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Using The Model Business Corporation Act

by Sourav
The Model Business Corporation Act

Model Business Corporation (MBC) was an organization set up to help entrepreneurs set up businesses without going through the process of starting a corporation. Starting a business is time-consuming, expensive, and may create unexpected difficulties later on. On the other hand, a corporation provides many of the protections and guarantees needed by investors. The Model Business Corporation Act (MBCA) attempts to bring uniformity to the laws governing corporations so that there is consistency across the country. This uniformity will help potential entrepreneurs avoid pitfalls when they set up their corporations.
The Model Business Corporation Act was established by the Special Committee on Corporate and Public Corporations of the US House of Representatives and the Senate, along with the American Bar Association, in 1980. Ever since the M BCA has been influencing model acts for state corporate law. Today, it is being followed by 24 states. The MBCA was instrumental in shaping national standards for corporate law.
One provision of the Model Business Corporation Act calls for notice of meetings to be sent by the members to all members and stockholders. These notices provide a general opportunity for members to come together and meet behind closed doors to discuss important matters such as management and budgeting. The general idea behind this provision is to allow for informed discussions within corporations. However, it also requires that any action taken by the members must be in writing and not rely on “verbal or written communications.”
Another provision of the act proposed amendments would allow a corporation to carry on its business for a single year if the Articles of Organization are in order and there have been no meetings of the board of directors. Furthermore, the General Instructions Regarding Corporations would need to be adopted. This is an important provision since the purpose behind the creation of these corporations was to avoid double taxation. If a corporation makes use of this provision and then reverts to the double taxation provision of its home state, then it could be considered a fraudulent activity under the law. The Articles of Organization would need to be altered to prevent double taxation. These modifications would need to be approved by a majority of directors present and signed off on before the corporation can transact business.
Part of the purpose behind the MBCA was to provide general supervision over corporations. It does this through the Memorandum and Articles of Organization. This is the document that contains the basic information required to start a corporation. It also provides information about how the corporation will be managed and advised. It is the main document that is used by state law enforcement agencies when investigating crimes against corporations.
There are some additional stipulations in the Articles of Organization. They state that the corporation must have a registered agent and secretaries if it has more than two directors. The secretary is responsible for ensuring the proper services of a registered agent and will assist in the closing of a corporation’s doors. He or she will also ensure that all of the required paperwork is filed and that the corporation has a registered office.
A director of a corporation must not have a registered office within the jurisdiction of his corporation. Also, he or she cannot serve as legal counsel for the company unless he or she has been properly authorized to do so. Each state has its own registered agent rules. A company may have up to five registered agents, but only one director and one secretary at any given time.
The Articles of Organization also include a provision that will allow the shareholders of a corporation to propose by majority a resolution of affirmance or denial of the validity of a corporation’s declaration. This can only be done if the shareholders of a corporation file the proposition with the Secretary of State. If the Secretary of State finds the proposition to be valid, the corporation will then be dissolved. If the shareholders do not propose a resolution of affirmance, the Secretary of State will dissolve the business under the model corporate name act.
The last section of the Articles of Organization is important in that it allows for the annual budget of a business to be set by a registered agent. The registered agent must file the appropriate forms with the treasurer of the county where the corporation is registered. This is important because section 5.04 of the model business corporation act allows for the establishment of a separate, self-governing administrative division. This section is also important because if there is ongoing litigation involving the business, the registered agent can serve as the legal counsel for the company and its shareholders.

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