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Chapter 1 — Governance Issues in Closely Held Entities - I. [1.1] Introduction
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II. [1.2] Overview of Common Entity Types - III. [1.8] Common Issues in Business Entity Governance
- [1.9] Governing Law and the Internal-Affairs Doctrine
- [1.10] Articles of Incorporation and Articles of Organization
- [1.11] Voting
- [1.12] Preemptive Rights
- [1.13] Exculpation and Indemnification
- [1.14] Bylaws
- [1.15] Procedures for Calling Meetings
- [1.16] Procedures for Conduct of Meetings
- [1.17] Quorum
- [1.18] Approval Requirements
- [1.19] Informal Board or Shareholder Action
- [1.20] Amendments
- [1.21] Indemnification
- [1.22] Governing Agreements
- [1.23] Indemnification and Advancement for Managers, Officers, and Directors
- [1.24] Proxy Solicitations
- Chapter 2 — Personal Liability in Closely Held Entities
- Chapter 3 — Fiduciary Duties of Shareholders in Closely Held Corporations and Members of Limited Liability Companies
- I. [3.1] Introduction
- II. Fiduciary Duties of Shareholders in Closely Held Corporations
- [3.2] Basic Principles of When Duties Are Owed to Other Shareholders
- [3.3] What Makes a Corporation “Closely Held”
- [3.4] Factors That Determine Whether a Duty Is Owed
- Duties Owed by Minority Shareholders
- [3.5] Cases Holding That Minority Shareholders Owe Duties
- [3.6] Cases Holding That More than Mere Minority Shareholder Status Is Required To Impose Fiduciary Duties
- [3.7] Types of Conduct That May Constitute Breaches of Fiduciary Duty
- [3.8] Statutory Procedure for Avoiding Shareholder Fiduciary Duties
- III. Fiduciary Duties Owed by Members of Limited Liability Companies
- [3.9] Overview
- [3.10] Fiduciary Duties of Members in Member-Managed LLCs
- [3.11] Duty of Loyalty
- [3.12] Duty of Care
- [3.13] Obligation of Good Faith and Fair Dealing
- [3.14] Exception for Merely Furthering a Member’s Own Interest
- [3.15] Ability To Limit Certain Duties by Operating Agreement Provision
- [3.16] Fiduciary Duties of Members in Manager-Managed LLCs
- [3.17] Pleading Breach of Fiduciary Duty in Claims Brought by LLC Members Against Other Members
- Chapter 4 — Minority Stakeholder Rights and Remedies
- I. [4.1] What Constitutes a “Minority Interest”
- II. [4.2] General Stakeholder Rights and Obligations in Close Corporations, Partnerships, and Limited Liability Companies
- Close Corporations
- Agreements Concerning Management and Other Corporate Affairs
- [4.3] Close Corporations Under Illinois Law: Statutory Close Corporations and Common-Law Close Corporations
- [4.4] Statutory Close Corporations Under Article 2A of the BCA
- [4.5] Common-Law Close Corporations
- [4.6] Shareholder Agreements under Galler and BCA §7.71
- [4.7] Galler v. Galler
- [4.8] BCA §7.71
- Voting and Shareholder Meetings
- [4.9] Notice and Voting
- [4.10] Default Supermajority Approval Requirements for Certain “Major” Corporate Events
- [4.11] Notice of Shareholder Action by Written Consent in Lieu of Shareholder Meeting; Unanimous Written Consent for Dissolution Under BCA §12.10
- [4.12] Inspector of Meetings
- [4.13] Calling of Meeting by the Shareholders
- Access to Business Information
- [4.14] Voting Lists
- [4.15] Inspection of Books and Records
- [4.16] Distributions, Dividends, and Redemptions
- Limited Liability Companies
- [4.17] Critical Importance of the Operating Agreement
- [4.18] Admission of New Members — Default Rules
- [4.19] Management and Voting Rights — Default Rules
- [4.20] Fiduciary Duties
- [4.21] Right to Business Records — Default Rules
- [4.22] Distributions — Default Rules
- Partnerships
- [4.23] Effect of a Partnership Agreement
- [4.24] Admission of New Partners
- [4.25] Management and Voting Rights
- [4.26] Fiduciary Duties
- [4.27] Right to Business Records
- [4.28] Profits, Liabilities, and Winding Up
- [4.29] Dissociation
- III. [4.30] Minority Stakeholder Remedies
- Close Corporations
- [4.31] Remedies for Minority Shareholder Oppression
- [4.32] Shareholder’s Right of Dissent
- [4.33] Derivative Actions
- Limited Liability Companies
- [4.34] Direct Actions by Members
- [4.35] Derivative Actions
- Partnerships
- [4.36] Direct Actions
- [4.37] Violations of Partners’ Fiduciary Duties
- [4.38] Derivative Action for Limited Partnership
- Chapter 5 — Rights To Inspect Company Records
- I. [5.1] Introduction
- II. Statutory Provisions
- III. Commonly Litigated Issues
- Who Is Entitled To Inspect Company Records
- [5.6] Corporations and General Partnerships
- [5.7] Limited Partnerships and Limited Liability Companies
- [5.8] How Specific Does the Inspection Request Need To Be
