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Table of Contents

List of Forms by Chapter

Chapter 1 — Organizing and Advising a Small Business

I. [1.1] Introduction

II. [1.2] Whom Do You Represent?

III. Choosing the Form of Business Entity

[1.3] Sole Proprietorship

Partnership

[1.4] General Partnership

[1.5] Limited Partnership

[1.6] Limited Liability Partnership and Limited Liability Limited Partnership

Corporation

[1.7] C Corporation

[1.8] S Corporation

[1.9] Professional Corporation and Benefit Corporation

[1.10] Limited Liability Company and Professional Limited Liability Company

[1.11] Close Corporation

[1.12] Joint Venture

[1.13] Cooperatives

General Considerations

[1.14] Number and Identity of Owners and Investors

[1.15] Limited Liability

[1.16] Tax Considerations

[1.17] Management

[1.18] Transferability of Ownership

[1.19] Estate Planning

[1.20] Professional Regulation

[1.21] Continuity of Ownership and Management

[1.22] Costs; Flexibility for Future Transactions

IV. Organizing the Business Entity

[1.23] Sole Proprietorship

Partnership

[1.24] General Partnership

[1.25] Limited Partnership

[1.26] Limited Liability Partnership and Limited Liability Limited Partnership

C Corporation

[1.27] Selecting the State of Incorporation

[1.28] Incorporators

[1.29] Subscriptions for Shares; Pre-Organization Subscriptions

[1.30] Articles of Incorporation

[1.31] Registered Agent and Office

[1.32] Purposes for Which Corporation Is Organized

[1.33] Authorized and Issued Shares; Consideration Received

[1.34] Directors

[1.35] Allocation Factor

[1.36] Effectiveness of Articles of Incorporation

[1.37] Bylaws

[1.38] Meeting of Incorporators

[1.39] First Meeting of Shareholders

[1.40] First Meeting of Directors; Corporate Seal

[1.41] Form of Stock Certificate

[1.42] Organizing Other Forms of Corporations

[1.43] S Corporation

[1.44] Close Corporation

[1.45] Professional Corporation

[1.46] Limited Liability Company and Professional Limited Liability Company

[1.47] Federal Employer Identification Number

[1.48] Trademarks, Trade Names, and Service Marks

V. [1.49] Buy-Sell Agreements

[1.50] Scope of Restriction on Transfer

[1.51] Price

[1.52] Triggering Events

[1.53] Purchaser

[1.54] Financing the Purchase

VI. [1.55] Securities Law Concerns

[1.56] Federal Securities Law

[1.57] Intrastate Offering Exemption

[1.58] Private Offering Exemption

[1.59] Violations of Federal Securities Law

[1.60] Illinois Securities Law

[1.61] Preincorporation Subscriptions

[1.62] Sales to Fewer than 35 Persons or Offerings Less than $1 Million

[1.63] Sales to Existing Security Holders

[1.64] Miscellaneous

[1.65] Violations of Illinois Securities Law of 1953

VII. Capitalization and Financing of Corporations

[1.66] Equity and Debt

[1.67] Unconditional Promise To Pay

[1.68] Subordination or Preference

[1.69] Ratio of Debt to Equity

[1.70] Conversion of Debt into Stock

[1.71] Ownership of Debt and Equity

[1.72] 26 U.S.C. §1244

Outside Sources of Financing

[1.73] Banks

[1.74] Finance Companies

[1.75] Venture Capital Groups

[1.76] Leasing

[1.77] Governmental Agencies

VIII. [1.78] Operating the Business Entity

IX. [1.79] Appendix — Sample Forms

[1.80] Partnership Agreement

[1.81] Pre-Organization Subscription Agreement

[1.82] Bylaws

[1.83] Call and Waiver of Notice of First Meeting of Shareholders (with Minutes of First Meeting of Shareholders)

[1.84] Directors’ Action Pursuant to §8.45 of the Business Corporation Act of 1983, as Amended

Authors

Connie M. Mayer
Connie M. Mayer
Connie M. Mayer is a Partner at Hinshaw & Culbertson LLP in Chicago, where her practice focuses on commercial transactions. She is a member of the Illinois chapter of the ESOP Association and has been recognized as a Rising Star by Illinois Super Lawyers (2021 – 2023). Ms. Mayer received her B.A. cum laude from Illinois Wesleyan University and her J.D. from the Washington University School of Law.
Todd M. Young
Todd M. Young
Todd M. Young is a Partner at Hinshaw & Culbertson LLP in Chicago, where he concentrates his practice in corporate transactions and governance, with a particular focus on employee stock ownership plan transactions. He was recognized as a Notable LGBTQ Executive by Crain’s Chicago Business in 2018. He received his A.B. cum laude from Dartmouth College and his J.D. from the University of Chicago Law School, where he was Comment Editor of the Law Review.

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Elements of Illinois Law: Organizing and Advising a Small Business 2023 Edition

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