Corporate Practice Series Portfolio No. 64-2nd, The Massachusetts Corporation: Legal Aspects of Organization and Operation, analyzes Chapter 156D, the principal Massachusetts corporation law statute, which covers such matters as corporate organization and operation and extraordinary corporate actions. The portfolio also examines statutes treating other types of corporations (e.g., professional) that make reference to and rely on provisions of Chapter 156D for some aspects of their organization and governance. It will also consider the Massachusetts business trust and the requirements for foreign corporations to qualify—and to maintain that qualification—to do business in Massachusetts. Finally, it provides an extensive overview of Chapter 156C, which governs Massachusetts limited liability companies, both domestic and foreign.

Portfolio 64-2nd: The Massachusetts Corporation: Legal Aspects of Organization and Operation

I. Introduction
    A. Adoption of the Massachusetts Corporation Law Statute
    B. Objectives in Drafting Chapter 156D
    C. Organization and Structure of Chapter 156D
    D. Other Business Law
    E. Conclusion

II. Considerations for Incorporating in Massachusetts
    A. The Massachusetts Business Corporation Act
         1. Comparison to Delaware corporation law
              a. Shareholder action without a meeting
              b. Shareholder approval of extraordinary action
              c. Calling special shareholders' meetings
              d. Shareholder appraisal rights
              e. Voting and inspection by non-shareholders
              f. Number of directors
              g. Removal of directors
              h. Close corporations
         2. Special issues in Massachusetts corporation law
              a. Rights of shareholders in close corporations
              b. Anti-takeover statutes
              c. Piercing the corporate veil
              d. Massachusetts business trusts
    B. Other Massachusetts Laws
         1. Statutes
         2. Regulations
    C. Tax Considerations
         1. Excise on domestic corporations
              a. Rate of tax
              b. Classification as ‘tangible property corporation' or ‘intangible property corporation'
              c. Certain deductions
              d. Credits against tax
         2. Excise on foreign corporations
         3. Other tax statutes
    D. Fee for Incorporating in Massachusetts

III. Organizing the Corporation
    A. Introduction
    B. Corporate Name; Assumed Name; Protection of Marks
         1. Corporate name: requirements and standards
         2. Reservation of name
         3. Assumed (‘d/b/a') name
         4. Massachusetts trademark and service mark statute
    C. Initial Tax Considerations
         1. S corporation status
         2. Manufacturing or research and development corporation
    D. Registered Office; Registered Agent
         1. Registered office
         2. Registered agent
    E. Articles of Organization
         1. Required matters
         2. Optional matters
         3. Matters for either the articles of organization or the bylaws
         4. Filing the articles of organization; effect
    F. Bylaws
         1. Standard matters
         2. Optional matters
    G. Organizational Meetings
         1. Incorporators
              a. Who may serve
              b. Initial meeting
              c. Scope of authority
              d. Liability for false statements
         2. Directors
    H. Subscriptions to and Payment for Stock
    I. Fiscal Year; Annual Meeting
    J. Tax Identification Numbers; Unemployment Compensation
    K. Correction of Inaccurate Corporate Records Filed with the Secretary of State
    L. Shareholders' Agreements

IV. General Provisions; Definitions
    A. Chapter 156D—General Provisions and Definitions
         1. Act definitions
         2. Notice
              a. Manner of giving notice
              b. Effectiveness of delivery to shareholders
              c. Written notice to a corporation
              d. Effectiveness of notice in general
         3. Number of shareholders
         4. Interpretation of act

V. Corporate Powers
    A. Overview
    B. Powers
    C. Ultra Vires
    
VI. Shares
    A. Shares
         1. Authorized shares
         2. Determination of terms of class or series
         3. Issued and outstanding shares
         4. Fractional shares
    B. Issuance of Shares
         1. Subscription for shares before incorporation
         2. Issuance of shares
         3. Liability of shareholders (‘piercing the corporate veil')
         4. Share dividends
         5. Share options
         6. Form and content of certificates
         7. Shares without certificates
         8. Restriction on transfer of securities
    C. Subsequent Acquisition of Shares by Shareholders and Corporation
         1. Shareholders' preemptive rights
         2. Corporation's acquisition of its own shares
    D. Distributions
         1. Distributions to shareholders
         2. Liability for improper distributions
    E. Thin Capitalization—Minimum Capital
    F. Debt/Equity
    G. Disclosure Requirements
    H. U.C.C. Article 8

