In Seidman v Clifton Savings Bank, S.L.A., (S.Ct. 2011), the NJ Supreme Court affirmed the Appellate Court decision finding that Clifton Savings Bank awards under their Stock Incentive Plan met the Business Judgment Rule and, as such, Seidman’s challenge was denied.
Clifton Savings Bank reorganized in 2004, issuing stock, of which 45% were made available to the public. Seidman bought some of such stock. In 2005, Clifton (via holding company Bancorp) issued a notice of the 2005 annual meeting, summarizing a Stock Incentive Plan to be enacted allowing for stock option grants and restricted stock awards to the board of directors and key staff. The stockholder approved the plan.
Clifton awarded the full possible amount of awards to its board of directors and key staff. Seidman filed suit arguing that the incentive were not designed to retain service, left insufficient shares and options to attract new qualified people, were not consistent with any study or survey and constituted an unreasonable portion of Bancorp’s/Clifton’s net earnings. Seidman argued that disclosure of the stock plan was insufficient and that there was corporate waste.
The court held that once a stock incentive plan is approved or ratified by the stockholders, a challenger to the plan bears the burden of proving that the business judgment rule —-no person of sound business judgment would view the consideration furnished by the individual directors a fair exchange for the awards conferred—has not been met. The distinction between whether an action constitutes corporate waste or is subject to the business judgment rule is one of substance; i.e. in the former case, the court will reverse the decision of the stockholders and, in the latter case, it will not.
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
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--Tagged under: business law--
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--Tagged under: Corporate Law--
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--Tagged under: Clifton Savings Bank--
S Corporations shareholder agreements include an explanatory statement consent to S election, restriction on sale of the common stock, restrictive legend, request to transfer, transfer by reason of death, transfer in violation of agreemtn, stock issued or transferred in the future, revocation of S corporation election, termination, miscellaneous and signatures of shareholders as well as witnesses.
The explanatory statement sets out the intention of the company to be taxed as an S Corporation. Each shareholder agrees to the election by the company of S corporation status and that they each will not act in a manner prejudicial to the S corporation status. In addition, each shareholder agrees not to sell, assign, transfer etc. all of part of his/her shares except pursuant to the shareholder agreement.
Further provisions of the S Corporation shareholder agreement includes that each stock certificate must bear a conspicuous restrictive legend on the sale, transfer etc. of the stock. If a shareholder wants to sell or transfer stock, the shareholder must give notice to the company of a specified period and the company must reasonably consent to the action requested. However, if a shareholder transfers his or her stock in violation of the terms of the shareholder agreement, such transfer is void.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Gabrielle L. Strich, Esq.
FEDERAL TAX NOTICE - IRS rules mandate restrictions on federal tax advice by attorneys and accountants. If this correspondence or any attachments contain (or may be construed to contain) any federal tax advice, such advice is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under federal tax laws.
Strich Law Firm, P.C.’s employees are not accountants. As such, tax information may not be relied upon for federal, state or other tax purposes. Rather, you should consult with an accountant for any tax advice.
ALSO, please remember that our business is referral based and let your friends and family know we would be happy to assist them with their legal and/or mediation needs.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
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--Tagged under: corporate law; shareholder agreement;--
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In evaluating which form of corporation you want for your new business entity, an S Corporation has a number of benefits. S Corporations cannot be more than 75 shareholders, though husband and wife, estates, certain trusts, tax-exempt charitable institutions, certain partnerships and other S corporations with a sole shareholder count as one shareholder.
The key benefits of an S Corporation are tax savings and liability protection. There is no double taxation because income and losses are passed through to shareholders and included on their individual tax returns. In addition, if the corporation choosed to retain some of the income, the portion retained is not subject to Medicare tax.
Before an individual shareholder in an S Corporation is personally liable, the person or entity suing must piece its corporate veil, which is quite difficult. However, there are special rules for professionals such as attorneys and accountants that limit the protection of a S Corporation. Even in the latter case, the S Corporation provide a layer of liability protection to the individual shareholders.
Lastly, many shareholders enjoy the S Corporation benefit of receiving pay checks and a W2.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Gabrielle L. Strich, Esq.
FEDERAL TAX NOTICE - IRS rules mandate restrictions on federal tax advice by attorneys and accountants. If this correspondence or any attachments contain (or may be construed to contain) any federal tax advice, such advice is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under federal tax laws.
Strich Law Firm, P.C.’s employees are not accountants. As such, tax information may not be relied upon for federal, state or other tax purposes. Rather, you should consult with an accountant for any tax advice.
ALSO, please remember that our business is referral based and let your friends and family know we would be happy to assist them with their legal and/or mediation needs.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
--Tagged under: S Corporation--
--Tagged under: Corporate law--
--Tagged under: business law--
--Tagged under: tax benefits--
--Tagged under: liability protection--
--Tagged under: form of corporation--
--Tagged under: shareholders--
--Tagged under: pierce the corporate veil--
Currently, attorneys in the US enjoy the attorney-client privilege; ie. communications between a client and an attorney are not admissable. The privilege rules of the jurisdiction are applied, though some courts have held that the party asserting the applicability of a foreign privilege has the burden of proving it. If a party does not asset a foreign privilege, the courts will use a conflict of law analysis to determine if the foreign privilege applies.
