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what if a "C" corporation does not have an operating agree

ment...
what if a "C" corporation does not have an operating agree ment
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Answered in 15 minutes by:
11/1/2012
socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 39,498
Experience: Retired
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C Corporations do not have operating agreements. LLCs have operating agreements.

A C Corporation has articles of incorporation, which are required in order to register with the state government. A C Corp also has bylaws, which is the equivalent of an operating agreement. A Corp also has a board of directors which makes the strategic decisions as to how the corporation operates, and which drafts and votes on formal board resolutions to memorialize its decisions.

The difference between a C Corp and an LLC for operational purposes, is that as an LLC has no board of directors, and as an LLC is intended to operate generally based upon a more limited set of directives and under management of a small number of persons, the operating agreement is all that is required. Whereas a C Corp has a much broader range of interests, and requires more oversight, because it usually has many more investors than does an LLC.

If you have a small C Corp, you can draft a bylaws that provide for management in the same manner as does an LLC operating agreement. Or, you could create a formal resolution that has a similar effect.

Hope this helps.

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Customer reply replied 5 years ago

We have a small C corp where there is conflict and gridlock between


the two 50% chaseholders. We want to use the articles of incorporation


and the bylaws to resolve our issues but we can not find any paper work.


The questions is what governs the corporation in the absense of any


agreements. We have been in existence for 38 years. Are you saying


that the state must have a copy of our articles as well as our by-laws?


If not, are there state staues that address issue this for corporations as


it does for partnerships without agreements

Customer reply replied 5 years ago
Relist: Other.
I am not getting a response to my follow up question
Customer reply replied 5 years ago
Relist: Other.
I am not getting a response to my follow up question
Attorney2020
Attorney2020, Attorney
Category: Business Law
Satisfied Customers: 2,580
Experience: I am a practicing attorney. I have experience in business law, bankruptcy, real estate law and estates.
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State statutes have specific statutes tailored to be used as default rules. Typically, under a 50/50 gridlock, the most cost effective arrangement to use is to obtain a mutualy agreed upon mediator in your county and mediate the issue. Otherwise, a lawsuit might be required to be filed which can be quite costly.
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Customer reply replied 5 years ago

Can I force the appointment of a mediator if the other party does not agree to anything that i propose. Our problem is the use of corporate funds which are loaned out withoud my consent and against my objection. To make things worse he is under a debtor in pocession, in a


chapter 11 personal bankruptcy. I don't want to file a suit because that will damage his case but how else can i force him to stop the practice
of moving funds out of the corporation.


 

If he can move funds out, so can you correct? If so, I would transfer the funds out of teh account as a precaution and not use any of the funds until the matter is solved. It sounds like you have an unreasonabel partners that is violating some fiduciary duties as to the company.

 

Otherwise, you wil have to file suit and request an injunction restricting him from access to the bank accounts.

 

 

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Unfortunately, it will be extremely difficult to appoint a mediator without court involvement. The other person will have to voluntarily attend the mediation session unless the court order him to.
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