VII. Shareholders
    A. Meetings of Shareholders
         1. Annual meeting
         2. Special meeting
         3. Court-ordered meeting
         4. Action without meeting
         5. Notice of meeting
         6. Waiver of notice
         7. Record date
         8. Meetings by remote communication; remote participation
    B. Voting
         1. Shareholders list for meeting
         2. Voting entitlement of shares
         3. Proxies
         4. Shares held by nominees
         5. Corporation's acceptance of votes
         6. Quorum and voting requirements for voting groups
         7. Action by single and multiple voting groups
         8. Greater or lesser quorum or voting requirements for shareholders
         9. Voting for directors; cumulative voting
         10. Form of shareholder action
    C. Voting Trusts and Agreements
         1. Voting trusts
         2. Voting agreements
         3. Shareholder agreements
    D. Derivative Proceedings
         1. Introduction and definitions
         2. Standing
         3. Demand
         4. Stay of proceedings
         5. Dismissal
         6. Discontinuance or settlement
         7. Payment of expenses
    E. Duties of Majority Shareholders to Minority Shareholders, and of Shareholders Generally, in Close Corporations

VIII. Directors
    A. Role of Directors
    B. Qualification, Election, and Removal of Directors
    C. Staggering of Terms of Directors
    D. Number of Directors
    E. Directors' Meetings, Notice, and Quorum
    F. Action by Directors Without a Meeting; Remote Participation in Meetings
    G. Committees of the Board
    H. Duties, Rights, and Liabilities of Directors
         1. Duty of care
         2. Reliance on other persons
         3. Conflict of interest transactions
         4. Indemnification of directors
         5. Exculpation of directors
         6. Right to inspect records
         7. Liabilities of directors for improper distributions
         8. Loans to directors

IX. Officers
    . Introductory Material
    A. Officers: Required, Optional
    B. Election and Removal of Officers
    C. Authority and Duty of Officers
    D. Secretary; Resident Agent
    E. Duties of Officers
    F. Indemnification and Insurance
    G. Liabilities of Officers

X. Indemnification
    A. Definitions
    B. Mandatory and Permissible Indemnification
    C. Advances for Expenses
    D. Court-Ordered Indemnification and Advance for Expenses
    E. Determination and Authorization of Indemnification
    F. Officers
    G. Insurance
    H. Variation by Corporate Action

XI. Domestication
    A. By a Foreign Corporation
    B. By a Domestic Corporation
    C. Plan of Domestication
    D. Amendments to the Plan
    E. Action on a Plan of Domestication
    F. Articles of Domestication
    G. Surrender of Charter Upon Domestication
    H. Effect of Domestication
    I. Abandonment of a Domestication

XII. Nonprofit Conversion
    . Introductory Material
    A. Approval by Directors and Shareholders
    B. Articles of Nonprofit Conversion; Articles of Charter Surrender
    C. Effect of Nonprofit Conversion
    D. Conversion and Domestication by a Foreign Nonprofit Corporation Into a Massachusetts Business Corporation

XIII. Entity Conversion
    . Introductory Material
    A. Approval of the Plan of Entity Conversion
    B. Articles of Entity Conversion; Articles of Charter Surrender
    C. Effect of Entity Conversion

XIV. Amendments to Articles of Organization and Bylaws
    . Introductory Material
    A. Amendments by Board of Directors
    B. Amendments by Directors and Shareholders
    C. Articles of Amendment; Restated Articles of Organization
    D. Amendments to the Bylaws
    E. Amendments Relating to Reorganization

XV. Mergers and Share Exchanges
    . Introductory Material
    A. Mergers
    B. Share Exchanges
    C. Approval of Merger or Share Exchange by Directors and Shareholders
    D. Mergers Involving Subsidiaries
    E. Articles of Merger or Share Exchange
    F. Effect of Merger or Share Exchange
    G. Regulation of Takeovers
         1. Overview and background
         2. Chapter 110C—the first anti-takeover statute
         3. Chapter 110D—the Control Share Acquisition Act
         4. Chapter 110F—business combinations with interested shareholders

XVI. Disposition of Assets
    A. Approval by Board of Directors and Shareholders
    B. Liability of Successor Corporation
    C. Plant Closing Law
    
XVII. Dissenters' Rights
    A. When Dissenters' Rights Are Available
    B. Required Notices and Procedures
    C. Court Action

XVIII. Dissolution
    A. Voluntary Dissolutions
         1. Dissolution by incorporators or initial directors
         2. Dissolution by board of directors and shareholders or otherwise in accordance with the articles of organization
         3. Articles of dissolution
         4. Revocation of dissolution
         5. Effect of dissolution
    B. Provision for Claims Against Dissolved Corporations
    C. Administrative Dissolution
    D. Judicial Dissolution
    E. Receivership and Related Matters

