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Flashcards in Business Entity: Termination Deck (5)
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1

Business Entity
Termination
Sole Proprietorship

Sole Proprietorship
- naturally terminates when the sole owner dies or departs

2

Business Entity
Termination
General Partnership

General Partnership
- adding or removing partners does not automatically lead to dissolution
Disassociation
- cause of "disassociation": notice of partner's express will to dissolve, death, bankruptcy, expulsion
- must lead to buyout or dissolution
- partnership will purchase the share of the disassociating partner as if partnership was sold at greater of liquidation or going-concern value
- 90 day cooling off period between dissolution and liquidation
- in winding up, creditors must be paid first. If insufficient funds, then partners must contribute assets, then pay partners

3

Business Entity
Termination
Limited Partnerships

Limited Partnerships
- process is similar to general partnership
- departure of limited partner will not result in dissolution

4

Business Entity
Termination
Corporation

Corporation
- voluntarily dissolved upon approval of directors and shareholders
- majority of directors vote and majority of shareholders vote
- "administratively" dissolved by failure to pay franchise taxes, file annual reports, establish and maintain a registered agent and office
- "judicially" dissolved by court: fraudulent approval of articles of incorporation, abused legal authority
- "judicially" dissolved by shareholders: if management is deadlocked, those in control are acting illegally, if shareholders are deadlocked and cannot elect directors, by an action of creditors, unsatisfied judgement creditor's claim and corporation is insolvent
- other major activities
- Procedures: directors owing fiduciary duty must propose and shareholders approve and vote
- Appraisal Rights: dissenting shareholders must request share be purchased at court-valued rate

5

Business Entity
Termination
LLC's

LLC's
- Disassociated from LLC: express will to withdraw, event listed in agreement occurs, expulsion, death, entity that has been dissolved.
- possible event: event occurs, consent of members, 90 days, court order

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