CORPORATE DOCUMENTS....snore..........

This undoubtedly will be the most boring post I have ever written, but it may save you a bunch of money. I have been involved in dozens of emerging growth companies. Often the capital to fuel this growth comes from the members/shareholders. Make sure you understand your shareholder/operating agreement. Very seldom have I seen closely held companies  follow the dictates in their corporate documents regarding capital calls and shareholder loans. If you are the "money partner" in a deal and advancing the money to fuel the company's growth, your capital contributions may be categorized as unsubordinated loans. If you don't give the proper notices to the other shareholders/members, you could end up in big trouble. Issues relating to capital accounts and contributions, their tax consequences and how capital is categorized are the most important elements of any closely held entity. When drafting your documents, make sure you think these items through and then follow the procedures to protect yourself  that are listed in your corporate documents.

It is a good idea to have your documents reviewed, especially if the entitry is contemplating a big realization event. Documents drafted 5-10 years ago may not reflect your needs now, especially in our over regulated, over taxed and overly litigious business environment of 2012.

Should you have corporate documents that need to be re-evaluated, please contact me at rsmith@chartwellcapital.net.


Visit our website at http://www.chartwellcapital.net/

Rob