XIX. Foreign Corporations
    . Introductory Material
    A. What Constitutes Doing Business in Massachusetts
    B. Consequences of Transacting Business Without Qualification
    C. Qualification to Do Business in Massachusetts; Annual Reports
    D. Corporate Name of Foreign Corporation
    E. Registered Office and Registered Agent
    F. Service on Foreign Corporation
    G. Withdrawal of Foreign Corporation from Massachusetts
    H. Revocation of Authority to Transact Business in Massachusetts

XX. Records and Reports
    . Introductory Material
    A. Records to be Maintained in Massachusetts
    B. Inspection Rights
    C. Financial Statements; Bylaw Amendments
    D. Annual Reports

XXI. Securities Laws
    . Introductory Material
    A. Registration Exemptions
         1. Uniform Securities Act
         2. Massachusetts Uniform Limited Offering Exemption
         3. Rule 506 offerings
    B. Registration
         1. Registration by coordination
         2. Registration by qualification
    C. Enforcement

XXII. Limited Liability Companies
    A. Introduction
    B. Formation of a Domestic LLC
         1. Name
              a. Requirements
              b. Reservation
         2. Office; resident agent
         3. Certificate of organization
              a. Required contents
              b. Optional provisions
              c. Fees and forms
              d. Effect of filing—public notice
         4. The operating agreement
    C. Operation of a Domestic LLC
         1. Purposes
         2. Powers
         3. Records
         4. Access to information
         5. Amendment of certificate of organization—required and optional
         6. Restatement of certificate
         7. Cancellation of certificate
         8. Execution of certificates; failure to execute
         9. Incumbency
         10. Execution of recordable instruments
         11. Annual report; fee
         12. Good standing certificate
         13. Certificate of existence
    D. Members and Managers
         1. Provisions applicable to members and managers
              a. Limited liability
              b. Indemnification
              c. Exoneration
              d. Interested transactions
              e. Duty of care
              f. Operating agreement provisions
                   (i). Classes
                   (ii). Voting
                   (iii). Meetings
                   (iv). Safe harbor
              g. Liability for violative distributions
              h. Delegation of powers
         2. Members
              a. Management vested in members
              b. Admission of members
              c. Contributions
                   (i). Types
                   (ii). Extent of obligation; remedy for failure
                   (iii). Compromise of contribution obligation
                   (iv). Remedies in operating agreement
              d. Allocation of profits and losses; return of contribution
              e. Distributions
              f. Nature of member's interest
              g. Evidence of membership interest
              h. Assignment or pledge of membership interest
                   (i). Assignment of management rights
                   (ii). Assignment of economic and other rights
                   (iii). Admission of assignee to membership
                   (iv). Rights and liabilities of assignees
              i. Exercise of membership by legal representative
              j. Resignation of members
              k. Judgment creditor
         3. Managers
              a. Qualification
              b. Classes and groups
              c. Resignation of managers
    E. Dissolution and Winding Up; Revocation; Reinstatement
         1. Events of dissolution
         2. Application for judicial dissolution
         3. Persons permitted to wind up the LLC
         4. Permitted action during winding up
         5. Claims against and obligations of dissolved LLC
         6. Distribution of dissolved LLC's assets
         7. Administrative dissolution
         8. Reinstatement
    F. Merger and Consolidation
         1. Permitted merger or consolidation entities
         2. Approval by members and rights of dissenters
         3. Procedure
         4. Powers and property of successor
    G. Conversion
         1. Entities permitted to convert
         2. Procedure—approvals, filing, and effectiveness
         3. Powers and property of successor
    H. Reorganization
    I. Actions
         1. Direct actions
         2. Derivative actions
              a. Award of fees
              b. Impermissible defense
    J. Foreign Limited Liability Companies
         1. Introduction
         2. Applicable law
         3. Permitted business in Massachusetts
         4. Name
         5. Resident agent
         6. Qualification to do business in Massachusetts; fee
         7. Filing by secretary of state
         8. Certificate of correction
         9. Failure to register
         10. Suit; service of process
         11. Cancellation of registration
         12. Withdrawal
         13. Revocation of right to transact business
         14. Annual report

XXIII. Massachusetts Business Trusts
    A. Introduction
    B. Statutory Requirements
    C. Operations
    D. Liability
    E. Tax Treatment

XXIV. Professional Corporations
    A. Introduction
    B. Organization and Operation
    C. Shareholder Qualifications
    D. Shareholder Liability; Privilege
    E. Foreign Professional Corporations

