Call Now (800) 681-1295

What corporate law considerations should I be aware of?

Table of Contents

    Corporate law considerations generally arise under the state corporate law and will directly or indirectly affect the negotiation and structure of an acquisition or sale of a business. Although the substantive provisions of the law will vary from state to state, deference will be given to Delaware General Corporation Law (DCGL). The DCGL is highly regarded because a large number of corporations that are incorporated there and Delaware consequently has a large body of law to draw from. The principal issues that arise in this area tend to be: 1) corporate approval of the transaction (is a shareholder vote needed and have the directors met their fiduciary duties), 2) appraisal rights (are they offered to dissenting stockholders), 3) minority stockholders (do they continue to have an interest in the acquired company), 4) third party consents (are they needed), and 5) liabilities (which, if any, will flow through to the buyer).

    With regards to corporate approvals, the structure of a transaction will dictate what action is required on the part of the board of directors and stockholders of each party to approve the transaction. However, formal action by directors is always required in connection with a material transaction. Conversely, formal action by the stockholders is typically required when an action to be taken by the corporation will result in a fundamental change in the nature of a stockholder’s investment or a termination of the underlying business.

    Corporate fiduciary duties refers to an officer or director’s obligation to act in the interest of the shareholders and exercise a high degree of care in the execution of his or her responsibilities. The standard for determining a breach of duty is the so-called “business judgment rule.” Under the business judgment rule, a court will not second-guess a business decision if it was made in good faith, was informed, and had a rational basis.

    Dissenting stockholders that follow precisely established procedures are entitled to have their shares appraised as of a date immediately preceding the announcement of the transaction. Such shareholders are entitled to receive the value o f their shares in cash. In the case of publicly traded share, the value will be the closing price on the designated date.

    Tax Help Videos

    Representing Clients from U.S. and International Locations Regarding Federal and California Tax Issues

    Main Office

    Orange County
    2601 Main St. Penthouse Suite
    Irvine, CA 92614
    (949) 681-3502

    Our headquarters is located in Irvine, CA. Our beautiful 19,700 office space is staffed full-time and always available for our clients to meet with our highly qualified and experienced staff of Attorneys, Certified Public Accountants and Enrolled Agents. We also offer virtual consultations and can travel to meet with clients in one of our satellite offices.

    Outside of our 4 hour initial consultation option, we do not charge travel time or travel expenses when traveling to one of our Satellite offices, or surrounding business districts, where it is necessary to meet personally with taxing authority personnel, make court appearances, or any in person meeting deemed necessary for the effective representation of a client. To make this as flexible, efficient, and convenient as possible, David W. Klasing is an Instrument Rated Private Pilot and Utilizes the Firms Cirrus SR22 to service client’s in California and in the Southwest by air. Offices outside these areas are serviced via commercial jet airlines. None of these costs are charged to our clients.

    Satellite Offices

    (310) 492-5583
    (760) 338-7035
    (916) 290-6625
    (415) 287-6568
    (909) 991-7557
    (619) 780-2538
    (661) 432-1480
    (818) 935-6098
    (805) 200-4053
    (510) 764-1020
    (408) 643-0573
    (760) 338-7035
    (602) 975-0296
    New Mexico
    (505) 206-5308
    New York
    (332) 224-8515
    (512) 828-6646
    Washington, DC
    (202) 918-9329
    (702) 997-6465
    (786) 999-8406
    (385) 501-5934