rather than Articles of Organization).
A corporation’s charter that evidences the corporation’s existence. It is a birth certificate that documents the state of incorporation and the name of the corporation. The Articles of Incorporation must conform to state law minimum requirements, and must be filed with the state where the corporation is formed. Additionally, the Articles of Incorporation often state the purpose of a particular corporation, the name of the corporation, the Registered Agent’s name and address, and details involving stock types and amounts that are to be authorized. (Sometimes referred to as a “Certificate of Incorporation”, depending on the state involved)
A document required by law to be filed with the registration of a limited liability company (LLC) (including the name and address of its Registered Agent). Necessary provisions vary among states. Many states require this document to be signed by a manager or managing member. (Sometimes referred to as the “Articles of Organization” or a “Certificate of Formation”, depending on the state involved).
The Certificate of Formation is the document that creates the LLC and lists where the Registered Agent can be contacted. This short document is usually kept in company files and in the files of each member. All of IncNow‘s LLC packages include the Certificate of Formation, as it is the one essential document that must be filed with the state.
A right of shareholders who disagree with a merger to have their shares objectively valued and repurchased by the corporation at Delaware fair value, which may be different than fair market value. A petition must be filed in the Court of Chancery to obtain this remedy.
An official certificate, issued by the Secretary of State, to certify that documents on file with the Secretary of State that are required by certain countries which accept the terms of the Hague Convention’s international treaty. For example, to do business in Spain, rather than have a certified copy of the Delaware LLC’s Certificate of Formation legalized by filing a certified copy with the U.S. Department of State and that Spain’s consulate, the treaty empowers Delaware to issue the document directly, which saves time and money and does not require separate approval from the U.S. Government. Fewer than half of all countries have ratified the Hague treaty on this. Therefore, many countries require the more formal and longer process of legalization. We help international customers obtain apostilled documents and legalized documents for use overseas.
A corporation’s one-page online filing due once per year to inform the Secretary of State of the names of all of the directors and at least one officer. Required with this report is also a payment of a “franchise tax”. One must file the annual report with the Division of Corporations online, which collects the franchise tax and maintains the Good Standing status of the corporation. Currently, Delaware does not require LLCs to file Annual Reports, although many other states do. The Annual Report in Delaware must be completed online and must list all directors of a corporation as of the time of filing. The Registered Agent’s address should not be listed as the principal place of business on the annual report. Failing to file this report and pay the franchise tax/fee will result in the corporate charter being revoked administratively by the Secretary of State and thereby lose the privilege and protections afforded to corporations.
1. A required meeting of the stockholders of a corporation that must happen every year (or technically every 13 months under Delaware law). It is also possible to avoid this meeting in a corporation if there is a unanimous action in writing signed by all shareholders of the agreed upon actions, such as election of directors.
2. An annual meeting of directors, where officers are elected and their salary and bonuses are agreed upon. Typically, these meetings should be documented by the corporate secretary who will insert annual meeting minutes into the corporate minute book. These are usually still kept in paper form. Even in a corporation where the stockholder is also the sole director and sole officer, the annual meeting is required.
3. It should be noted that the annual meeting is different from the “annual report” that is filed with the Secretary of State listing the names of the corporation’s directors.
Alter ego liability is a legal term used offensively by a creditor to a company who is attempting to pursue the assets of the owner-operator of a business. It is a claim that the manner in which the company has been operating is without recognition of a distinction between the owner and the business: the business is just an extension of the individual or his “alter ego.” This is a legal sword to piece the protective layer between the business and the person to allow the business creditor to extend his claim from not only the business assets, but also to the owner’s personal assets. For example, when few corporate formalities are not followed, such as documenting transactions, keeping separate records and accounts, the injured party can claim that the company was just an extension of its owner and that the line between the person and the business was so blurred as to make the creditor believe he was dealing with the individual not operating as a business entity. This is an easier case to make in the corporate context. In the context of an LLC, there are fewer required formalities and therefore fewer “rules” that need to be followed. Nevertheless, it is a good idea to keep contracts in the proper name of the business, whether it is an LLC or a corporation. Delaware is one state that does not favor this method of attack. It is a very difficult claim for a creditor to make in Delaware. However, other states, with less developed laws and less sophisticated judges may be more prone to entertain this offensive attack on the company and its owner, resulting in a “thinner” bullet proof jacket in states other than Delaware. Avoiding alter ego liability it another reason to incorporate in Delaware, to get the “thicker” bullet proof jacket.
A signed modification or addition to an agreement appended at the end of an agreement either when the agreement is signed or at a later time.