Corporate Governance

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What are the powers of the president of a close corporation to make major decisions in the ordinary course of business, such as entering leases, without obtaining board approval? Does it matter if the president knows he or she cannot obtain board approval for the proposed action? Read this week’s New York Business Divorce to see how these questions were answered by Rochester Commercial Division Justice Kenneth Fisher in a fascinating case pitting brother against brother in Hellman v. Hellman.
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Continue Reading Court in Hellman Case Re-Affirms Close Corporation President’s Authority to Sign Lease Without Board Approval

In this second installment of a two-part series, New York Business Divorce examines recent First Department decisions clarifying the standards for overcoming general releases given in the context of transactions with fiduciaries in closely held business entities, where the plaintiffs allege that the fiduciary fraudulently induced them to enter into the transaction. This week’s focus is on a case whose name should be familiar to regular readers of this blog, Arfa v. Zamir, 2010 NY Slip Op 06070 (1st Dept July 13, 2010).
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Continue Reading Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 2

This week and next, New York Business Divorce examines two recent First Department decisions clarifying the standards for overcoming general releases given in the context of transactions with fiduciaries in closely held business entities, where the plaintiffs allege that the fiduciary fraudulently induced them to enter into the transaction. This week’s focus is on Centro Empresarial Cempresa S.A. v. America Movil S.A.B. de C.V., 2010 NY Slip Op 04719 (1st Dept June 3, 2010).
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Continue Reading Recent Appellate Rulings Clarify Standards for Challenging Releases Given to Fiduciaries of Closely Held Business Entities: Part 1

The right of first refusal, commonly used to restrict stock transfers in closely held corporations, continues to live up to its reputation as one of the most reliable generators of employment for litigation attorneys in Giaimo v. EGA Associates Inc., in which the Appellate Division, First Department, recently reversed a lower court’s ruling denying summary judgment in a battle for corporate control between brother and sister. It’s in this week’s New York Business Divorce.
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Continue Reading Court Invalidates Control-Shifting Stock Transfer Made in Violation of Corporation’s Right of First Refusal

Corporate bylaw provisions governing the number of directors and procedures for their appointment can sometimes play a critical role in the outcome of disputes among shareholders of closely held corporations, as illustrated in a recent case highlighted in this week’s New York Business Divorce involving a small residential co-op.
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Continue Reading Pay Attention to the Latent Power of Corporate Bylaws

This week’s New York Business Divorce highlights an important decision by the Appellate Division, First Department, construing rights of advancement and indemnification for litigation expenses in a battle royal between majority and minority members of a limited liability company.
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Continue Reading New York Court Follows Delaware Law to Construe Advancement and Indemnification Provisions of Florida LLC’s Operating Agreement

A recent decision by Commercial Division Justice Charles E. Ramos in the case of Arfa v. Zamir grabs the spotlight in this week’s New York Business Divorce. The subject is an important one to business owners and their counsel: Does a general release in an out-of-court agreement between business partners/fiduciaries provide any protection against allegations of fraudulent nondisclosure?
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Continue Reading Fiduciaries, the Duty to Disclose and the Incredible Shrinking Release

Last month the Appellate Division, Second Department issued an important decision concerning the application of the LLC Law’s default rules where the operating agreement is silent on a disputed issue. Get up to speed with this week’s New York Business Divorce.
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Continue Reading Appellate Court Finds Operating Agreement “Silent” on Sale of LLC’s Sole Asset, Upholds Approval by Majority Vote Under Statute’s Default Rule

This week’s New York Business Divorce looks at a recent decision by Justice Herman Cahn addressing the fiduciary duties of a controlling shareholder who authorizes and issues additional shares to himself without offering the same opportunity to minority shareholders.
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Continue Reading Controlling Shareholder’s Dilution of Minority Interest Requires Bona Fide Business Purpose

There’s been a spate of recent court decisions concerning the authority of one 50% business owner to hire counsel to represent the company adverse to the other 50% owner. This week’s New York Business Divorce looks at two new decisions, one from New York and one from Delaware.
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Continue Reading Delaware and New York Courts Agree that 50% LLC Member May Not Hire Lawyer to Represent Company Adverse to Other 50% Member