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Fri 7 Jan, 2005 09:01 pm
Hi, again!
I'm seeking general information regarding the purchase of an existing corporation (small business--single shareholder) which is in a state other than my own.
The intent is to buy the hard assets and goodwill (including the name) and operate that company from my home state. It's an internet-based company, so there's only a small amount of physical moving of hard assets involved.
What legal challenges might I incur? Are corporations recognized only by their home state, or are they recognized by all states as being incorporated (and afforded the same protections)?
Would the corporation have to close, then re-incorporate in its new home state, or can the shares just be transferred to the new owner without drawing up a new charter?
Anything I might need to ask about that I might overlook?
Thanks very much,
General Tsao
I think you may want to post this in the Legal Forum.
Re: Need general info re: buying an out-of-state corporation
GeneralTsao wrote:What legal challenges might I incur? Are corporations recognized only by their home state, or are they recognized by all states as being incorporated (and afforded the same protections)?
A corporation is recognized as a corporation everywhere (it is considered a "juridical person"), but it can only do business in those states where it is licensed.
GeneralTsao wrote:Would the corporation have to close, then re-incorporate in its new home state, or can the shares just be transferred to the new owner without drawing up a new charter?
That depends on the state and the corporation. You'll need to ask your attorney about this.
Re: Need general info re: buying an out-of-state corporation
joefromchicago wrote:
A corporation is recognized as a corporation everywhere (it is considered a "juridical person"), but it can only do business in those states where it is licensed.
What about companies that do business on the internet?
I've been thinking of incorporating a couple of my online businesses and wonder how what you said would affect that.
Craven: in the usual sense of the term, companies that operate on the web "do business" all over the world. In the legal sense, however, they are "doing business" where they are physically located. That's where they pay business taxes, file corporate reports, etc.
This subject, however, is rapidly approaching the limits of my expertise. I don't really follow cyberlaw, so I don't know if what I learned about traditional corporations has any application to the e-corporations of today. I trust that anyone who is making a significant decision like starting a business or incorporating will consult with an attorney who is familiar with the specific factual situation and the general state of the relevant laws.
Sounds like what I had thought, thanks Joe.
My businesses are not profitable enough to seek counsel, and I'm only incorporating to limit liability. So I'll have to do my own homework.
Is there actually an item on the balance called "Goodwill"? If so, it just may not be what you think it is.
Are the tangible assets valued at a significant amount. If you buy assets, you can probably depreciate them for tax purposes. If you buy the corporation, you may not be able to do that.
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