HOW DOES NEW YORK BCL 708 APPLY TO DIRECTORS WHO TAKE ACTION WITHOUT A MEETING?

Aug 13, 2021

Kiritsis Law Group  Call: 212-922-0005

Written by John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

 

Unless the certificate of incorporation or bylaws specify otherwise, the board of directors may act without a meeting, provided all members approve the action in writing. BCL 708(b). A board that conducts its meetings without notice or fails to adequately document the nature and substantive decisions of said meetings is asking for legal problems.

 

If you are considering starting a Corporation, there are likely a number of inquiries that should be made during the start up (launch phase) of the Corporation, such as:

What is the suggested name for the Corporation?

Will the Corporation decide whether to operate for profit or not?

Will the bylaws specify if the corporation is for profit or not?

Is it possible to take action on behalf of shareholders without holding a formal meeting?

What is the expected number of directors on the Board of Directors?

Will there be a corporate seal for the corporation?

Will the Corporation's bylaws be amendable by a simple majority vote?

Will a super majority be required to alter the Corporation's bylaws?

Will the corporation be liable for the legal expenses of its directors and officers in the event of a lawsuit?

Will the Corporation be able to legally issue stock certificates in response to a valid request?

Should the original members of the Board of Directors be mentioned in the Articles of Incorporation?

Is there going to be a President for the Corporation?

Is there going to be a Vice President for the Corporation?

Is there going to be a treasurer for the Corporation?

Who will serve as the company's corporate secretary?

When will the Corporation's internal affairs regulating documents become legally binding?

Who will be the Corporation's designated organizer?

Is the Corporation going to adopt a trade name?

What will the legal name of the corporation be when it is formed?

What will the Corporation's postal address be (it may or may not be the same as the physical address)?

When do you think the Corporation's operations will start?

What is the maximum number of workers that the Corporation can lawfully have?

What is the Corporation's expected yearly revenue in its first year of operations?

What are the main types of activities that the Corporation will undertake?

Where will the Corporation's regular business operations take place?

Is it legal for the Corporation to do business with its directors and officers?

In terms of real estate contract agreements, who has the authority to sign and legally bind the Corporation?

What will individual directors/officers be allowed/authorized to conduct on a day-to-day basis on behalf of the Corporation?

Will the Corporation's directors be able to lease office space on the Corporation's behalf?

In terms of correspondence with the underlying commercial landlord, who is the corporate commercial tenant's point of contact?

Will the corporation's executives and directors be able to engage into employment arrangements with the company?

Which corporate executives will have legal authority to bind businesses in employment agreements?

What is the individual officers' contact information?

In terms of taxation and corporate governance, who are the Corporation's most important employees?

Will there be significant workers who aren't Board members?

Who were the company's first shareholders?

What will each of the early stockholders' contributions be?

What shareholder voting procedures are required for properly organized shareholder meetings to approve company action?

What are the conditions for approving corporate activity by written permission (in the absence of a shareholder agreement)?

What are the conditions for amending the company bylaws in terms of shareholder voting?

When and where will the first shareholder meeting of the Corporation be held?

What are the logistics of business shareholder meetings that are scheduled?

Is it possible for the Corporation to issue stock certificates?

Will the Corporation provide any ancillary benefits?

What (if any) advantages will the Corporation provide to its shareholders, executives, and/or directors?

Who will be the registered agent for the corporation?

Who will serve as the company's accountant?

Who will serve as the Corporation's general counsel and lawyer?

Who will serve as the Corporation's insurance expert?

Who will be the banker/financier for the Corporation?

Is there a founder's kind of agreement in place before to the incorporation date?

Is the Corporation's underlying business an existing one or a brand-new venture?

Is the Corporation going to be regarded as a C Corporation for tax purposes?

Will the corporation elect to be taxed as a S Corporation?

Will the corporation have, own, and/or run limited liability companies (LLCs) or subsidiaries?

 

 

Citations and possibly useful reference links, may include:

-U.S. Constitution

-New York State Bar Association

-New York City Bar Association

-American Bar Association

-New York State Secretary of State: Divisions of Corporations

-Internal Revenue Code

-Internal Revenue Service

-New York Department of Finance

-New York Business Corporation Law

-New York UCC (Uniform Commercial Code)

-New York LLC (Limited Liability Company) Law

-New York General Obligations Law (GOL)

-New York CPLR

-Delaware Corporate Law

-Delaware LLC Law

-Bankruptcy Code

-Revised Uniform Limited Liability Company Law (RULLCA)

-New York Partnership Law

-New York Trust Law

-New York Constitution

-Gordon v. Doty 69 P.2d 136 (Idaho 1937)

-A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d (Minn 1981)

-Hoddeson v. Koos Bros., 47 N.J. Super. 224 (N.J. Super. Ct. App. Div.1957)

-Ira S. Bushey & Sons, Inc. v. United States, 398 F.2d 167 (2d Cir. 1968)

-Majestic Realty Assoc., Inc. v. Toti Contracting Co., 30 N.J. 425 (1959)

-Town & Country House & Home Serv., Inc. v. Newbery, 3 N.Y.2d 554

-Fenwick v. Unemployment Compensation Comm’n, 133 N.J.L. 295 (1945)

-Martin v. Peyton, 246 N.Y. 213 (1927)

-Meinhard v. Salmon, 249 N.Y. 458 (1928)

-Eisenberg v. Flying Tiger Line, Inc., 451 F.2d 267 (2d Cir. 1971)

-Marx v. Akers, 644 N.Y.S.2d 121

-Auerbach v. Bennett, 47 N.Y.2d 619 (1979)

-A.P. Smith Mfg. Co. v. Barlow, 13 N.J. 145 (1953)

-Kamin v. American Express Co., 86 Misc.2d 809 (N.Y. Sup. Ct. 1976)

-Francis v. United Jersey Bank, 87 N.J. 15 (1981)

-Bayer v. Beran, 49 N.Y.S.2d 2 (N.Y. Sup. Ct. 1944)

-Escott v. BarChris Construction Corp.m 283 F.Supp. 643 (S.D.N.Y. 1968)

-Levin v. Metro-Goldwyn-Mayer, Inc., 264 F.Supp. 797 (S.D.N.Y. 1967)

-Rosenfeld v. Fairchild Engine & Airplane Corp., 309 N.Y. 168 (1955)

-AFSCME v. AIG, Inc., 462 F3d 121 (2d Cir. 2006)

-Crane Co. v. Anaconda Co., 39 N.Y.2d 14 (1976)

-Ingle v. Glamore Motor Sales, Inc. 73 N.Y.2d 183 (1989)

-Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 716 F.Supp 1504 (S.D.N.Y. 1989)

-Morgan Stanley & Co. v. Archer Daniels Midland Co., 570 F.Supp 1529 (S.D.N.Y. 1983)

-IRC Chapter Section C of the Tax Code

-IRC Chapter Section S of the Tax Code

-Slaughter-Houses Cases, 83 U.S. (16 Wall.) 36 (1873)

-Northwestern National Life Insurance Co. v. Riggs, 203 U.S. 243 (1906)

-Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394 (1886)

 

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