Sacramento Close Corporations
Sacramento Business Attorneys on Close Corporations
Close corporations are easy to form and operate. They’re smaller corporations that provide great opportunities for shareholders to design their own corporate governance. For example, they can waive mandatory meetings of the board of directors and shareholders thereby enabling the corporation to operate more efficiently and effectively. Close corporations are often overlooked, but they can be a great option for smaller organizations. Our business lawyers work closely with our clients in deciding the best entity for their needs. Our Sacramento law firm has helped several locally operated businesses and nationally operated business.
Close Corporation Requirements
In California, close corporations are limited to 35 shareholders. They must still use a corporate designation in their name as required by California Corporations Code § 202(a) and may not make public offerings of stock. While operating a close corporation is easier, it also requires more work in the shareholders agreement.
Close Corporation Shareholder Agreements
Shareholder agreements allow shareholders to modify most of the default rules and permits shareholders to create a corporate governing structure tailored to their particular situations. Minority shareholders can better protect their rights by requiring shareholder votes for matters that would normally be dealt with through the board of directors. Close corporations may also remove some of the tedious formality requirements, like meetings.
There are still some provisions in the Corporations Code that cannot be changed. For example, there are record-keeping and report requirements, rights to inspection of corporate records, and required legends on the share certificates. Corp. Code §§ 1500-1512; Corp. Code §§ 1600-1605; Corp. Code § 418.
Contact Sacramento’s Business Lawyers to Discuss Close Corporations
If you’re considering forming a business entity and are considering a close corporation, feel free to contact our Sacramento’s Business Attorneys to set up an initial consultation.
By: Trevor Carson Google+
*The information provided in this post does not constitute legal advice or opinion. The information is for guidance purposes only. Individual situations vary and you should contact us for a consultation. Sacramento Business Law Attorneys Close Corporations