- [5.9] What Is a “Proper Purpose”
- [5.10] “Proper Purpose” Cases
- [5.11] Procedural Issues in “Proper Purpose” Cases
- [5.12] Scope of Inspection Permitted
- [5.13] Other Issues
- Chapter 6 — Valuation of Minority Interests in Closely Held Illinois Businesses
- Chapter 7 — Closely Held Entity Civil Procedure Issues
- I. [7.1] Overview
- II. [7.2] Closely Held Entities Can Sue in Their Own Names
- III. Bringing a Derivative Claim on Behalf of a Closely Held Entity
- [7.3] Derivative vs. Direct Actions Generally
- [7.4] Injury to the Entity vs. Injury to the Individual
- [7.5] The Parties to a Derivative Suit
- Derivative Actions Based on Type of Entity
- [7.6] Corporations
- [7.7] Limited Liability Companies
- [7.8] Limited Partnerships
- [7.9] Voluntary Unincorporated Associations
- [7.10] Summary
- IV. Federal Court “Citizenship” of a Closely Held Entity for Purposes of Diversity Jurisdiction
- V. [7.13] Enforceability of an Arbitration Provision Contained in an LLC Operating Agreement Against the Respective LLC
- Chapter 8 — Recurring Ethical Issues When Representing Closely Held Entities
- Genc Arifi
Genc Arifi
Genc Arifi is an Associate at Aronberg Goldgehn in Chicago, concentrating his practice in commercial litigation. Mr. Arifi is a member of the Chicago Bar Association and the Illinois Bar Association. Mr. Arifi received his J.D. from DePaul University College of Law.
- Kristina D. Diesner
Kristina D. Diesner
Kristina D. Diesner is an Associate at Aronberg Goldgehn in Chicago, where she focuses her practice on intellectual property law. Ms. Diesner serves on the Chicago Bar Association’s Young Lawyers Section Intellectual Property Law Committee and is a member of the International Trademark Association and the Intellectual Property Law Association of Chicago. She has been awarded the CALI Excellence Award for Legal Research & Communication III and the CALI Excellence Award for Legal Drafting: Transactional. Ms. Diesner received her B.S. magna cum laude from Kent State University and her J.D. from DePaul University College of Law.
- Benjamin E. Haskin
Benjamin E. Haskin
Benjamin E. Haskin is a Member at Aronberg Goldgehn in Chicago, focusing his practice on business litigation, business divorce, and complex ownership disputes. Mr. Haskin is a member of the Executive Board of Legal Aid Chicago’s Ambassadors Board. He has been recognized annually (2017 – 2019) as an Emerging Lawyer in commercial litigation by Illinois Leading Lawyers and was named a Rising Star in business litigation by Illinois Super Lawyers (2018 – 2020). Mr. Haskin received his B.A. from the University of Wisconsin — Madison and his J.D. magna cum laude from Loyola University Chicago School of Law.
- David A. Johnson, Jr.
David A. Johnson, Jr.
David A. Johnson, Jr., is a Member of Aronberg Goldgehn Davis & Garmisa in Chicago, where he focuses his practice in mergers and acquisitions, corporate governance, corporate finance, and commercial transactions. He has been recognized as an Emerging Lawyer (2019 and 2020) by Illinois Leading Lawyers and a Rising Star (2017 – 2020) by Illinois Super Lawyers. He is a former Cochair/Legislative Liaison for the Environmental Section of the Chicago Bar Association’s Young Lawyers Division and a current member of the Illinois State Bar Association’s Business Advice and Financial Planning Section Council (2015 – Present), for which he is a co-editor of the newsletter, The Counselor.
- Blake S. Kocian
Blake S. Kocian
Blake S. Kocian is an Associate at Aronberg Goldgehn in Chicago, focusing his practice on business law and transactions. He is a member of the International Moot Court Honors Society at Chicago-Kent College of Law and the Assistant Managing Editor, Contributing Editor, and Associate Editor of The Journal of International and Comparative Law at Chicago-Kent College of Law. He received his B.S. from St. Louis University and his J.D. from Chicago-Kent College of Law.
- Nathan H. Lichtenstein
Nathan H. Lichtenstein
Nathan H. Lichtenstein is a Member at Aronberg Goldgehn in Chicago. His practice is focused on business litigation and business divorce. He is the Chair of the Decalogue Society of Lawyers’ Alternative Dispute Resolution Subcommittee. Mr. Lichtenstein holds the AV Peer Review Rating from Martindale-Hubbell, its highest rating for ethics and legal ability, and has been recognized annually (2010 – 2019) as an Illinois Leading Lawyer in commercial litigation. He received his B.A. from Northwestern University, his J.D. cum laude from DePaul University College of Law, and his Master of Laws in Taxation cum laude from The John Marshall Law School.
