Ward, June and Wally reside in the hypothetical state of Evermore. They come to your office and state that they would like to form a corporation to organize their business selling souvenirs in the city of Mayfield. They want the corporation to be called WJW Souvenirs, Inc.
Ward is planning to invest $100,000 into the business and June and Wally $50,000 each. Their ownership of the corporation should be proportional to their initial investments. The three all live at 211 Pine Street in Mayfield.
The three investors tell you that they also want to form a board of directors that will include each of themselves plus Fred Rutherford and Margaret Mondello, two friends of theirs from the neighborhood. They tell you that Fred and Margaret can receive salaries for their work but that the three initial investors should not receive salaries (it is assumed that they will all give their time to running the business).
The three investors would like you to draft Articles of Incorporation and the initial corporate bylaws. They tell you that any provision that you feel is reasonable and proper can be included. They do, however, make you aware of the following factors to keep in mind:
1) The three want the annual meeting to be held on February 15 at their home.
2) They want to make sure that the corporation cannot start a new line of business without their unanimous consent.
3) They would like just the three of them (and not Fred or Margaret) to have “speaking authority” for the company.
4) They want the hiring of officers to be accomplished by majority vote of the directors.
5) They want to make sure that stock is not sold to anyone other than the initial three without all three agreeing to the sale.
The three also tell you that for income tax purposes, they would like to be treated as an s-corporation.
Please prepare the Articles, the Bylaws and the IRS form that will allow the company to be treated as an s-corporation.
