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Contact a Massachusetts business lawyer at the Mwangi Law Office
Contact one of our Massachusetts corporate lawyers to find out what we can do for you. We offer a free initial consultation.
We are available for evening and weekend appointments in the Boston area.
Contact one of our Massachusetts corporate lawyers to find out what we can do for you. We offer a free initial consultation.
We are available for evening and weekend appointments in the Boston area.
MASSACHUSETTS CORPORATIONS
Please note that the following should not be construed as legal advice.
We invite you to contact us if you are looking for a Boston business lawyer. We strongly encourage you to speak to an
experienced attorney about your business formation issues. You can contact us if you are looking for a Boston business
lawyer by visiting our current website at SMLawGroup.com.
Massachusetts Corporations
A corporation is a separate, incorporated legal entity organized under an enabling statute. Stockholders of a corporation
enjoy limited liability and, with certain exceptions, are not liable for corporate obligations exceeding their investment.
For federal tax purposes, depending on its organizational structure and the nature of its stockholders, a corporation may be
a C corporation, separately taxed on its own taxable income, or may elect to be treated as an S corporation. By electing S
status, the stockholders of the S corporation effectively pass through the income, gains, losses, deductions and credits of
the corporation and report them as their own on their individual tax returns.
Statutory Requirements for Formation
To organize a business corporation, one or more persons with capacity to contract must act as incorporators of the
corporation and must by written consent or at a meeting approve bylaws, adopt the initial articles of organization and select
the initial directors and a president, treasurer and clerk. The corporation is formed only after the articles of organization,
signed under pains and penalties of perjury, are submitted to the secretary of state with the appropriate filing fee and are
accepted for filing and made effective by the secretary. The effective date may be the filing date or a date not later than 30
days thereafter,specified in the articles of organization.
The bylaws contain the rules for governance of the corporation and the procedures by which corporate action may be taken.
The bylaws are considered a contract among the stockholders. A corporation may make bylaws that contain any provisions
not inconsistent with law or the articles of organization for the regulation and management of the affairs of the corporation
Control and Management
A corporation involves a hierarchical system of management. Except in some instances when power is reserved to the
stockholders pursuant to, the business of every corporation is managed by the board of directors. The officers are elected by
the directors or the stockholders for the purpose of carrying out the directives of the board of directors. The duties of the
officers are usually specified in the bylaws, but officers also may have apparent authority to bind the corporation beyond the
authority stated in the bylaws. The incorporators, officers and directors are obligated to act in good faith and in a manner
reasonably believed by them to be in the best interests of the corporation, with such care as an ordinarily prudent person in
a like position would use under similar circumstances.
While the business of the corporation is conducted for the benefit of the stockholders, the duties and responsibilities of the
stockholders in ordinary circumstances are quite limited. The stockholders elect the directors and otherwise have the
authority to approve or disapprove significant corporate events, such as the amendment of the articles or
organization (including the authorization of shares of stock), mergers and consolidations, sales of all or substantially all the
assets of the corporation and dissolution of the corporation.
Stockholders Liability
In general, stockholders are liable for corporate obligations only to the extent of their investment in the corporation. In the
event of a distribution to a stockholder, whether by way of a dividend, repurchase or redemption of stock or otherwise,
when the corporation is insolvent or is thereby rendered insolvent, the stockholder is liable to return to the corporation the
amount of the distribution that exceeds what could have been paid without rendering the corporation insolvent.
Officers and Directors Liability
Directors and officers share certain corporate liabilities. In general, they stand in a fiduciary relationship to the corporation
and owe the corporation and its stockholders a duty of care (that is, their actions are to be undertaken with "such care as
an ordinarily prudent person in a like position would use under similar circumstances," and a duty of loyalty (that is, they
must act in the best interest of the corporation and not for personal gain or profit). In addition to their fiduciary duties, the
directors and officers may be liable for breach of enumerated statutory duties.
Continuity of Existence
The death or incapacity of a stockholder, officer or director does not terminate the corporation's existence; it has perpetual
existence unless dissolved voluntarily by the stockholders or by the secretary of state pursuant.
Transferability of Interests
Except as restricted by the articles of organization, bylaws or agreements among the stockholders, shares of stock
representing interests in a corporation are freely transferable. The transfer of corporate shares does not terminate the
corporation's existence, and generally the transferee obtains all the rights and obligations of the transferor.
Notwithstanding the foregoing, both the issuance and transfer of shares of stock are subject to the restrictions imposed by
state and federal securities laws.
Federal Taxation of Corporations
Except in the case where a business or professional corporation makes an election under the provisions of Subchapter S of
the Internal Revenue Code, it is separately taxable as an entity on its own taxable income under Subchapter C of the
Internal Revenue Code. Its stockholders are also taxed on distributions of the corporation made to them. Thus, a C
corporation involves two levels of tax and differs from proprietorships and partnerships in this important respect.
The election of S status by a corporation is an attempt to eliminate the double taxation otherwise inherent in corporate form.
