Corporate Governance Attorneys
As inquiries into Board of Directors matters, disclosure requirements, and enforcement practices intensify, it is critical that companies build robust and effective corporate governance programs responsive to both day-to-day challenges and high-stakes issues such as shareholder activism and litigation.
The experienced corporate governance attorneys at Kendall PC know that the key to a successful, compliant business is a well-developed strategy. We offer strategic guidance and planning to corporate executives, boards, senior management, and committees of public, private, family-owned, and nonprofit organizations for a wide range of corporate governance and business planning initiatives. With a focus on industry compliance best practices, our lawyers have considerable experience with corporate controls, compliance assessments, audits, and planning.
If you need guidance for your company’s corporate governance and business planning initiatives, the accomplished corporate governance attorneys at Kendall PC can help. To learn more about our corporate governance and business planning services, contact our office today online or at (484) 414-4093. We proudly serve companies of all sizes throughout the United States and across the globe.
Governing Documents
When starting a business, detailed rules and processes must be established to dictate how the company will be directed and managed. This is broadly referred to as the company’s corporate governance.
Corporate governance is established through a collection of governance documents that are uniquely tailored for different types of business entities. While every corporate governance document performs a different function, the overall objective for each is the same – to clearly delineate the operating rules of the business.
Common corporate documents and agreements often establish provisions for:
- Distribution and salaries:
These agreements establish how and when business partners and investors can withdraw funds from the business.
- Decision-making mechanisms:
An agreed-upon procedure for handling conflicting opinions on business decisions helps to prevent disagreements from flaring with business partners.
- Expected ownership and contribution of each owner:
This establishes the proportion of the business owned by each person, as well as the day-to-day work and financial responsibilities of the owners.
- Withdrawal of a business partner, owner, or other key principal:
Buyout plans and succession mechanisms can protect companies in the event that a partner or owner leaves the business.
- Death of a business partner, owner, or other key principal:
In the event of a tragedy, it is important to have an organizational plan already in place.
Corporate Bylaws
Corporate bylaws outline the rights and responsibilities of a corporation’s owners and officers. They establish critical rules that govern the daily operations of business as well as protocols for special situations.
Key topics typically addressed in corporate bylaws include:
- Identifying information, such as name, location(s) and purpose
- Titles of corporate officers
- Board of Directors
- Responsibilities of the Board of Directors
- Type and number of shares and stock classes
- Indemnification of officers and directors
- Conflict of interest provisions
- Procedural requirements for voting, including the process for amending bylaws
- Process for the appointment, removal, and replacement of officers
- Process for the appointment, removal, and replacement of directors
If you have already incorporated your business, or are planning to in the future, the corporate governance attorneys at Kendall PC can work with you to create corporate bylaws that stipulate how your company will operate, make critical decisions, comply with state and federal laws and handle owner disputes.
Operating Agreements
Operating agreements govern the financial and managerial duties and rights of the members of a Limited Liability Company (LLC). Although operating agreements are not required to form LLCs in many states, taking the time to draft agreements can help ensure your company runs smoothly and is protected against costly management and financial disputes.
Key topics typically addressed in LLC operating agreements include:
- Member identities
- Manager identities
- Capital contribution of members
- Duties and rights of managers and members
- Decision-making protocols, including a process for amending operating agreements
- Dissolution events
- Access to records and information
- Protective provisions
If you are considering forming an LLC, or if you have already done so, Kendall PC can help by drafting operating agreements that establish how your LLC operates and makes business decisions.
Partnership Agreements
When a business forms as a partnership, a partnership agreement establishes the terms of the partnership, the roles and responsibilities of the partners and governs the day-to-day operations of the business. Partnership agreements also govern how the business will run in the event of a crisis, such as the dissolution of the partnership or the death of a partner.
There are three types of partnerships available to most U.S. businesses:
- General partnerships (GPs):
In these partnerships, each partner is involved in the daily management of the business and shares in unlimited liability.
- Limited partnerships (LPs):
These partnerships also involve partners who run the business and take on unlimited liability, but they also allow for “silent” limited partners who do not get involved with the day-to-day operations of the business and whose liability is limited to the amount of their investments.
- Limited liability partnerships (LLPs):
These types of partnerships operate like GPs, but each partner has limited liability.
There are advantages and disadvantages to each type of partnership agreement. Kendall PC can help you determine which option is best suited for your business’s unique needs and circumstances.
