A buyout agreement is a legally binding contract that sets the price and process for one owner’s shares to be purchased when they leave a business, often using a preset valuation method or formula. It helps prevent disputes and protect continuity after events like death, disability, retirement, divorce, or a voluntary exit. This article explains […]
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What is piercing the corporate veil?
Piercing the corporate veil is when a court holds a company’s owners or shareholders personally liable for the company’s debts or misconduct, despite the usual liability shield. It’s typically considered in cases involving fraud, undercapitalization, commingling of funds, or failure to follow corporate formalities. This article explains what the doctrine means, the common legal factors […]
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What is the duty of loyalty?
The duty of loyalty is a fiduciary obligation requiring a trusted decision-maker to act 100% in the beneficiary’s best interests, not their own. It bars conflicts of interest, self-dealing, and taking secret profits from the relationship. This article explains who owes the duty, common violations, and potential legal remedies. Understanding the Duty of Loyalty The […]
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What is a shareholder agreement?
A shareholder agreement is a private contract among a company’s shareholders (and often the company) that sets the rules for ownership, voting, and share transfers. It complements the company’s articles/bylaws by clarifying rights, obligations, and what happens during disputes or major events like funding rounds or exits. This article explains what a shareholder agreement includes, […]
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What is the duty of care?
Duty of care is a legal obligation to act with reasonable care to avoid foreseeable harm to others. Courts apply it by asking whether a reasonable person (or professional) would have taken safer steps in the same situation. This article explains the definition, who owes it, common examples, and how it affects negligence claims. Duty […]
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What is fiduciary duty?
Fiduciary duty is a legal obligation requiring a fiduciary to act in the best interests of another person, meeting one of the highest standards of care under law. It applies where trust and confidence are placed in someone like a trustee, attorney, or financial advisor. This article explains fiduciary relationships, core duties, and what counts […]
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What is a board of directors?
A board of directors is an elected group—typically 3 to 15 members—that governs a corporation on behalf of shareholders. It hires and oversees top executives, sets strategic direction, and approves major decisions while meeting fiduciary duties. This article explains what boards do, how they’re structured, and why they matter. Understanding the Board of Directors A […]
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What is articles of incorporation?
Articles of incorporation are the state-filed formation documents that legally create a corporation as a separate entity. They typically list the corporate name, registered agent, share structure, and incorporator details. This article explains what they are, what they contain, and how filing works by state. Understanding Articles of Incorporation Articles of incorporation are the legal […]
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What is corporate bylaws?
Corporate bylaws are a corporation’s written internal rules that govern management, meetings, voting, and decision-making. They outline how directors and officers act, how shareholders meet, and how key actions are approved. This article explains what bylaws cover, how they differ from articles of incorporation, and why they’re essential. Corporate bylaws are the internal rules that […]
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What is an S corporation?
An S corporation is a corporation that elects IRS “S” status so profits and losses pass through to shareholders and are taxed once at individual rates. It offers corporate limited liability while avoiding C corporation double taxation if eligibility rules are met. This article explains S corp basics, taxation, requirements, and key pros/cons. Understanding S […]
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What is a sole proprietorship?
A sole proprietorship is a one-owner, unincorporated business where the owner and business are legally the same. You report income on your personal tax return and you’re personally liable for business debts. This article explains how sole proprietorships work, pros and cons, and when to consider another entity. Understanding Sole Proprietorships A sole proprietorship is […]
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What is a corporation?
A corporation is a business structure that exists as a separate legal entity from its owners, typically providing limited liability protection. It can own property, enter contracts, and sue or be sued in its own name, independent of shareholders. This article explains core corporate features, how it operates, and why businesses choose incorporation. A corporation […]
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