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Ask a Lawyer -- Corporations
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Brought to you by MedLawPlus.com®-- Corporate Bylaws and initial board of directors resolution Price: $14.99 (free trial) |
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Question: Can a company that is not publically traded, yet has share holders, dissolve part of an S-Corp into an LLC with out consent from the share hlolders, or knowledge of the share holders prior to moving the S-Corp into an LLC? What is the impact of that move on Share holders? Response: Although your stated facts are sketchy, I doubt part of the S corporation referred to was dissolved. It sounds more like the corporation, for whatever reason, took part of its assets and rolled them into a controlled LLC (possibly as part of a joint venture with other parties). As to what level of approval is required for such a move (directors and/or shareholders), I can't really hazard a guess based upon the stated facts. One would have to know the nature the assets moved to the LLC and their relation to the rest of the corporation, whether the LLC is wholly owed by the corporation and, also, review the bylaws. Are their implications to the shareholders? If the LLC is 100% owned by the corporation, probably not. The LLC would, in essence, be a subsidiary of the corporation. If ownership in the LLC is less than 100%, then there may be tax implications to the corporation (which flow through to the shareholders). Please bring the issue to an accountant for an analysis of the tax implications. Submitted: 01/28/2008; Melissa, Missouri Response: 01/30/2008; JJR Add A Comment |
Ask a Lawyer, Corporations Archives
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