Re: Taking part ownership of a corporation

< DoyouknowwhatIlikeaboutyou@xxxxxxxxx > wrote in message
news:1142903006.371548.327280@xxxxxxxxxxxxxxxxxxxxxxxxxxxx ...

Does anyone know what the straighforward process for this is.

My business partner owns the corp, without assets, its basically a
shell from delaware but we do business in CA

We want to use it as the incorporation of our business, so I will need
to own half (and take half responsibility).

1. So what exactly does it mean to take half ownership of a business?
a. Does it mean that you just take half ownership of all shares?
b. If so, do I use "Contract for Purchase of Corporate Stock"
(this is in Nolo quicken legal) but the sample says ALL of the stock -
how do I do it for half the stock.

2. What about financial responsibility, decision making and that sort
of thing? How is that recorded?

3. What forms must I use for this?
a. s it just a modification to bylaws with a contract fo purchase
of stock
4. Anything legal need to be filed with the IRS or state?

I have quicken legal and it has a buy-sell agreement - a kind of
pre-nup that I can use for establishing our own agreement but this
won't share ownership of the company's shares.

Love to have this cleared up

The incorporator appoints a board of directors and adopts bylaws.

The corporation holds a board meeting in which the board decides to issue
stock. If the corporation has already issued stock to your partner, new
stock would be issued to you in the same number of shares. If the
corporation has not issued any stock yet, the new shares would be issued to
both of you. Like 1,000 shares to each. (I suggest that your partner not
selll you half of his stock already issued.) The board would decide that
the price to be paid to the corporation for the stock is the best that the
corporation could get. The board's resolution should recite those decisions
and end with an authorization to the officers to issue the stock in exchange
for the consideration.

You used the term "business partner", but that doesn't tell me whether you
already have a business going under a partnership, or that you have not
started yet. If you haven't started yet, your consideration to be paid to
the corporation for the shares should be the amount of money that you think
the company will need to reach profitability. If you already have the
business going, the consideration to be paid for the shares is "John Doe's
50% partnership interest in that certain business commonly know as Milo's
Experienced Autos."

The board in the same meeting elects officers and decides on the authority
of each officer. That includes decision on who will be president and etc.,
who will be the boss, how bossy can the boss be, etc. Minutes of the board
meeting must be taken.

The President and Secretary issue the stock certificates and deposit each
person's consideration into the corp. bank account. (or, it it isn't cash,
enter the debits and credits into the corporation's balance sheet)

A "Contract for Purchase of Corporate Stock" is a good idea because it
incorporates all of the investment declarations needed to comply with
securities law. Also important is a "Stockholders buy-sell agreement."
That's the document that contains your decisions about what happens to the
ownership if one stockholder dies, quits, goes crazy, gets a divorce, wants
to sell stock, wants to give shares to 24 cousins, wants to fire the other
stockholder, etc.

If by "financial responsibility" you mean the individual's liability for the
debts and liabilities of the company, the answer is: if the shareholders,
directors and officers do a good job of maintaining the corporate status and
corporate separateness, and complying with all laws, there is no personal
liability.

Yes, you need to file some things with the State. First, an application for
authority to do business in California as a foreigh corporation. (A delaware
corporation is a "foreign" corporation in California)

You also file a Statement of Information to the Secretary of State and
(maybe) a Notice of Issuance of Stock to the Commissioner of Corporations.

You might also want to file with the IRS an Election of Subchapter S Status.

If you are in Southern California, come see me and I'll do whichever part of
the above you want.

This answer must not be relied on as legal advice for the reasons posted
here: http://www.msnusers.com/1LawChat/Documents/McGyver%2FDisclaimer.doc

McGyver


.

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