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USA Company Law

USA Model Business Corporation Act – Company Law

The USA Model Business Corporation Act is the official legislation of the rules and regulations of a limited liability company incorporated in the USA.

Company Name

A corporate name:

Must contain the word ‘‘corporation,’’ ‘‘incorporated,’’ ‘‘company,’’ or ‘‘limited,’’ or the abbreviation ‘‘corp.,’’ ‘‘inc.,’’ ‘‘co.,’’ or ‘‘ltd.’’, or words or abbreviations of like import in another  language; and

  • May not contain language stating or implying that the  corporation is organised for a purpose other than that permitted by section 3.01 and its articles of incorporation.
  • A corporate name must be distinguishable upon the records of the secretary of state from:

Registered Office and Registered Agent

Each corporation must continuously maintain in this state:

A registered office that may be the same as any of its places of business; and a registered agent, who may be:

  • An individual who resides in this state and whose business office is identical with the registered office;
  • A domestic corporation or not-for-profit domestic corporation whose business office is identical with the registered office; or
  • A foreign corporation or not-for-profit foreign corporation authorised to transact business in this state whose business office is identical with the registered office.

Articles of Incorporation

The articles of incorporation must set forth:

  • A corporate name for the corporation that satisfies the requirements of section 4.01
  • The number of shares the corporation is authorised to issue
  • The street address of the corporation’s initial registered office and the name of its initial registered agent at that office; and
  • The name and address of each incorporator.

Directors

A director need not be a resident of this state or a shareholder of the corporation unless the articles of incorporation or bylaws so prescribe.

  • A board of directors must consist of one or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.
  • The number of directors may be increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws.
  • Directors are elected at the first annual shareholders’ meeting and at each annual meeting thereafter unless their terms are staggered under section 8.06.

Shareholders

For purposes of this Act, the following identified as a shareholder in a corporation’s current record of shareholders constitutes one shareholder:

  • Three or fewer co-owners
  • A corporation, partnership, trust, estate, or other entity
  • The trustees, guardians, custodians, or other fiduciaries of a single trust, estate, or account.
  • For purposes of this Act, shareholdings registered in substantially similar names constitute one shareholder if it is reasonable to believe that the names represent the same person

Corporation Dissolution

 Dissolution by Board of Directors and Shareholders

A corporation’s board of directors may propose dissolution for submission to the shareholders.

For a proposal to dissolve to be adopted:

  • The board of directors must recommend dissolution to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders; and
  • the shareholders entitled to vote must approve the proposal to dissolve as provided in subsection (e).
  • The board of directors may condition its submission of the proposal for dissolution on any basis.
  • The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.
  • Unless the articles of incorporation or the board of directors acting pursuant to subsection (c) require a greater vote, a greater number of shares to be present, or a vote by voting groups, adoption of the proposal to dissolve shall require the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the
    votes entitled to be cast exists.

Grounds for Administrative Dissolution

The secretary of state may commence a proceeding under section 14.21 to administratively dissolve a corporation if:

  • The corporation does not pay within 60 days after they are due any franchise taxes or penalties imposed by this Act or other law
  • The corporation does not deliver its annual report to the secretary of state within 60 days after it is due
  • The corporation is without a registered agent or registered office in this state for 60 days or more
  • The corporation does not notify the secretary of state within 60 days that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued; or

Procedure for and Effect of Administrative Dissolution

If the secretary of state determines that one or more grounds exist under section 14.20 for dissolving a corporation, he shall serve the corporation with written notice of his determination under section 5.04.

If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the secretary of state that each ground determined by the secretary of state does not exist within 60 days after service of the notice is perfected under section 5.04, the
secretary of state shall administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The secretary of state shall file the original of the certificate and serve a copy on the corporation under
section 5.04.

A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under section 14.05 and notify claimants under sections 14.06 and 14.07.

The administrative dissolution of a corporation does not terminate the authority of its registered agent.

Company Restoration

Reinstatement Following Administrative Dissolution

A corporation administratively dissolved under section 14.21 may apply to the secretary of state for reinstatement within two years after the effective date of dissolution. The application must:

  • Recite the name of the corporation and the effective date of its administrative dissolution
  • State that the ground or grounds for dissolution either did not exist or have been eliminated
  • State that the corporation’s name satisfies the requirements of section 4.01; and
  • Contain a certificate from the [taxing authority] reciting that all taxes owed by the corporation have been paid
  • If the secretary of state determines that the application contains the information required by subsection (a) and that the information is correct, he shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites his determination and the effective date of reinstatement, file the original of the certificate, and serve a copy on the corporation under section 5.04
  • When the reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution had never occurred