Tag: mi business attorney

What is a Michigan Registered Agent?

October 30, 2011 /

As a Grand Rapids, MI business lawyer, this is a question I’ve been asked quite a bit.  Due to the large number of corporations and limited liability companies (LLCs) formed in Michigan every year, it is important to know the requirements of a registered agent.  Why?  Because whether you form a Michigan corporation or a Michigan LLC, you are required to appoint a registered agent.  The law for requiring one for Michigan corporations is here, and the law for requiring one for Michigan limited liability companies is here.

A registered agent can be an individual Michigan resident, or a domestic or foreign corporation (or LLC) authorized to transact business in Michigan.  The registered agent of a Michigan corporation or LLC (I’ll refer to it as the “Company”) is the Company’s agent for the purpose of service of process.  Service of process is the procedure used to give legal notice to the Company of a court or administrative proceeding against it.  In other words, it’s how a Company is notified that it is being sued or that someone is bringing an administrative action against it.

Of course, to “serve process” on a Company, the Company is also required to have a registered office.  Both the name of the registered agent and the street address (and mailing address if different than the street address) of the registered office must be included in the Articles of Organization (if the Company is a LLC) or Articles of Incorporation (if the Company is a Corporation).

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends.

What Is a Michigan Benefit Corporation?

August 21, 2011 /

Short answer – nothing . . . yet.  You see, as a Grand Rapids, Michigan business lawyer I try to keep my “ear to the ground” when it comes to the future of business law – both here in Grand Rapids, Mi and nationally.  There seems to be a growing national trend for state business laws to allow a “Benefit Corporation.”  Five states already have such laws and Michigan is one of six states currently considering enacting B Corporation laws.

Generally speaking you can currently form two types of Corporations in Michigan – for profit or non profit.  Yes, there are more, but those are the two most common.  For profit Corporations can then elect to be treated as either a C Corporation or an S Corporation for tax purposes.  Please note that you don’t “form” a C Corporation or S Corporation – that is a tax election (and a topic for a future blog post).

Benefit Corporations would function the same as C Corporations in terms of taxation, but would give businesses the fiduciary duty to consider non-financial interest when making decisions and require accountability through annual reporting.  This is mainly accomplished and carried out by appointing a “Benefit Director.”  The driving cause behind the Benefit Corporation is providing a way for business Corporations to further environmental, sustainability and other goals without running afoul of Director fiduciary responsibilities.

You see, Directors are legally obligated to act in the best interest of the Corporation’s shareholders.  This could leave them open to the threat of lawsuit from one or more shareholders if they make a decision that is more mission driven (e.g. good for the community with potentially little or no benefit to the shareholders).  Forming as a Benefit Corporation would not only allow for those types of “greater good” decisions but also hold them accountable via a Benefit Director and Benefit Officer(s), annual reporting and a shareholder right to enforce a higher standard of action.

If you are interested in reading the proposed legislation, you can find it here: Senate Bill 359, Senate Bill 360, House Bill 4615, and House Bill 4616.

I can see this being of particular interest here in West Michigan.  We have a remarkable reputation for incorporating sustainability into our businesses and lives and for having a focus on the “greater good.”  I’m looking forward to monitoring developments on Benefit Corporations in Michigan and will post again with any updates.

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends.

Michigan LLC Charging Order Asset Protection

March 6, 2011 /

So you’ve read my post about charging orders against Michigan LLCs and are thinking, “so what?!”   Well, the key is not so much what it is, but whether it is the only remedy a creditor may have or just one of many.

Much review and comment has been made about a 2010 Florida case, Olmstead v FTC, 44 So 3d 76, and the effect it may have on the level of asset protection provided by a Single-Member Limited Liability Company.  Why?  Because the court determined that, under Florida law, a creditor is not limited to a charging order as a means of collecting on the judgment.  That could mean the creditor could “step into the shoes” of the LLC Member, effectively taking all ownership in the company and directing it as the creditor sees fit.  I think all Michigan LLC owners can agree, that’s a bad thing.

Well, Michigan business attorneys and the Michigan legislature were listening to the scuttlebutt.  What came out of it was a change to Michigan law via a 2010 amendment to the Michigan Limited Liability Company Act (the MLLCA).  Section 507 (MCL 450.4507) of the MLLCA now makes it clear that the charging order is the “exclusive remedy” by which a judgment creditor of a Member may satisfy a judgment out of a Member’s membership interest.

And THAT is a good thing for asset protection.  It limits the creditor to distributions from the LLC.  No distributions = nothing to the creditor.  And the creditor is not able to have any say in the LLC’s actions . . . it leaves the Member in control of the company.  And that is a great thing for Michigan business owners!

Important Note: there is still some belief that a court could find that a charging order is not the only remedy in certain circumstances involving a single-member LLC.   Make sure to meet with a Michigan business lawyer before making any decisions.

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends and trusted confidants.

How Should I Sign Business Documents?

December 5, 2010 /

It depends on whether you are right handed or left handed.  Ok, not really.  This is a question I hear on a regular basis and an important one to make sure you do correctly.  Many Michigan business owners form their company as a Corporation or a Limited Liability Company (LLC).  They do this because they want to protect their personal assets from business liabilities, among many other reasons.  Many Grand Rapids business owners have read stories about lawsuits against a company and “piercing the veil” to access the owner’s personal assets.  That is definitely something to avoid.

A key component in avoiding “veil piercing” is to make sure you treat your business as just that . . . a business . . . separate and apart from you, the owner.  And how you sign documents on the company’s behalf can reinforce that notion.  I generally recommend the following: [Your Name], as [Your Title] of [Business Name].  For example, “John Doe, as Member of Masters of the Universe LLC.”

This clearly sets out that you are signing the document in your business capacity, not your personal capacity.  I also recommend always including the abbreviation for the type of business entity – LLC or Inc. – at the end so that you are putting the other parties to the document on notice that the business name is not just a sole proprietorship.

Sure, signing this way can take a little extra time and room on the paper, but it’s time (and room) well spent if it help reinforce your business entity’s existence and protect your personal assets from business liability.  If you need to make sure your Grand Rapids small business is working like a “well oiled” machine, call us at 616-827-7596 for a small business “tune up.”  Mention this blog post and we’ll waive the typical “tune up” fee ($950 value!).