While every partnership agreement is unique, they must all address common issues through provisions and key terms such as:
- Business name
- Ownership percentages
- Capital contributions
- Profit and loss allocations
- Distributions
- Partner authority
- Management
- New partners
- Death and disability
- Dissolution
- Dispute resolution
If you are considering entering a partnership, or have already begun the process, Kendall PC can help to ensure your partnership agreements meet the unique needs of your business.
Shareholder Agreements
Shareholder agreements establish the rights and responsibilities of the shareholders who own shares in public or private corporations and describe how the companies will operate. Shareholder agreements are recommended for any company that has multiple shareholders.
Some of the issues that are generally covered under shareholder agreements include:
- Who can serve on the Board of Directors
- Preemptive rights to purchase shares before they are offered to others
- Information rights of shareholders
- Dispute resolution
- Non-competition obligations
- How the company will be managed
- How and when dividends will be distributed
- Valuation of shares
- What corporate decisions will be subject to shareholder approval and what percentage of shareholders must approve. While some decisions may require a simple majority, others may require a supermajority or unanimity.
- How additional shares may be issued
- How shareholders’ stock can be sold or transferred, including restrictions on transfers. This may include “tag-along,” “drag-along” or “right of first refusal” provisions.
- What happens to a shareholder’s equity after bankruptcy, disability or death. This is referred to as a “buy-sell” provision.
These are just some of the many provisions that may be included in a shareholder agreement, each of which can be structured in several ways, depending on the current needs of and plans for your company. Kendall PC can guide you through the process of drafting a shareholder agreement and tailor it to your business.
Board of Directors and Board of Advisors Agreements
Board of directors and board of advisors agreements describe the responsibilities and rights of a company’s board members. These agreements define the work to be performed, the compensation involved and any confidentiality requirements that may be in place.
These agreements generally cover issues such as:
- Roles and duties
- Terms of service
- Compensation
- Confidentiality and privilege
- Protecting intellectual property
- Disclosing conflicts of interest
- Indemnification and advancement
- Governing law and consent to jurisdiction or arbitration
Kendall PC has considerable experience in helping companies create effective board of directors and board of advisors agreements.
Investment Agreements and Equity Plans
Equity and investment plans define the financial rights and obligations of owners, shareholders, investors, and employees. As your business grows and your financial needs change, your company will likely need different types of agreements, from early-stage fundraising rounds to more complex financing and operational activities.
Kendall PC can help you determine which types of agreements are appropriate for each stage of your company’s development, including investment agreements and equity plans.
- Investment agreements:
These agreements lay out the terms between your company and individual investors at the time of a sale of stocks or securities. Written contracts should be created for each investment, regardless of the type being offered by your company. Strong investment agreements can protect you from litigation or any future conflicts involving your company’s ownership.
- Equity plans:
These plans establish how equity will be shared among owners, shareholders, investors, and employees. Clear equity plans are necessary if you plan to give options (typically through a grant or stock option) or other equity incentives to your employees, such as profit units.
The corporate governance attorneys at Kendall PC can advise you at each step of your investment agreements and equity plans to protect you down the line from potential disputes with your investors or partners.
Buy-Sell Agreements
Buy-sell agreements govern situations in which one partner leaves the company. Also referred to as buyout agreements or “business wills,” buy-sell agreements help you plan for the departure, disability, or death of your partners.
Buy-sell agreements generally cover partnership issues such as:
- Triggering event:
This defines when the buy-sell agreement is triggered. These agreements can be triggered by an event such as retirement, bankruptcy, the departure of a partner or a partner’s death or disability.
- How price is determined:
A methodology for determining the price involved in a buy-sell agreement should be included in the document.
- Who is involved:
Buy-sell agreements may obligate your partners to buy your stake in a cross-purchase agreement, the business to buy your stake in a redemption agreement or a hybrid of these options. In a cross-purchase agreement, you should stipulate which partners have the right to purchase in what amounts, because it could shift control in the business.
- Optional vs mandatory buy-sell agreements:
Optional buy-sell agreements often provide partners, businesses or third parties (such as a surviving spouse) with a first right of refusal for buying shares. Mandatory buy-sell agreements require partners or businesses to buy shares.
- Insured buy-sell agreements:
You may consider setting up life insurance policies for the partners, naming either the business or other partners as beneficiaries to finance the acquisition.
Kendall PC can help you determine which buy-sell options are right for your business.
Contact Our Corporate Governance Lawyers Today
The experienced corporate governance attorneys at Kendall PC can help you with several aspects of your business agreements, strategies and compliance issues. Contact our office today online or at (484) 414-4093 to learn more about corporate governance services. We proudly serve small, emerging, and mid-size businesses throughout the United States and across the globe.
