Mattingly "AI & Prompt Design" - Introduction to Machine Learning"
Business Entities and Trusts
1. Complex Commercial / Business Court Cases
BUSINESS ENTITIES
AND TRUSTS
Rew R. Goodenow
Saturday, March 9, 2013
National Judicial College, Reno, Nevada
parsonsbehle.com
2. Sole proprietorship
Mom, but not Pop, starts a business
No formal filing with any governmental
agency to initiate the business?
Business licenses
Tax identification numbers
Payroll
Fictitious firm name
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3. Add Pop
No formal filing
Partnership?
Who has control? (authority to bind)
Who has ownership? (distribution on
dissolution)
Who is liable for the debts?
Community property (revisit for all other
entities), dissolution of marriage
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4. Add a secret ingredient
Intellectual property
Trademark, tradename
Trade secret
Patent
Copyright
State v. federal law, formal filing v. none
Contracts
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5. Home cooking
Legal Zoom
Secretary of State online filing
Digital operation agreement (trouble
following the recipe?)
The handshake (whose recipe?)
Formal organization, informal operation as
a partnership (No turmeric, just add . . .)
Loss of the chief cook and bottle washer
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6. Probate and bankruptcy
A new cook (the PR or trustee)
The head chef (trustee), the sous-chef
Change the menu (different duties and
goals for the business)
We liked Dad’s cooking better (a
restructuring may not be welcome)
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7. Showing up for dinner
Absentee owners and their problems and
complaints v. active participants
I never write down the recipe. (providing
adequate information to avoid later claims)
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8. Potluck
I assumed you would bring the deviled
eggs! (Incorrect assumptions about what
the other participants are doing or not
doing often leads to problems later.)
Just desserts (lack of formal, coordinated
structure often leads to failed functions)
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9. Joint venture
A Partnership
Also a contract
May not have clear guidelines as to who is
in control
May not receive contributions
Often has an objective that is not achieved
No formal filing
Earn-in
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10. Corporations
Formal filing with the Secretary of State,
corporations commission
Formality is a key, but is often lacking
(structure, documentation, operations)
Bylaws
Annual lists, public display of the officers
and directors
Stockholders’ agreement (buy-sell)
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11. Stock
Shareholders ledger, defines who the
shareholders are
Share certificates or un-certificated shares
Preferred stock, blank check preferred
Approvals are often imperfect, resolutions
lacking or defective
Control Shares Act violations
Derivative claims, Rule 23.1
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12. Limited liability company
Formal filing
Articles of organization
Operating agreement
Member managed
Manager managed
Titles of participants (some entities use
corporate titles for positions in the
company)
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13. Limited liability and other myths
An operating agreement is a contract
between the parties
A lease is a contract with a different party
Fiduciary duties and their waiver
Charging order
Bankruptcy remote entity
Personal guaranty
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14. Tax
The second primary driver of choice of
entity
Default based upon corporate form
S Corp. (limitations)
Complexity added by additional
distribution of salary and employment
filings
Partnership taxation
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18. Business trust formation
Created by agreement of the parties,
without formal statutory sanction or filing
Some states recognize by statute, some
do not
Shares several corporate characteristics:
limited liability, centralization of
management, transferability of ownership,
and continuity of existence
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