Tricky Stock Creation Scenario
My partners and I own a couple business'. They are both LLC's. We want to start a third as a shell corporation which will own the other two by way of shares not the LLC partner names on everything bit.
Is there a rule of thumb which allows:
- Majority shareholding for the shell corporation
- Lesser value shares for a President at the head of each company
- Even lesser value shares for employees in some sort of stock option scenario
Further are there terms that go along with these that are commonly used to describe this type of thing?
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Welcome to the site, Matt. Please don't edit an existing question with answers to a completely different question, as it will confuse future visitors. If you have a different question, please click on the Ask Question link and ask a separate question. Also note that asking for resource recommendations is not allowed on the Stack Exchange network. – Zuly Gonzalez 12 years ago
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Its not a different question. It's what I meant to ask originally but lacked clarity until Dana responded. Same title works. StackOverflow encourages this type of behavior. I guess that's not the same across the StackExchange network. – Matt Akers 12 years ago
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Think about the bigger picture here. Does the title of my question lend itself to search ability in the future? Yes. Does the question (regardless of how dramatically it changes) ask the question in a manner that provides future readers easy/understandable access to its content. Yes. Does the answers provided still pertain to the original question. Yes. I appreciate your criticism, however I've now wasted a bunch of time on this trying to make an il-formed question follow rules. It would be easier and more fitting to leave the modified version up so it was more useful to others. – Matt Akers 12 years ago
1 Answer
Your mixture of partnership, corporation and LLC terminology makes it a bit difficult to understand the scenario you are describing. Nevertheless, I believe I can provide direct answers to your specific questions:
- There is no rule of thumb.
- The only relevant terms I can think of are parent and subsidiary.
I suspect that you will not find the foregoing answers helpful. I suspect, further, that my answers are not helpful because you have assumed facts concerning business structure and compensation that may not best address your underlying objectives (which you have not stated).
You probably should explain those objectives to an experienced business lawyer so s/he can get you pointed in the right direction - a direction that may involve structure and compensation dramatically different from what you have described.
Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.
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Thank you for your comment. I think I wasn't sure what I was asking until you helped me refine it a little. I have edited the question which I think gets after my aim a little better. Further I was using the word partner in a more joining sense than actual entity sense. – Matt Akers 12 years ago
