Legal Question in Business Law in New Jersey

Re: Super Majority

The concept is quite simple. A Closely held business can have a Shareholder's Agreement. This Agreement is a contract between the shareholders. Typically, the Shareholders Agreement outlines what happens if a shareholder becomes disabled or dies, what happens if there is a major disagreement or deadlock. Voting requirements on certain issues are also typically addressed.

Because the shareholder's agreement can greatly affect you rights, the entire transaction should be negotiated and drafted by a tax and business attorney.

I hope this helps!

Ron Cappuccio

http://www.BusinessEsq.com

Re: Super Majority

You should not purchase (or even accept) any interest in a business unless and until you have a business lawyer review the arrangement. That will naturally include a review of the corporation's bylaws which, together with the corporation law of the State of incorporation, will determine what voting rights apply. That will answer any quesitions that you might have and many others that you may not have imagined.

You need to be particularly careful when acquiring an interest in an S-Corp, LLC, or true partnership because they are all taxed as partnerships for income tax purposes. That means that the income is considered to be earned by the owner in the year that it is earned bu the business even if it is not distributed. That can leave you owing taxes on money that you have never received. For that reason and for many others, you should have a lawyer review the business documents before you buy.

My firm handles matters of this type. If I can be of further help to you, call or email.

See also: http://info.corbettlaw.net/lawguru.htm

Re: Super Majority

Super majority simply means something more than 51%. This is usually used when shares are held where one or two shareholders own a majority and either unanimous consent is needed to make decisions, or so the minority shareholders have some control, as they will be needed to also approve decisions. I agree that you should not make any decision without having someone review the corporate status and all documents. From what you describe, you might be purchasing part of an existing shareholder's shares, and even if the by-laws or other agreements require a 75% vote, the remaining shareholders will control the company, so recognize that you might not have any say in how the corporation is operated or the business is conducted. You should have expert advice before you make this investment.