XXV. Nonprofit Corporations
    A. Introduction
    B. Formation
    C. Operation of the Corporation
    D. Filings; Certificate of Good Standing
    E. Extraordinary Corporate Events

XXVI. Litigation
    A. Massachusetts Courts
    B. Massachusetts Rules of Civil Procedure
         1. In general
         2. Derivative actions
    C. Venue and Service of Process
         1. Domestic corporations
         2. Foreign corporations
    D. Trade Regulation Statutes

Portfolio 64-2nd: The Massachusetts Corporation: Legal Aspects of Organization and Operation

Wks. 1 Checklist for Incorporation

Wks. 2 Application of Reservation of Name

Wks. 3 City of Boston Business Certificate (Regarding Use of Fictitious Business Name)

Wks. 4 Unanimous Consent of Incorporator(s) in Lieu of Meeting

Wks. 5 Articles of Organization Partially Completed with Standard Provisions

Wks. 6 Bylaws with Standard Provisions

Wks. 7 Initial Action of Directors by Unanimous Consent (With Notes for Minutes if Actual Meeting Held)

Wks. 8 Stock Subscription Agreement

Wks. 9 Department of Revenue Form 355Q

Wks. 10 Trademark/Service Mark Application

Wks. 11 Employer Status Report (Department of Employment and Training)

Wks. 12 Sample Stock Certificate Legends

Wks. 13 Corporations Division Fee Schedule

Wks. 14 Office of the Secretary of State, Office of the Attorney General: Addresses/Telephone Numbers

Wks. 15 Annual Report for Domestic and Foreign Corporations

Wks. 16 Articles of Correction

Wks. 17 Statement of Change of Supplemental Information in Article VIII of Articles of Organization

Wks. 18 Statement of Appointment of Registered Agent

Wks. 19 Statement of Change of Registered Agent/Registered Office

Wks. 20 Statement of Change of Registered Office Address by Registered Agent

Wks. 21 Statement of Resignation of Registered Agent

Wks. 22 Certificate of Resignation of Directors or Officers

Wks. 23 Request for Certificate of Tax Good Standing

Wks. 24 Notice of Annual Meeting of Shareholders

Wks. 25 Minutes of Annual Meeting of Shareholders

Wks. 26 Minutes of Annual Directors' Meeting

Wks. 27 Action of Board of Directors by Written Consent

Wks. 28 Shareholder Action by Written Consent

Wks. 29 Articles of Amendment

Wks. 30 Articles of Merger Involving Domestic Entities

Wks. 31 Articles of Merger Involving Domestic Corporations, Foreign Corporations or Foreign Other Entities

Wks. 32 Articles of Share Exchange Involving Domestic Corporations and Domestic Other Entities

Wks. 33 Articles of Share Exchange Involving Domestic or Foreign Corporations or Foreign Other Entities

Wks. 34 Restated Articles of Organization

Wks. 35 Articles of Charter Surrender

Wks. 36 Articles of Charter Surrender Upon Foreign Non-profit Conversion

Wks. 37 Articles of Entity Conversion of a Domestic Business Corporation to a Domestic Other Entity

Wks. 38 Articles of Charter Surrender Upon Conversion to a Foreign Other Entity

Wks. 39 Articles of Entity Conversion of a Domestic Other Entity to a Domestic Business Corporation

Wks. 40 Articles of Entity Conversion of a Foreign Other Entity to a Domestic Business Corporation

Wks. 41 Articles of Voluntary Dissolution

Wks. 42 Articles of Voluntary Dissolution of Corporation Which Has Not Issued Shares or Has Not Commenced Business

Wks. 43 Articles of Revocation of Dissolution

Wks. 44 Application For Reinstatement Following Administrative Dissolution

Wks. 45 Application For Revival (for corporations dissolved voluntarily or administratively prior to July 1, 2004)

Wks. 46 Foreign Corporation Certificate of Registration

Wks. 47 Certificate of Amendment

Wks. 48 DBA Attachment

Wks. 49 Foreign Certificate of Withdrawal

Wks. 50 Foreign Certificate of Withdrawal Upon Conversion to a Nonfiling Entity

Wks. 51 Foreign Application For Transfer of Authority

Wks. 52 Application for Reinstatement of Authority to Transact Business

Wks. 53 Articles of Domestication

Wks. 54 Articles of Foreign Non-profit Domestication and Conversion

Jonathan C. Guest
McCarter & English, LLP
Boston, Massachusetts

David A. Parke
Bulkley, Richardson & Gelinas, LLP
Springfield, Massachusetts