- Eric N. Macey
Eric N. Macey
Eric N. Macey is a Partner at Novack and Macey LLP in Chicago, where he has extensive experience in complex commercial litigation. He has been ranked repeatedly as one of the Top 100 Lawyers in Illinois by Super Lawyers and has been recognized by Chambers USA for his work in commercial litigation. In 2020, U.S. News & World Report named Mr. Macey Lawyer of the Year in the category of Real Estate Litigation in Chicago. Mr. Macey received his A.B. magna cum laude from Princeton University, his M.A. from Annenberg School of Communications, and his J.D. from George Washington University Law School with High Honors, Order of the Coif.
- Richard L. Miller II
Richard L. Miller II
Richard L. Miller II is a Partner at Miller PC, in Chicago, where he concentrates his practice in commercial litigation, labor law, and class actions. Miller is an Adjunct Professor at the Northwestern School of Law, where he has served as an instructor for Trial Advocacy since 2005 and Advanced Trial Advocacy since 2013. He has been an arbitrator for the American Arbitration Association arbitrator since 2008, FINRA since 2018, and the Cook County Mandatory Arbitration Program from 2003 to 2005. He has been repeatedly recognized as a Leading Lawyer, Super Lawyer, and Rising Star. In 2008, Miller was named one of the 40 Illinois Attorneys Under Forty To Watch by the Law Bulletin Publishing Company, publishers of Chicago Lawyer and Chicago Daily Law Bulletin. He is a Past President of the Law Alumni Board for the University of Illinois College of Law. Miller graduated cum laude from the University of Illinois College of Law and magna cum laude from the University of Illinois College of Business.
- Douglas C. Murray
Douglas C. Murray
Douglas C. Murray is a Member at Aronberg Goldgehn in Chicago, where his practice is focused on business law and transactions. He is a member of the American Bar Association and Chicago Bar Association. Mr. Murray received his B.A. from Northwestern University and his J.D. from Loyola University Chicago School of Law.
- Amy M. Rapoport Gibson
Amy M. Rapoport Gibson
Amy M. Rapoport Gibson is a Partner at Aronberg Goldgehn in Chicago, where his practice is focused on commercial and employment litigation. Ms. Rapoport Gibson is the Co-Chair of the Chicago Bar Association’s Labor & Employment Committee and the Co-Vice Chair of the Chicago Bar Association’s Alliance for Women. She was named an Illinois Super Lawyers Rising Star from 2010 – 2019. Ms. Rapoport Gibson received her undergraduate degree from DePaul Unviersity and her J.D. from Chicago-Kent College of Law.
- Steven M. Scholl
Steven M. Scholl
Steven M. Scholl is a Member at Aronberg Goldgehn in Chicago. His practice is focused on business law and transactions and business divorce. He is a member of the Chicago Bar Association and has been recognized annually (2005 – 2019) as an Illinois Leading Lawyer in closely and privately held business law and tax law. Mr. Scholl received his B.A. from the University of Illinois at Urbana-Champaign and his J.D. from Loyola University Chicago School of Law.
- John C. Sciaccotta
John C. Sciaccotta
John C. Sciaccotta is a Member at Aronberg Goldgehn in Chicago, where his practice is focused on business litigation and business divorce. He is a member of the Chicago Bar Association and has served on many of its committees and boards, including the Business Divorce & Complex Ownership Disputes Committee (Cofounder and Chair, 2019 – 2020), Mediation Program (Cofounder), Board of Managers (2017 – 2019), CLE Committee (current Vice Chair), and Bench & Bar Committee (current Chair). Mr. Sciaccotta is also a member of the DePaul University College of Law Dean’s Council (2018 – 2021) and a past member of DePaul’s Public Interest Law Board. He is on the Commercial Panel of the American Arbitration Association’s National Roster of Arbitrators and Mediators. Mr. Sciaccotta received his B.S.B.A. from Creighton University and his J.D. from DePaul University College of Law.
- Zachariah J. Snyder
Zachariah J. Snyder
Zachariah J. Snyder is an Associate at Aronberg Goldgehn in Chicago, where his practice is focused on business law and transactions and business litigation. He has been awarded CALI Excellence for the Future Awards for International and Comparative Antitrust, Alternative Dispute Resolution, Supreme Court Review, Professional Responsibility, and International Business Transactions. He earned the Dean’s List at Chicago-Kent College of Law every semester from Fall 2015 – Spring 2018. Mr. Snyder received his B.A. cum laude from Butler University and his J.D. cum laude from Chicago-Kent College of Law, where he was a member of the Dean’s Honors Scholar Program.
- Michael A. Weinberg
Michael A. Weinberg
Michael A. Weinberg is a Partner at Novack and Macy LLP in Chicago, where his practice is focused on commercial litigation. He has been recognized as both an Illinois Super Lawyer (Top Rated Business Litigation Attorney) and a Leading Lawyer. He is a member of the Chicago Bar Association. Mr. Weinberg received his B.A. from Vassar College with honors and distinction and his J.D. from the University of Michigan Law School, where he was the Note Editor for the Michigan Law Review.
Disputes Involving Closely Held Companies 2020 Edition
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