BUSINESS
ORGANIZATIONS
2006 Update by:
A. Howard Metro, Esq.
David W. Hotes, Esq.
Samek, McMillan & Metro, P.C.
Rockville, Maryland
Revisions/Supplements by:
Sheryl N. Stephenson
Shapiro, Sher, Guinot & Sandler
Baltimore, Maryland
Original Text by:
William E. Carlson, Esq.
Shapiro, Sher, Guinot & Sandler
Baltimore, Maryland
Table of Contents
I. INTRODUCTION ................................................................. 7
II. THE FORMS OF BUSINESS ORGANIZATIONS .............. 7
A. Introduction............................................................................. 7
B. The Sole (or Individual) Proprietorship................................... 9
C. The General Partnership...................................................... 11
D. The Limited Liability Partnership.......................................... 14
E. The Joint Venture................................................................. 14
F. The Limited Partnership....................................................... 15
G. The Corporation................................................................... 17
H. The Limited Liability Company............................................. 21
III. SELECTING THE FORM OF BUSINESS
ORGANIZATION ................................................................ 23
A. Goals and Solutions............................................................. 23
IV. DRAFTING CHECKLISTS AND STRATEGIES .............. 25
A. Introduction........................................................................... 25
B. Common Requirements...................................................... 25
1. Federal tax identification number................................ 25
2. Registration with the taxing divisions of
the
Comptroller of the Treasury........................................
26
3. Licensing requirements..............................................
26
4. Trade names and fictitious names............................. 27
5. Registration to do business in a state other
than
Maryland......................................................................
29
C. General Partnership............................................................. 29
D. Limited Liability Partnership................................................. 31
E. Joint Venture......................................................................... 31
F. The Limited Partnership....................................................... 31
1. Drafting of the Certificate of Limited
Partnership....... 32
2. Execution and filing of Certificate of
Limited
Partnership.................................................................
37
G. The Limited Liability Company............................................. 37
1. Drafting Articles of Organization................................. 37
2. Default provisions in the Limited Liability
Company Act..............................................................
38
3. The Limited Liability Company generally.................... 40
V. DRAFTING CHECKLIST FOR CORPORATIONS .......... 42
A. Generally.............................................................................. 42
B. Formation and Organization of the Corporation.................. 42
C. Drafting the Articles of Incorporation —
Required
Provisions............................................................................. 43
1. Name and address of each incorporator and a
statement that each incorporator is at least 18
years old and incorporating under
Maryland law....... 43
2. Name of the corporation.............................................
43
3. Purposes for which the corporation is formed........... 44
4. Address of the principal office of the
corporation....... 45
5. Name and address of resident agent......................... 45
6. The total number of shares of stock and a
statement of its par value (and the aggregate value thereof) or that the stock
has no par value 45
7. Description of each class of stock (if
applicable)....... 45
8. Number and names of initial directors........................ 46
D. Drafting Articles of Incorporation —
Permissible
Provisions............................................................................. 47
1. Definitions, limitations, and regulations
concerning
powers of the corporation and its directors,
stockholders, and holders of bonds, notes and
other securities...........................................................
47
2. Restrictions on transferability of stock....................... 47
3. “By-Law” provisions.................................................... 47
4. “Super Majority” or “Mere Majority” voting
requirements...............................................................
47
5. Division of directors into classes................................ 48