Rhode Island Agreement Between Board Member and Close Corporation: In Rhode Island, an Agreement Between Board Member and Close Corporation refers to a legally binding contract between an individual serving as a board member and a closely held corporation. This agreement establishes the rights, obligations, and responsibilities of the board member within the close corporation, ensuring clarity and transparency in corporate governance. Key Features of a Rhode Island Agreement Between Board Member and Close Corporation: 1. Scope of Authority: The agreement outlines the board member's authority and responsibilities within the close corporation. It specifies their role in decision-making, corporate strategy, financial matters, and other crucial aspects of the company's operations. 2. Term and Termination: The agreement establishes the duration of the board member's appointment. It may also include provisions related to termination, resignation, or removal of the board member under certain circumstances, ensuring proper governance and smooth transitions if needed. 3. Confidentiality: To protect the close corporation's trade secrets, intellectual property, and other proprietary information, the agreement often includes provisions mandating the board member's adherence to strict confidentiality obligations. This helps safeguard the corporation's competitive advantage and maintains the trust among board members. 4. Compensation and Benefits: The agreement defines the board member's compensation package, including salary, bonuses, incentives, equity stakes, stock options, or any other benefits provided by the close corporation. These terms ensure a fair and mutually agreed-upon remuneration structure. 5. Non-competition and Non-solicitation: To maintain the close corporation's competitiveness, the agreement may contain clauses prohibiting the board member from competing with the corporation during and after their tenure. Non-solicitation clauses may also be included to prevent the board member from enticing employees, clients, or customers away from the corporation. 6. Indemnification and Liability: It is common for the agreement to address issues of indemnification and liability, outlining circumstances under which the close corporation will indemnify the board member for legal expenses and damages incurred during the course of their duties, as permitted by law. Types of Rhode Island Agreements Between Board Members and Close Corporations: 1. General Agreement Between Board Member and Close Corporation: This is the standard agreement entered into by a board member and a closely held corporation, establishing the overall terms and conditions of their relationship. 2. Agreement for Independent Board Members: In cases where independent directors or non-controlling shareholders join the close corporation's board, a specific agreement tailored to the unique needs and expectations of independent directors may be utilized. 3. Agreement for Executive Board Members: Close corporations may have board members who also hold executive positions within the company. An agreement dedicated to executive board members can outline their dual roles, responsibilities, and any additional compensation structure associated with their executive duties. It is important for both the board member and the close corporation to consult legal professionals experienced in Rhode Island corporate law to ensure that the agreement aligns with applicable laws and regulations while addressing the specific needs of the corporation.
Rhode Island Agreement Between Board Member and Close Corporation
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If your business is a corporation, then you are required by law to have a board of directors. Depending on your particular corporate structure and your state, one or two directors may be all that's legally required.
Different states have different rules for the organization of their S corporations and C corporations, but all for-profit and nonprofit corporations are required by law to have boards of directors. The rules of the state in which you incorporate determine when they must be named and how many directors are required.
ORC § 1701.591 entitled Close Corporation Agreement provides a mechanism for shareholders of a close corporation to agree in advance on issues related to the internal management and business operations of their corporation and the relations between and among themselves as shareholders.
Disadvantages to a Close CorporationClose corporations do not exist in all states.A close corporation often costs more money to organize.While shareholders have the benefit of greater control over the sale of shares, shareholders in a close corporation are also burdened with increased responsibility.More items...
It is a legal entity with its own legal personality and perpetual succession and must register as a taxpayer in its own right. A CC has no share capital and therefore no shareholders. The owners of a CC are the members of the CC. Members have a membership interest in the CC.
Can a close corporation or a company be a member of a close corporation? No, only a natural person or a inter vivos trust/testamentary trust can become a member.
A close corporation is a legal entity much like a company. A CC is run and administered by its members, who must be natural persons (i.e. not other legal entities). A close corporation's members are like a company's shareholders.
A Close Corporation has members and a Company has shareholders and directors. The Close Corporation has its own estate seperate from its members.
The articles of incorporation of a close corporation may provide that the business of the corporation shall be managed by the stockholders of the corporation rather than by a board of directors.