A corporation that, together with its stockholders, has elected S status is not generally itself taxed on its income; instead,
each item of income, loss, deduction and credit is passed through to its stockholders in proportion to their ownership interest
in the corporation. Unlike partnerships, allocations of income or loss must be made strictly in
accordance with shareholdings.
Please note that the following should not be construed as legal advice.
We invite you to contact us if you are looking for a Boston business lawyer. We strongly encourage you to speak to an
experienced attorney about your business formation issues. You can contact us if you are looking for a Boston business
lawyer by visiting our current website at SMLawGroup.com.
Massachusetts Corporations
A corporation is a separate, incorporated legal entity organized under an enabling statute. Stockholders of a corporation
enjoy limited liability and, with certain exceptions, are not liable for corporate obligations exceeding their investment.
For federal tax purposes, depending on its organizational structure and the nature of its stockholders, a corporation may be
a C corporation, separately taxed on its own taxable income, or may elect to be treated as an S corporation. By electing S
status, the stockholders of the S corporation effectively pass through the income, gains, losses, deductions and credits of
the corporation and report them as their own on their individual tax returns.
Statutory Requirements for Formation
To organize a business corporation, one or more persons with capacity to contract must act as incorporators of the
corporation and must by written consent or at a meeting approve bylaws, adopt the initial articles of organization and select
the initial directors and a president, treasurer and clerk. The corporation is formed only after the articles of organization,
signed under pains and penalties of perjury, are submitted to the secretary of state with the appropriate filing fee and are
accepted for filing and made effective by the secretary. The effective date may be the filing date or a date not later than 30
days thereafter,specified in the articles of organization.
The bylaws contain the rules for governance of the corporation and the procedures by which corporate action may be taken.
The bylaws are considered a contract among the stockholders. A corporation may make bylaws that contain any provisions
not inconsistent with law or the articles of organization for the regulation and management of the affairs of the corporation
Control and Management
A corporation involves a hierarchical system of management. Except in some instances when power is reserved to the
stockholders pursuant to, the business of every corporation is managed by the board of directors. The officers are elected by
the directors or the stockholders for the purpose of carrying out the directives of the board of directors. The duties of the
officers are usually specified in the bylaws, but officers also may have apparent authority to bind the corporation beyond the
authority stated in the bylaws. The incorporators, officers and directors are obligated to act in good faith and in a manner
reasonably believed by them to be in the best interests of the corporation, with such care as an ordinarily prudent person in
a like position would use under similar circumstances.
While the business of the corporation is conducted for the benefit of the stockholders, the duties and responsibilities of the
stockholders in ordinary circumstances are quite limited. The stockholders elect the directors and otherwise have the
authority to approve or disapprove significant corporate events, such as the amendment of the articles or
organization (including the authorization of shares of stock), mergers and consolidations, sales of all or substantially all the
assets of the corporation and dissolution of the corporation.
Stockholders Liability
In general, stockholders are liable for corporate obligations only to the extent of their investment in the corporation. In the
event of a distribution to a stockholder, whether by way of a dividend, repurchase or redemption of stock or otherwise,
when the corporation is insolvent or is thereby rendered insolvent, the stockholder is liable to return to the corporation the
amount of the distribution that exceeds what could have been paid without rendering the corporation insolvent.
Officers and Directors Liability
Directors and officers share certain corporate liabilities. In general, they stand in a fiduciary relationship to the corporation
and owe the corporation and its stockholders a duty of care (that is, their actions are to be undertaken with "such care as
an ordinarily prudent person in a like position would use under similar circumstances," and a duty of loyalty (that is, they
must act in the best interest of the corporation and not for personal gain or profit). In addition to their fiduciary duties, the
directors and officers may be liable for breach of enumerated statutory duties.
Continuity of Existence
The death or incapacity of a stockholder, officer or director does not terminate the corporation's existence; it has perpetual
existence unless dissolved voluntarily by the stockholders or by the secretary of state pursuant.
Transferability of Interests
Except as restricted by the articles of organization, bylaws or agreements among the stockholders, shares of stock
representing interests in a corporation are freely transferable. The transfer of corporate shares does not terminate the
corporation's existence, and generally the transferee obtains all the rights and obligations of the transferor.
Notwithstanding the foregoing, both the issuance and transfer of shares of stock are subject to the restrictions imposed by
state and federal securities laws.
Federal Taxation of Corporations
Except in the case where a business or professional corporation makes an election under the provisions of Subchapter S of
the Internal Revenue Code, it is separately taxable as an entity on its own taxable income under Subchapter C of the
Internal Revenue Code. Its stockholders are also taxed on distributions of the corporation made to them. Thus, a C
corporation involves two levels of tax and differs from proprietorships and partnerships in this important respect.
The election of S status by a corporation is an attempt to eliminate the double taxation otherwise inherent in corporate form.
A corporation that, together with its stockholders, has elected S status is not generally itself taxed on its income; instead,
each item of income, loss, deduction and credit is passed through to its stockholders in proportion to their ownership interest
in the corporation. Unlike partnerships, allocations of income or loss must be made strictly in
accordance with shareholdings.