Yet the attorney-client privilege may be at risk because a significant percentage of corporations in the US have at least a foreign affiliation. Recently, the European Court of Justice held in Akzo Nobel Chemicals Ltd. v Commission, in an anti-trust matter, that the legal professional privilege does not cover exchanges within a company or group with in-house lawyers!!! The Court focused on the lack of independence in such situations.
10/27/10
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
--Tagged under: attorney client privilege--
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New Jersey Courts have finally clarified that a certificate of authority is only needed in New Jersey if a company is engaged in intrastate commerce. See Bonnier Corporation v Jersey Cape Yacht Sales, Inc., No. A-2404-09T2, App. Div 101310. Bonnier relied on the US Supreme Court decision of Eli Lilly & Co., v. Sav-on Drugs, Inc., 366 U.s. 276, 81 S.Ct. 1316 (1961), which case determined that a State’s imposition of the certificate of authority unduly burdened interstate commerce and therefore violated the Commerce Clause where a company only engages in interstate commerce.
Factors looked at include ownership of real estate, location of an office, telephone listing, sales to retailers vs just wholesalers and employees regularly in NJ. Sales people traveling to NJ to sell to businesses in NJ or bare solicitation of orders is not sufficient to require a certificate of authority. However, targeting the needs of its NJ customers and fulfilling the orders through NJ suppliers is enough to subject the company to a determination of intrastate business and a need for a certificate of authority.
Companies that engage in intrastate commerce in NJ must have a certificate of authority from NJ to file a legal action in NJ. See N.J.S. A. 14A:13-3(1) and N.J.S. A. 14A:13-11(1).
This clarification provided by the Bonner case is significant because previously there was a blanket requirement for a foreign corporation (headquartered or incorporated in a state other than NJ) to have a NJ certificate of authority to file suit in NJ or be subject to dismissal under N.J.S.A. 14A:13-11.
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
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--Tagged under: corporate law--
--Tagged under: N.J.S.A. 14A:13-11--
--Tagged under: N.J.S. A. 14A:13-3--
--Tagged under: motion to dismiss--
An arbitration clause in an employment agreement means that any employment dispute must be handled through arbitration rather the courts. Case law has upheld such clauses as valid and binding. Most arbitrations are handled by one arbitrator, though there can be a panel of arbitrators, depending on the language in the arbitration clause. The source of the arbitrators, such as American Arbitration Association, is usually spelled out in the arbitration clause. Under AAA rules, both parties have to pay an initial fee for a list of arbitrators to be provided to the parties.
Arbitration is generally less formal and costly than the court process. However, an arbitrator’s decision is binding, with very rare exceptions. Parties are usually represented by attorneys in arbitration, but can choose to represent themselves.
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
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--Tagged under: employment--
--Tagged under: employment agreement--
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Under the NJ Business Corporation Act (N>J>S.a. 14A:5-28(4)), a shareholder can see the corporation’s board and/or executive committe minutes so long as the shareholder has a proper purpose to inspect them. However, the review of the minutes is limited to the portions relevant to the shareholder purpose. This permissible review of minutes is not the same as a discovery request in litigation. In fact, the shareholder cannot merely claim mismangement as the proper purpose, but must have a specific, supported and credible allegation of mismanagement in order to exercise the right to review minutes. In other words, the review cannot be a “shopping trip” to see if anything can be found. See Cain v Merck & Co, Inc., App. Div., #12-2-9095 decided 8/10.
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C., and anyone viewing this site.
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If parties have material facts in dispute in contract litigation, the Court cannot grant summary judgment. Summary judgment is when the Court rules in the requesting party’s favor based on the law and facts not in dispute. When granted, it cuts short and ends litigation. However, it is difficult to obtain summary judgment early in litigation because material facts are usually in dispute. See Yezzi Associates, L.L.C. v Brick Township Board of Education, App. Div. July 2010 #11-2-8658).
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C., and anyone viewing this site.
--Tagged under: business dispute--
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--Tagged under: contract breach--
--Tagged under: summary judgment--
--Tagged under: Yezzi Associates--
--Tagged under: Brick Township--
--Tagged under: Brick Township Board of Educaiton--
--Tagged under: end litigation--
Security law related businesses are at increased risk for violations. The soon-to-be-signed Dodd-Frank Act financial reform package creates a new whistleblower program with potentially huge cash rewards for individuals who provide information about securities law violations to the Securities and Exchange Commission. The whistleblower program also covers violations of the Foreign Corrupt Practices Act, which lately has produced hundreds of millions of dollars in corporate penalties and settlements. Under the program, the SEC will pay whistleblowers cash rewards of between 10 percent and 30 percent of any monetary sanctions in excess of $1 million that the government, because of whistleblowers’ assistance, recovered through either civil or criminal proceedings. In addition, the program also extends to whistleblower disclosures of violations to the U.S. Commodity Futures Trading Commission.
Gabrielle L. Strich, Esq.
Call us with more questions at 732-438-3880 or visit our web site at www.strichlaw.com.
Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. , and anyone viewing this site.
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--Tagged under: Dodd-Frank Act--
--Tagged under: corporate law--
--Tagged under: securities law violations--
--Tagged under: Foreign Corrupt Practices Act--
--Tagged under: Commodity Futures Trading Commission--
