New Jersey law permits loans to directors, officers or employees only if a benefit to the corporation can be reasonably expected. That section also requires the approval of the board of directors. Based upon the statutory language and the general duties of care and loyalty which applies to members of the board of directors they may only approve these loans if there is reasonably expected to be a benefit to the corporation.
As more and more business owners are forming limited liability companies (“LLC’s”) to operate their businesses, familiarity with the statute that governs limited liability companies (which in New Jersey is the New Jersey Limited Liability Company Act (the “LLC Act”)) is important. Most provisions of the LLC Act can be preempted by the LLC’s Operating Agreement, which is the agreement among the members of the LLC that governs its conduct and affairs. If the LLC’s Operating Agreement does not address a particular issue, the LLC Act governs.
A common theme through out previous blog posts is the basic concept that majority shareholders, officers and directors are fiduciaries. As a result of that position they owe to the corporation itself along to the other shareholders duties of care, loyalty and good faith. One area which often results in minority oppression and breach of fiduciary duty claims is when an officer, director or majority shareholder personally takes advantage of a business opportunity to the detriment of the corporation and its shareholders.
Often majority shareholders will enter into various kinds of unfavorable contracts between the closely held company and themself or a business owned by them in order to siphon off corporate earning or assets. Generally, directors and majority shareholders are fiduciaries and owe to the minority shareholders along to the corporation itself certain duties of care, loyalty and good faith. Majority shareholders must place the interests of the corporation and its shareholders above their own. Moreover, the majority shareholder or directors must act to further the best interest of the corporation and may not utilize their powers to further a personal interest.
Homeowners often ask what legal remedies exist against builders, design professionals, and other parties for defects in design or construction of their homes. Often times, however, the defect is not readily apparent, and is therefore not discovered for several years after the homeowner begins residing in the house.
Cary S. Kvitka, member of Stark & Stark’s Business & Corporate and Franchise Groups, will present a seminar entitled, Legal Considerations for Small Businesses, for the Greater Princeton Area SCORE. The seminar will be held Tuesday May 25, 2010 from 6:45 – 8:45 PM at the South Brunswick Public Library.
The majority of organizations that are exempt from federal income tax are required to file Form 990 or a similar form on an annual basis. Previously, small tax exempt organizations were not required to file Form 990 or a variation thereof. The Pension Protection Act of 2006 requires that non-profit organizations that do not file Form 990 (or a variation thereof as required for that type of organization) for three consecutive years automatically lose their federal tax exempt status.
Rachel Lilienthal Stark, Shareholder in Stark & Stark’s Business & Corporate and Banking & Financial Services Group authored the article, Buying Assets From a Troubled Company, for the April 2010 edition of Mercer Business Magazine.
The Greater Princeton Area SCORE Chapter and the Princeton Public Library will host a Small Business Fair at the Library n Saturday, May 22, 2010. The fair will be held in the Library’s Community Room from 11:00 AM to 3:00 PM (admission is free to the public).
Melvin Simon, together with his brother and business associate Herbert Simon, built a business empire upon the then novel concept of the shopping mall. The company that he and his brother founded – Simon Property Group, Inc. – is now the largest mall owner on the United States with over 300 shopping malls in its property portfolio.
