Corporate law is a term which usually which refers to matters involving the creation and maintenance of corporations and other types of business entities and the provision of legal advice concerning them. It may include advising minority shareholders of their rights and assisting them in protecting their interests.
It is extremely important that a corporation, especially a professional service corporation (sometimes called professional corporations, professional associations, or "P.A.s") be properly formed and have thorough, detailed formation documents (articles of incorporation, bylaws and shareholder agreements). Failure to have a properly created corporation which addresses the individual owner's unique needs, business and circumstances can create problems in the future which could have been avoided. The proper creation of a limited liability company (LLC), is even more important, as failing to honor certain legal requirements may make this business entity subject to being set aside and result in liability on the individual owners.
A corporation is a legal entity that is separate from its owners or shareholders. It is formed by filing certificates or articles of incorporation with the Secretary of State where the business will operate. State law governs the duties of corporate shareholders, as do the corporate bylaws. Corporations are governed by the shareholders, who elect the directors, who elect the officers, who actually run the corporation. Because the corporation exists apart from its shareholders, directors, and officers, it continues to exist even if something happens to the people who own and operate it. There are many types of corporations, such as close corporations, professional corporations, S corporations, nonprofit corporations, and general corporations.
A limited liability company (LLC) shares features of both corporations and partnerships. An LLC may be treated as a corporation for limited liability purposes but as a partnership or sole proprietorship for tax purposes (its taxation form may be selected by the members). The owners are called members instead of shareholders. To form an LLC, articles of organization are filed with the Secretary of State where the LLC will operate. A detailed operating agreement governs the LLC's affairs and usually takes the place of both corporate bylaws and a shareholders agreement. However, LLCs offer a great deal of flexibility as they may be organized to operate like a corporation if the owners desire. For example, their membership units may be renamed as "shares." They may adopt bylaws. They may have a board of directors and they may have officers (e.g., president, vice president, secretary).
There are other types of business entities including partnerships, limited partnerships, professional service corporations (sometimes called professional associations) professional limited liability companies,
For any type of business entity, it is extremely important that it be properly maintained (e.g., annual meetings, annual reports filed with the Secretary of State, written resolutions and actions to document decisions and minutes of meetings), that it always be identified with the proper designation after its name (e.g., "LLC," "Inc.," "P.A.," "Co.," "L.P."), that it be treated as a separate individual, and that its funds and accounts always be kept separate form those of any individual owner. It is also important that the laws concerning the business entity be strictly followed in order to prevent any potential litigants from attempting to have the business entity's protections set aside (sometimes referred to as "piercing the corporate veil") so that the individual assets of the individual owners may be seized. For example, a limited liability company must be properly funded to accomplish its purpose when it is initially formed or its limited liability protection may be voided.
A professional service corporation (or professional association) must only have officers, shareholders and directors who are members of the same profession (i.e., licensed by the same professional board) in order to be legally formed under most states' laws. Therefore a doctor of osteopathic medicine (D.O.) and a doctor of medicine (allopathic physician or "M.D.") may not be officers, shareholders or directors in the same corporation if that corporation is a professional service corporation (or professional association). Otherwise, the corporation would be operating illegally and subject to being dissolved or set aside.
The Health Law Firm routinely forms professional service corporations and other types
of business entities for health care professionals. We provide legal advice and opinion letters on corporate structure and on business ventures. We prepare, review and amend articles, bylaws, shareholder agreements, articles of merger and dissolution, termination and dissolution agreements, shareholder buy-out agreements, and other similar documents. We represent corporations. LLCs and other types of business entities as well as shareholders and owners in business disputes and litigation. We have represented shareholders and corporations in litigation to dissolve them, to have receivers appointed, to have trustees appointed and in other similar actions.