Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 13
PREINCORPORATION AGREEMENTS
AMONG SHAREHOLDERS AND/OR
INVESTORS
Section
§ 13.01 Introduction
§ 13.02 Description of the Purpose of Preincorporation Agreements
§ 13.03 Voting Trust
§ 13.04 Shareholder Voting Agreement
§ 13.05 Shareholder Control Agreement
§ 13.06 Share Transfer Restrictions
§ 13.07 Typical Provisions Included in Preincorporation Agreements
from Minority and Majority Ownership Interest Perspectives
§ 13.08 Protecting the Minority Shareholder’s Interests
§ 13.09 Protecting the Majority Shareholder’s Interests
§ 13.10 Specific Problems of Enforceability of Preincorporation Agreements
§ 13.11 Effectiveness of “Letters of Intent” with Respect to Preincorporation
and Other Business Authority
§ 13.12 Effectiveness of Oral Understandings with Respect to Preincorporation
and Other Business Activity
§ 13.01 Introduction
In addition to promotion agreements1 and subscription agreements,2
those forming a corporation may desire to set out their expectations
regarding control and operation of the corporation in a preincorporation
agreement.3 This Chapter discusses agreements between shareholders
13.02 through 13.06 address the purpose and use of preincorporation
agreements. Sections 13.07 through 13.09 provide an overview of typical
provisions. Problems of enforceability are addressed in Section 13.10.
This Chapter concludes with a discussion of the effectiveness of “letters
of intent” and oral understandings at the preincorporation stage in
Sections 13.11 and 13.12, respectively.
§ 13.02 Description of the Purpose of Preincorporation Agreements
Common law and statutory provisions grant the shareholders certain
rights. Control and management of the corporation, for example, rest in
the hands of the board of directors according to the statutory provisions
of the state’s business corporation act.5 Those forming the corporation,
and those who will invest in it, may desire to circumvent certain of those
common law rules and statutory presumptions. One way to do so is by
shareholder agreement.
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis