Unitymaster
Citizen
Speaker of the House
Representative
Commerce Department
Redmont Bar Assoc.
Popular in the Polls
Statesman
UnityMaster
specialadvisor
- Joined
- Jan 12, 2021
- Messages
- 34
- Thread Author
- #1
A
BILL
TO
Create a framework for the creation of corporations and companies
The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the Constitution, do hereby enact the following provisions into law:
1 - Short Title and Enactment
(1) This Act may be cited as the "The Business Structuring Act"
(2) This Act shall be enacted 14 days after its signage.
(3) This act has been authored by Speaker UnityMaster, Former Chief Justice Matthew100x, and Representative Caseylefaye.
(4) This Act has been co-sponsored by Representative Caseylefaye.
2 - Reasons
(1) To amend the Commercial Standards Act and the Economic Standards Act.
3 - Repeal
(1) The Corporate Law Act is hereby repealed in its entirety.
4 - Amendments
(1) The Commercial Standards Act shall be amended as follows:
“16 - Structure for Public Companies
(1) The term Public Company will be defined as a company of which shares are being publicly bought and sold in a securities exchange
(2) All Public Companies will be required to create publicly viewable policies for their internal governance. All company policies must specify the internal structure of the company and the methods of appointment of its directors.
(3) The directors and executives (equivalent) of a public company, have a fiduciary duty to the shareholders and the stakeholders of the company to maximise the shareholders profits and long-term prosperity of the company.
(a) Any person with such a fiduciary duty who willingly and intentionally engages in activity that undermines their duty or the integrity of the company whose shareholders they serve, will be liable for damages to the shareholders.
(4) For a company to be privatized, the consent of the shareholders (2/3 majority) must be obtained by the purchaser for a predetermined price.
(a) Should the privatization of a company be approved, all shareholders must sell their shares to the purchase of the company at said predetermined price.
…
18 - Protections for Partial Owners of Non-Public Companies
(1) The definition of a Partial Owner of a non-public company will be a legal entity sharing ownership in a non-public company with any other legal entities.
(2) The partial owners of a company have a fiduciary duty to one-another.
19 - Additional Rights Granted to Companies
(1) All companies will be considered to be legal entities distinct from their shareholders, board members, or management.
(a) The shareholders of a public company, and the owners of a non-public company will not be liable for any damages incurred by the business decisions of the company they hold shares or ownership in. This provision will not apply to any shareholders or owners who assume management positions in the company.
(2) All companies will be able to own any asset in their own capacity, with the asset being treated as solely the property of the company, subject to the decisions of the company’s management and/or board.
(a) For the purposes of companies owning plots of land, companies may deputies any citizen to own the land in-game on their behalf. For any such citizen, ordinary plot limits and regulations will apply to plots held on behalf of a company, with plots held on behalf of a company counting towards their plot limits.
20 - Additional Rights Guaranteed to Shareholders
(1) No partial owner or shareholder in any company, may be deprived of the value of their equity or shares by any means. In the case that a company is merged into another, acquired by another, becomes a public company, or becomes a non-public company, any partial owners or shareholders will have the right to full compensation of lost value of their equity or shares in the case that they are deprived of any part of their their equity or shares.
…
22 - Reporting
(1) All companies registered in-game must be submitted for registration on forums and approved by the Commerce Department.
(2) Any changes to the company's information since registration must be reflected in the original registration.
(3) All Financial Institutions must be declared as a Financial Institution in the title of the business page as either a Commercial Bank, Investment Bank, Stock Exchange, or a Credit Union.
(a) Should a Financial Institution change its classification from one type to another, it will need to update its business description in-game via the DemocracyBusiness plugin to reflect the change.
23 - Stocks
(1) If a individual/entity is inactive for more than 3 months, companies can reclaim their stocks by purchasing back all shares owned by them.
(2) This is recorded by the company informing the Department of Commerce of the share repossession, including the individual/entity's username, playtime information, and number of shares.”
(2) The Economic Standards Act shall be amended as follows:
“5 - Small Business Tax Exemptions
(1) Small Businesses may apply for a tax exemption if they fit the following requirements:
(a) Operate exclusively out of a town.
(b) Are not a non-profit, charity, securities exchange, bank, or credit union
(2) The Department of Commerce may grant tax exemptions to small businesses at their own discretion as long as they fit the requirements. The Department of Commerce may remove these exemptions at any time.
(3) Small Businesses are defined as the following:
(a) A company registered with the Department of Commerce.
(b) A company making less than $20,000/month in chest shop sales
(c) A company with one or more employees (not including the owner).
(d) A company with a balance under $50,000
(e) A company which operates chest shops for the majority of their income
…
8 - Non-Profits
(1) When registering a company, the person filing the registration may note that the company is a non-profit organization, making it subject to more rigorous regulations but providing more extensive benefits.
(2) Non-profit organizations may not distribute or sell shares of stock in private or within a stock/securities exchange.
(3) The owner of a non-profit organization may not be paid to increase their personal balance above $10,000. If a company fails to comply, the Department of Commerce reserves the right to deregister the company or revoke its tax exemption.
(4) Non-profit organizations may apply for “Operation Grants” on the forums, which shall be capped at $10,000 monthly.
(a) To be eligible, a non-profit organization must provide evidence to support that they improve the lives of at least ten people with a balance of less than $10,000 who do not work for the non-profit.
(5) Registered for-profit companies and individuals may apply for “Charitable Rebates” on the forums in which the Government will refund 50% of the cost of monetary donations made to registered non-profit organizations, capped at $100,000 per month per individual or company.
(a) Rebate(s) will be denied in the event that the donor also owns or is owned by the owner of the non-profit that is receiving the donation.
(b) Reimbursements made to companies owned by the same individual will all count towards the same rebate cap. Even if an individual owns two separate companies, the two companies may only be entitled to at most $100,000 of rebates per month combined.
9 - Stock Repossession
(1) If an individual/entity is inactive for more than three months, companies can reclaim their stocks by purchasing back all shares owned by them.
(a) If a player becomes active or is unbanned, they may buy back their assets.
(2) This is recorded by the company informing the Department of Commerce of the share repossession, including the individual/entity's username, playtime information, and number of shares”
21 - Liquidation of Companies
(1) The term Liquidation of a company will be defined as a company liquidating all of its assets, paying off all debts owed to external parties, and compensating owners or shareholders their proportional share of the company’s equity value after repayment of all external debts.
(2) A Public Company may be liquidated at the request of the holders of three-fourths or any greater proportion of the shares of the company.
(3) A non-Public Company may be liquidated at the request of the partial owners of three-fourths or any greater proportion of the company’s equity.
(3) The Debt Recovery Quick Fix Act shall be amended as follows:
5 - Bankruptcy
(1) When all assets, have been seized and there is no more money left in the balance, of the party that, needs to pay. Then they will be declared "bankrupt".
(2) Companies, unions or other legal entities registered with the government can be declared "bankrupt". However, unless otherwise stated the owners of said legal entities do not assume personal liability.
5 - How Firms are Formed
(1) Any person, partnership, association or corporation, singly or jointly with others, may incorporate or organize a Firm, defined as either a Corporation or a Limited Liability Company, under this act by filing with the Department of Commerce a Certificate of Incorporation which shall be executed, acknowledged and filed. Any Firm that wishes to incorporate in the Commonwealth of Redmont must have a registered headquarters in Redmont.
(2) A Firm may be incorporated under this chapter to conduct or promote any lawful business or purposes, except as may otherwise be provided by the Constitution or other laws of Redmont.
(3) In the case that a Firm wishes to amend their Certificate of Incorporation, they shall file a Certificate of Amendment of Certificate of Incorporation with the Department of Commerce.
(4) In the case that a company is created using the /db command system, however, does not submit a certificate of incorporation with the Department of Commerce, the owner of the company will be fully liable for any actions of the company and the company shall be a sole proprietorship.
6 - Management Structure of Firms
(1) Limited Liability Companies (hereinafter called ‘LLCs’) shall have a flexible management structure. They can be member-managed (where all members participate in decision-making) or manager-managed (where designated managers run the operations).
(2) Corporations have a more formal management structure with a board of directors elected by shareholders to oversee major decisions, and officers (e.g., Chief Executive Officer, Chief Financial Officer) appointed to manage day-to-day operations.
7 - Ownership and Control
(1) LLCs shall have the following ownership characteristics:
(a) Membership Interests:
(i) Ownership in an LLC is represented by membership interests rather than shares of stock. These interests are defined in the LLC's operating agreement, which outlines the rights and responsibilities of each member.
(b) Flexible Number of Member:
(i) LLCs may have an unlimited number of members.
(c) Types of Members:
(i) LLCs may have natural persons and/or firms as members.
(d) Transferability of Interests:
(i) Transferring ownership interests in an LLC requires the approval of other members and may be subject to restrictions outlined in the operating agreement.
(2) Corporations shall have the following ownership characteristics:
(a) Shares of Stock:
(i) Ownership in a Corporation is represented by shares of stock. Shareholders own these shares, which can be easily bought, sold, or transferred.
(b) Unlimited Shareholders:
(i) Corporations may have an unlimited number of shareholders.
(c) Types of Shareholders:
(i) Corporations may have various types of shareholders, including individuals, other corporations, and foreign entities. There are no restrictions on the nationality or residency of shareholders.
(d) Classes of Stock:
(i) Corporations may issue multiple classes of stock, each with different rights and privileges. This is outlined in their Certificate of Incorporation.
8 - Liability Protection
(1) Limited Liability for Shareholders:
(a) Shareholders' personal assets are protected from the firm's debts and liabilities.
(b) Shareholders are only liable up to the amount they have invested in the firm by purchasing shares.
(2) Firm as Separate Legal Entity:
(a) The firm is treated as a separate legal entity from its owners and managers. This separates the firm’s liabilities from the personal liabilities of shareholders and managers.
(3) Exceptions:
(a) Owners can be held personally liable if they provide personal guarantees for the firm, commit torts/negligence, or fail to maintain the firm's separate identity.
(b) Managers can be liable for their own negligent acts or failure to pay certain taxes on behalf of the firm.
9 - Corporate Governance
(1) Fiduciary Duties:
(a) In corporations there are fiduciary duties of care and loyalty on directors and controlling shareholders towards the corporation and minority shareholders.
(b) For LLCs, there shall be flexibility in the operating agreement to modify or eliminate fiduciary duties, except the implied covenant of good faith and fair dealing.
(2) Board of Directors and Officer Roles:
(a) Corporations are required to have a board of directors responsible for overseeing the corporation's management. Officers, appointed by the board, handle day-to-day operations. This separation of roles ensures a system of checks and balances.
(3) Corporate Governance Best Practices:
(a) Corporations must follow corporate governance best practices, encompassing principles such as transparency, accountability, and fair treatment of shareholders. These practices aim to ensure that the corporation's activities are in line with its long-term objectives and the interests of its stakeholders.
(4) Flexibility in Officer Roles:
(a) Officer positions may be flexibly appointed to accommodate the specific needs of corporations. However, clear responsibilities must be established, and accountability maintained, particularly in cases where one individual holds multiple roles.
10 - Operating/Shareholders' Agreements
(1) For LLCs, the operating agreement is a key document that outlines the rights, responsibilities, and decision-making processes for members. This agreement can be tailored to address issues like profit distribution, voting rights, and transfer of interests.
(2) For corporations, shareholders' agreements may specify rights and protections for minority shareholders, such as veto rights over certain actions or board representation.
11 - Entire Fairness Review
(1) If a controlling shareholder/member in a firm engages in a conflicted transaction, courts shall apply the entire fairness review, requiring the controlling shareholder to prove the transaction was entirely fair to the minority. This heightened scrutiny helps protect minority shareholder/member rights in conflicted transactions.
12 - Statutory Rights of Shareholders
(1) Right to Inspect Books and Records:
(a) Shareholders have the right to inspect the corporation's books and records if they state a proper purpose that is reasonably related to their interests as shareholders. This allows shareholders to investigate potential wrongdoing, mismanagement, or to value their shares. The court determines what specific documents are "necessary and essential" for the stated proper purpose.
(2) Right to Vote on Major Corporate Actions:
(a) Shareholders have the right to vote on major corporate actions such as mergers, sales of substantially all assets, amendments to the Certificate of Incorporation, and election of directors.
(3) Right to Bring Derivative Suits:
(a) Shareholders may bring derivative lawsuits on behalf of the corporation against directors or officers for breaches of fiduciary duties.
(4) Appraisal Rights:
(a) Shareholders shall have appraisal rights in merger transactions, allowing them to seek a judicial determination of the fair value of their shares. This provides a remedy for dissenting shareholders who believe the merger consideration is inadequate.
(5) Right to Transfer Shares:
(a) Shares of stock are deemed personal property and are freely transferable, subject to any restrictions in the Certificate of Incorporation and/or Shareholder Agreement.
(6) Right to Dividends:
(a) Shareholders have the right to receive dividends if and when declared by the board of directors.
(7) Right to Elect Directors:
(a) Shareholders have the right to elect directors at annual, quarterly, or monthly meetings, as laid out in the Certificate of Incorporation or By-Laws of the corporation.
(8) If an individual/entity is inactive for more than 3 months, companies can reclaim their stocks by purchasing back all shares owned by them.
(9) This is recorded by the company informing the Department of Commerce of the share repossession, including the individual/entity's username, playtime information, and number of shares.
13 - LLC Operating Agreements
(1) Ownership and Management:
(a) The operating agreement should clearly define the ownership interests of members, voting rights, and management structure (whether member-managed or manager-managed).
(2) Capital Contributions:
(a) The agreement should specify the initial and (if applicable) additional capital contributions required from members and the consequences of failing to meet these requirements.
(3) Profit and Loss Distribution:
(a) The agreement should outline how profits and losses will be distributed among members.
(4) Transfer of Ownership:
(a) The agreement should clarify the process for transferring ownership interests and any restrictions on such transfers.
(5) Dispute Resolution:
(a) Including provisions for resolving disputes, such as mediation or arbitration, shall be included to resolve disputes.
14 - Corporation Shareholder Agreements
(1) All Corporation Shareholder agreements shall be subject to the restrictions and requirements as described within this section;
(a) Ownership and Equity Distribution:
(i) This section delineates the methodology for distributing shares among shareholders, including protocols for issuing new shares, stipulations on share transfer, and the establishment of pre-emptive rights.
(b) Ownership and Equity Distribution:
(i) This section delineates the methodology for distributing shares among shareholders, including protocols for issuing new shares, stipulations on share transfer, and the establishment of pre-emptive rights.
(c) Management and Decision-Making:
(i) This section lines out procedures for appointing directors, delineating voting rights, and managing major decisions within the company are explicitly defined.
(d) Roles and Responsibilities:
(i) This section outlines the respective roles and anticipated contributions of each shareholder within the company's framework.
(e) Transfer of Shares:
(i) Conditions governing the transfer of shares, rights regarding first refusal, and methodologies for valuing share prices are detailed in this section.
(f) Dividends and Distributions:
(i) This section lays down the regulations for declaring and disseminating dividends and profits within the company.
(g) Dispute Resolution:
(i) Mechanisms such as arbitration or mediation for the resolution of shareholder disputes are established and elaborated upon in this section.
(h) Exit Strategies:
(i) Provisions for events such as shareholder demise, incapacitation, or the desire to divest shares, encompassing buy-sell, drag-along, and tag-along rights, are expressly outlined herein.
(i) Confidentiality and Non-Compete:
(i) Safeguarding sensitive information and potential restrictions on competitive activities are enshrined in this section.
(j) Financing Arrangements:
(i) This section addresses the methodologies by which the company secures funding and the consequent implications for existing shareholders.
(k) Parties:
(i) This section identifies the corporation and its shareholders as parties to the agreement.
(l) Board of Directors:
(i) The role, conduct of meetings, process for selection, and replacement of the board are meticulously described within this section.
(m) Reserved Matters:
(i) Issues necessitating unanimous shareholder approval, as opposed to majority approval, are explicitly outlined in this section.
Shareholder Information and Meetings:
(i) Requirements for disseminating updates to shareholders and stipulations regarding the conduct of shareholder meetings are elaborated upon in this section.
15 - Firm Names
(1) Firms shall have at least one of the following words in their name: “association,” “company,” “corporation,” “club,” “foundation,” “fund,” "group," “incorporated,” “institute,” “society,” “union,” “syndicate,” or “limited” (or abbreviations thereof, with or without punctuation).
(2) Firms shall not have the words “bank” or “trust” or similar such words in their name unless they register as a Financial Institution with the Department of Commerce.
16 - Enforcement and Implementation
(1) Registration and Certification:
(a) The Department of Commerce shall be responsible for processing applications for firm incorporation under this Act. This includes verifying submitted documents, issuing incorporation certificates, and maintaining a registry of registered firms.
(2) Compliance Monitoring:
(a) The Department of Commerce has the authority to monitor registered firms' activities to ensure adherence to this Act. This involves conducting periodic audits, inspections, and reviews of firm documents and operations.
(3) Enforcement Actions:
(a) In cases of non-compliance or violations, the Department of Commerce can take various enforcement actions, such as issuing warnings, imposing fines, suspending or revoking incorporation certificates, or initiating legal proceedings. Legal proceedings shall be initiated by the Attorney General, upon request by the Department of Commerce.
(4) Dispute Resolution:
(a) The Department of Commerce may handle disputes arising from interpreting or applying this Act. This may involve mediation, negotiation facilitation, or referral to courts for resolution.
(5) Information Disclosure:
(a) The Department of Commerce ensures transparency by providing public access to information on registered firms, including names, registration status, management structure, and enforcement actions taken.
(6) Educational Outreach:
(a) The Department of Commerce conducts educational initiatives to inform the public, prospective firm owners, and stakeholders about this Act's requirements and benefits. This includes organizing seminars, workshops, or publishing informational materials.
(7) Coordination with Other Agencies:
(a) The Department of Commerce shall collaborate with relevant government agencies and regulatory bodies to ensure coordinated enforcement efforts and information exchange on firms' activities.
(8) Rulemaking Authority:
(a) The Department of Commerce is authorized to create rules and regulations essential for enforcing and managing this Act. These rules will address procedural guidelines, reporting obligations, accounting norms, and compliance standards. Additionally, the Department of Commerce is empowered to form committees dedicated to crafting rules tailored to distinct areas such as accounting and financial reporting.
(9) Customer Service:
(a) The Department of Commerce shall establish a customer service unit to assist individuals and businesses with inquiries, applications, and compliance issues related to this Act. This unit is accessible through Discord consultations in the Department of Commerce Discord Server.
17 - Bankruptcy Code
(1) Intent and Purposes:
(a) References to this section of The Firm Act is to be known as “The Bankruptcy Code”.
(b) For all applications of this law, judicial officers are to apply the law with the golden and mischief rule for the benefit of rights of creditors and debtors as to close gaps within this code in any given case before a court of law.
(c) While the Bankruptcy Code is attached to The Firm Act, its application does apply generally as Redmont’s bankruptcy law, and thus will be written and interpreted inclusively to the law.
(2) Definitions:
(a) Debtor: An individual, corporation, or other entity that owes a debt to another. This includes any person or organization that has a legal obligation to pay money, deliver goods, or perform services to another party.
(b) Creditor: An individual, corporation, or other entity to whom a debt is owed. This encompasses any person or organization that holds a claim against the debtor, whether the claim is secured or unsecured.
(c) Insolvency: The state of being unable to pay debts as they come due. A debtor is considered insolvent when their liabilities exceed the fair value of their assets by 25% (Insolvency at $125 dollars with $100 dollars of assets); or when they are generally not paying their Active Debts as they become due, unless such debts are the subject of a legal dispute.
(d) Bankruptcy Trustee: An officer appointed to administer the debtor's estate. The trustee is responsible for collecting the debtor's assets, liquidating them, and distributing the proceeds to creditors in accordance with the priorities established by this code. The trustee also investigates the financial affairs of the debtor and performs other duties as specified by the court.
(e) Estate: All legal or equitable interests of the debtor in property as of the commencement of the bankruptcy case. This includes tangible and intangible assets, whether located within or outside the jurisdiction, and all proceeds, products, offspring, rents, or profits of or from such property.
(f) Secured Claim: A creditor's claim that is backed by collateral. If the debtor fails to pay the secured debt, the creditor has the right to repossess or sell the collateral to satisfy the debt.
(g) Unsecured Claim: A claim or debt for which a creditor holds no special assurance of payment.
(h) Proof of Claim: Any contract or other legal obligation between the creditor (or creditors) and the debtor that establishes an amount owed.
(i) Discharge: The release of a debtor from liability for certain debts.
(j) Liquidation: A conversion of all or part of the debtor’s assets to convert into cash.
(k) Reorganization Plan: A proposal by the debtor, or sometimes by creditors, or sometimes organized by a court of law; to restructure the debtor's obligations. The plan outlines how debts will be paid over time, how the business will be operated, and how the debtor will return to a sound financial footing.
(l) Bankruptcy: a legal process through which any debtor who cannot repay debts to creditors may seek relief.
(m) Active Debt: Is any debt that is under an active repayment plan or is a Secured Claim.
Passive Debt: All other debt that is not Active Debt.
(3) Bankruptcy Process
(a) If a debtor is able to demonstrate their ability to pay off a debt to a creditor, they will never be subject to the bankruptcy process or any part of the Bankruptcy Code, unless the debtor is insolvent by way of their debt being greater than their assets.
(i) Accountants can serve as expert witnesses in any court of law regarding any issue in the Bankruptcy Process.
(b) Bankruptcy can be declared in the first instance by the debtor:
(i) The debtor who declares bankruptcy in the first instance has priority and agency in resolving their debt obligations. The Debtor must meet some definition of Insolvency with Proof of Claim as well as proof of being unable to pay their debts.
(ii) The debtor must announce publicly within their own discord (if they have one) and to the DOC Secretary that they are declaring bankruptcy. The DOC Secretary, upon confirmation, that the Debtor’s Insolvency is valid, will post a government announcement informing the public and any prospective creditor of the bankruptcy.
(iii) Creditors are compelled to work with a debtor in this instance to amicably resolve debts in this instance. Debtors will be allowed to submit their own Reorganization Plan to establish repayment of Active Debts and/or to reduce debt beneath 75% of their total assets (if applicable).
(iv) A public accounting of the Reorganization Plan must be made by either an Accountant or a member of the DOC if there is no Accountant available. The Reorganization Plan must have a clear path to paying Active Debt to Creditors who are included on the Reorganization Plan.
(v) In order for a Reorganization Plan to be enacted, the Debtor must get all Creditors to agree to the terms. Creditors in this instance are expected to work with the Debtor to compromise on issues that they have with the Reorganization Plan. Creditors may be sued for failure to cooperate with the debtor under this instance of bankruptcy and have their debt discharged. Cases under this situation should be handled by motion for summary judgment as the facts should be agreed on, except for the issue at play keeping that Creditor from agreeing with the Debtor. The finalized Reorganization Plan with the public accounting attached must be submitted to the DOC Secretary for the purposes of keeping a public record.
(c) Bankruptcy can be declared in the second instance by a creditor:
(i) An individual creditor who is owed an Active Debt or Passive Debt by a Debtor, even with Proof of Claim, cannot demand insolvency of that Debtor under normal circumstances.
(ii) Creditors, as a class, may demand Bankruptcy in the second instance when a debtor fails to:
(iii) In order to establish a class for creditors, a creditor who has been harmed by a debtor in one of the situations described in the above subsection (The Firm Act - 17.3(c)(ii)) must seek out competent legal counsel. Once a retainer has been signed between a creditor and legal counsel, the legal counsel must immediately notify the DOC Secretary of their intention to form a class of creditors against a debtor. Only one legal counsel is allowed to form a class against a specific debtor at a time, on a first-come-first-serve basis. The DOC Secretary, upon confirmation that the Debtor’s Insolvency is valid, will post a government announcement informing the public and any prospective creditor of the bankruptcy. Prospective Creditors are to reach out to the legal counsel to become part of the class.
(iv) The Debtor is compelled to work with the Creditors to amicably resolve debts in this instance. Creditors’ counsel will be allowed to submit the Reorganization Plan to establish repayment of Active Debts and resolve the Insolvency.
(iv) A public accounting of the Reorganization Plan must be made by either an Accountant or a member of the DOC if there is no Accountant available. The Reorganization Plan must have a clear path for the Debtor to pay the Creditors who are included on the Reorganization Plan.
(v) In order for a Reorganization Plan to be enacted, the Creditors’ counsel must get the debtor to agree with the Reorganization Plan. Debtors in this instance are expected to work with the Creditor’s Counsel to compromise on issues that they have with the Reorganization Plan. Any draft of the Reorganization Plan must be approved by a simple majority of Creditors. Creditors’ voting power regarding the approval of the Reorganization Plan drafted by their counsel shall be distributed based on the percentage of Active Debt and Passive Debt that they own against the Debtor. The finalized Reorganization Plan with the public accounting attached is to be submitted to the DOC Secretary for the purposes of keeping the public informed.
(v) In order for a Reorganization Plan to be enacted, the Debtor must get all Creditors to agree to the terms. Creditors in this instance are expected to work with the Debtor to compromise on issues that they have. Creditors may be sued for failure to cooperate with the debtor under this instance of bankruptcy and have their debt discharged. The finalized Reorganization Plan with the public accounting attached must be submitted to the DOC Secretary for the purposes of keeping a public record.
(d) Insolvency can be declared in the third instance by a court order:
(i) A court of law must have a case of Bankruptcy brought before it from the first or second instance.
The debtor who declares bankruptcy in the first instance has priority and agency in resolving their debt obligations. The Debtor must meet some definition of Insolvency with Proof of Claim as well as proof of being unable to pay their debts.
BILL
TO
Create a framework for the creation of corporations and companies
The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the Constitution, do hereby enact the following provisions into law:
1 - Short Title and Enactment
(1) This Act may be cited as the "The Business Structuring Act"
(2) This Act shall be enacted 14 days after its signage.
(3) This act has been authored by Speaker UnityMaster, Former Chief Justice Matthew100x, and Representative Caseylefaye.
(4) This Act has been co-sponsored by Representative Caseylefaye.
2 - Reasons
(1) To amend the Commercial Standards Act and the Economic Standards Act.
3 - Repeal
(1) The Corporate Law Act is hereby repealed in its entirety.
4 - Amendments
(1) The Commercial Standards Act shall be amended as follows:
“16 - Structure for Public Companies
(1) The term Public Company will be defined as a company of which shares are being publicly bought and sold in a securities exchange
(2) All Public Companies will be required to create publicly viewable policies for their internal governance. All company policies must specify the internal structure of the company and the methods of appointment of its directors.
(3) The directors and executives (equivalent) of a public company, have a fiduciary duty to the shareholders and the stakeholders of the company to maximise the shareholders profits and long-term prosperity of the company.
(a) Any person with such a fiduciary duty who willingly and intentionally engages in activity that undermines their duty or the integrity of the company whose shareholders they serve, will be liable for damages to the shareholders.
(4) For a company to be privatized, the consent of the shareholders (2/3 majority) must be obtained by the purchaser for a predetermined price.
(a) Should the privatization of a company be approved, all shareholders must sell their shares to the purchase of the company at said predetermined price.
…
18 - Protections for Partial Owners of Non-Public Companies
(1) The definition of a Partial Owner of a non-public company will be a legal entity sharing ownership in a non-public company with any other legal entities.
(2) The partial owners of a company have a fiduciary duty to one-another.
19 - Additional Rights Granted to Companies
(1) All companies will be considered to be legal entities distinct from their shareholders, board members, or management.
(a) The shareholders of a public company, and the owners of a non-public company will not be liable for any damages incurred by the business decisions of the company they hold shares or ownership in. This provision will not apply to any shareholders or owners who assume management positions in the company.
(2) All companies will be able to own any asset in their own capacity, with the asset being treated as solely the property of the company, subject to the decisions of the company’s management and/or board.
(a) For the purposes of companies owning plots of land, companies may deputies any citizen to own the land in-game on their behalf. For any such citizen, ordinary plot limits and regulations will apply to plots held on behalf of a company, with plots held on behalf of a company counting towards their plot limits.
20 - Additional Rights Guaranteed to Shareholders
(1) No partial owner or shareholder in any company, may be deprived of the value of their equity or shares by any means. In the case that a company is merged into another, acquired by another, becomes a public company, or becomes a non-public company, any partial owners or shareholders will have the right to full compensation of lost value of their equity or shares in the case that they are deprived of any part of their their equity or shares.
…
22 - Reporting
(1) All companies registered in-game must be submitted for registration on forums and approved by the Commerce Department.
(2) Any changes to the company's information since registration must be reflected in the original registration.
(3) All Financial Institutions must be declared as a Financial Institution in the title of the business page as either a Commercial Bank, Investment Bank, Stock Exchange, or a Credit Union.
(a) Should a Financial Institution change its classification from one type to another, it will need to update its business description in-game via the DemocracyBusiness plugin to reflect the change.
23 - Stocks
(1) If a individual/entity is inactive for more than 3 months, companies can reclaim their stocks by purchasing back all shares owned by them.
(2) This is recorded by the company informing the Department of Commerce of the share repossession, including the individual/entity's username, playtime information, and number of shares.”
