USA – NEW YORK Law and Practice Contributed by: Lindsey E. Haubenreich, Joseph P. Heins, Timothy P. Moriarty and Kimberly R. Nason, Phillips Lytle LLP
5.4 Minimum Capital Requirement New York State does not have a minimum capital requirement to start up any type of entity. 5.5 Applicable Governance Requirements Corporations The day-to-day management of a corporation’s activities is the responsibility of the directors of the corporation, who generally delegate such management to officers. Certain significant mat - ters associated with the governance and opera - tion of the corporation may require the approval of the corporation’s shareholders. Corporate governance is dictated by the provisions of the certificate of incorporation, bylaws and statutory law. Limited Liability Companies An LLC is presumed to be managed by its mem - bers unless the articles of organization provide that the management is carried on by manag - ers. Except as provided in the operating agree - ment, each member of an LLC is entitled to vote in proportion to the member’s share of current profits. The articles of organization of an LLC may provide for classes or groups of members having such relative rights, powers, preferences and limitations as the operating agreement of such LLC may provide. Members in a member- managed LLC, and managers in a manager- managed LLC, who exercise management pow - ers or responsibilities have the duty of care and loyalty. Limited Partnerships Limited partnerships are managed by at least one general partner. Limited partnership govern - ance is dictated by the terms of the limited part - nership agreement with the limited partnership law setting forth statutory defaults. In order to insulate the limited partners from unlimited liabil -
types of entities. The requirements for qualifying as a REIT are numerous and complex, but the primary statutory requirements are: • the REIT is managed by one or more trustees or directors; • the beneficial ownership of the REIT is evi - denced by transferable shares or by transfer - able certificates of beneficial interest; • the REIT would be taxable as a domestic corporation but for Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code” ) • the REIT is neither a financial institution nor an insurance company subject to specified provisions of the Code; • the beneficial ownership of the REIT is held by 100 or more persons; • at all times during the last half of each tax - able year, not more than 50% in value of the outstanding shares of the REIT are owned, directly or indirectly, through the application of certain attribution rules, by five or fewer individuals; • the corporation makes an election to be tax - able as a REIT, or has made this election for a previous taxable year that has not been revoked or terminated, and satisfies all rel - evant filing and other administrative require - ments established by the IRS that must be met to elect and maintain REIT status; • the REIT uses a calendar year for federal income tax purposes and complies with the record-keeping requirements of the Code and Treasury regulations promulgated thereunder; • at the end of any taxable year, the REIT must not have any undistributed earnings and prof - its that are attributable to a non-REIT taxable year; and • the REIT meets other tests regarding the nature of its income and assets, and the amount of its distributions.
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