Category Archives: Change of Corporate Hierarchy

 

US Flag California Flag Orange County Flag

The Law Office of Gale and Vallance represents a client who recently asked, “Is there special documentation that needs to be prepared when a person who holds Officer, Director, and Shareholder positions is leaving the corporation?” Because this question and the ones following are so common, we thought it would be of interest to our readers to see the questions and our responses.

Four Things to Consider When a the President is Leaving Your Corporation

Question 1: The President of our small business is leaving the corporation, he is also a director and a shareholder, what is our first step?

A: As a California corporation, there are two different things that need to be done. First, you need to decide what will happen to the shares owned by the departing shareholder. Is he going to keep it, sell it to another shareholder, or sell it back to the corporation?

 

Question 2: What do we need to do to comply with requirements to change ownership?

Next, you are going to need to create records for the corporation that formally explain the President/Director/Shareholder’s departure and change of corporate hierarchy. As part of that documentation, he will need to resign his position as President and Director of the company, and someone else will need to be appointed to fill his positions.

As long as there is no internal animosity with regards to the changes, the Law Office of Gale and Vallance can prepare a package of this documentation for a flat fee. An additional fee is charged if there is going to be a formal share purchase agreement between the departing shareholder and the corporation (or whoever is going to be buying the corporate shares). Please contact our office if you would like specific fee information for your corporation.

 

Question 3: Is there anything we need to do with the State of CA regarding the change of corporate hierarchy

Yes, once the above referenced documentation has been completed, we will need to file a new and updated Statement of Information with the California Secretary of State explaining who now holds the position of President and the name of the new Director, if there is one.

 

Question 4: Is the relationship with your firm, as our registered agent, something that needs to be renewed each year?

Yes. The state of California requires you to have a Resident Agent for Service of Process on file every year.

The Law Office of Gale and Vallance has a specialized corporate records package for business clients who run corporations. As part of the package we keep your business in good standing by doing the following: prepare minutes for the annual board of directors meeting, minutes for the annual shareholders meeting, update and file the Statement of Information with the appropriate state, and renew the Registered Agent for Service of Process. If you would like a quote for this annual service, contact our office.

 

For more assistance or to ask an orange county business attorney specific questions about your business, please contact us at info@galeandvallance.com, or (714) 634-1414, or www.galeandvallance.com.

Read more