Business And Corporate Law—What Is Your Risk Of Litigation?

An attorney can gauge your risk of liability by evaluating the corporate form or business association.  Several of these structures may include an S Corporation, Limited Liability Company (LLC), or a Partnership.  Under California law, you may have the ability to form a special or public purpose corporation.  Your attorney can advise you of the statutes that must be followed, such as the California Corporations Code or the Corporate Flexibility Act, as well as explaining the steps required in order to do so.  Your corporate form also affects the information that must be included in the articles of incorporation and the bylaws, as well as the rights of any shareholders.

A corporation may find itself litigating a dispute regarding the bylaws.  Bylaws are the layout of rules that the individuals of the corporation must abide by.  The way you draft these rules will affect how legal disputes play out regarding crucial issues:  the responsibilities of officers and directors, issuance of stock certificates, elections, and meetings.  The consultation of an attorney can help you draft the bylaws to help ensure that your provisions survive any lawsuit.

A variety of other legal questions arise in the area of business and corporate litigation.  For example, trademark law comes into play with regard to your business name.  Your entity could be hauled into court if you use a certain word that is prohibited or deceptively similar to another business or corporate name.  Ask your attorney how to receive additional protection for your titlecounsel may advise you to register it with the federal or state government, although it might not required.

Furthermore, California law has certain rules that must be followed regarding directors of a corporation.  For example, a certain number of directors are mandatory, and this requirement may depend on how many shareholders you have in the corporation.  Generally, there must be three directors; however, the specification that pertains to your business may need to be stated in the articles of incorporation or the bylaws.

Another way that business people often find themselves in litigation is for commingling corporate or business assets with personal assets.   An attorney can help you understand the importance of holding a separate bank account in the corporation’s name and the specific information necessary to create it.  If there is a dispute regarding the financial assets of your entity, a member may have the legal right to compel an accounting or dissolution.

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