(2) The Economic Standards Act shall be amended as follows:
“5 - Small Business Tax Exemptions
(1) Small Businesses may apply for a tax exemption if they fit the following requirements:
(a) Operate exclusively out of a town.
(b) Are not a non-profit, charity, securities exchange, bank, or credit union
(2) The Department of Commerce may grant tax exemptions to small businesses at their own discretion as long as they fit the requirements. The Department of Commerce may remove these exemptions at any time.
(3) Small Businesses are defined as the following:
(a) A company registered with the Department of Commerce.
(b) A company making less than $20,000/month in chest shop sales
(c) A company with one or more employees (not including the owner).
(d) A company with a balance under $50,000
(e) A company which operates chest shops for the majority of their income
…
8 - Non-Profits
(1) When registering a company, the person filing the registration may note that the company is a non-profit organization, making it subject to more rigorous regulations but providing more extensive benefits.
(2) Non-profit organizations may not distribute or sell shares of stock in private or within a stock/securities exchange.
(3) The owner of a non-profit organization may not be paid to increase their personal balance above $10,000. If a company fails to comply, the Department of Commerce reserves the right to deregister the company or revoke its tax exemption.
(4) Non-profit organizations may apply for “Operation Grants” on the forums, which shall be capped at $10,000 monthly.
(a) To be eligible, a non-profit organization must provide evidence to support that they improve the lives of at least ten people with a balance of less than $10,000 who do not work for the non-profit.
(5) Registered for-profit companies and individuals may apply for “Charitable Rebates” on the forums in which the Government will refund 50% of the cost of monetary donations made to registered non-profit organizations, capped at $100,000 per month per individual or company.
(a) Rebate(s) will be denied in the event that the donor also owns or is owned by the owner of the non-profit that is receiving the donation.
(b) Reimbursements made to companies owned by the same individual will all count towards the same rebate cap. Even if an individual owns two separate companies, the two companies may only be entitled to at most $100,000 of rebates per month combined.
9 - Stock Repossession
(1) If an individual/entity is inactive for more than three months, companies can reclaim their stocks by purchasing back all shares owned by them.
(a) If a player becomes active or is unbanned, they may buy back their assets.
(2) This is recorded by the company informing the Department of Commerce of the share repossession, including the individual/entity's username, playtime information, and number of shares”
21 - Liquidation of Companies
(1) The term Liquidation of a company will be defined as a company liquidating all of its assets, paying off all debts owed to external parties, and compensating owners or shareholders their proportional share of the company’s equity value after repayment of all external debts.
(2) A Public Company may be liquidated at the request of the holders of three-fourths or any greater proportion of the shares of the company.
(3) A non-Public Company may be liquidated at the request of the partial owners of three-fourths or any greater proportion of the company’s equity.
(3) The Debt Recovery Quick Fix Act shall be amended as follows:
5 - Bankruptcy
(1) When all assets, have been seized and there is no more money left in the balance, of the party that, needs to pay. Then they will be declared "bankrupt".
(2) Companies, unions or other legal entities registered with the government can be declared "bankrupt". However, unless otherwise stated the owners of said legal entities do not assume personal liability.
5 - How Firms are Formed
(1) Any person, partnership, association or corporation, singly or jointly with others, may incorporate or organize a Firm, defined as either a Corporation or a Limited Liability Company, under this act by filing with the Department of Commerce a Certificate of Incorporation which shall be executed, acknowledged and filed. Any Firm that wishes to incorporate in the Commonwealth of Redmont must have a registered headquarters in Redmont.
(2) A Firm may be incorporated under this chapter to conduct or promote any lawful business or purposes, except as may otherwise be provided by the Constitution or other laws of Redmont.
(3) In the case that a Firm wishes to amend their Certificate of Incorporation, they shall file a Certificate of Amendment of Certificate of Incorporation with the Department of Commerce.
(4) In the case that a company is created using the /db command system, however, does not submit a certificate of incorporation with the Department of Commerce, the owner of the company will be fully liable for any actions of the company and the company shall be a sole proprietorship.
6 - Management Structure of Firms
(1) Limited Liability Companies (hereinafter called ‘LLCs’) shall have a flexible management structure. They can be member-managed (where all members participate in decision-making) or manager-managed (where designated managers run the operations).
(2) Corporations have a more formal management structure with a board of directors elected by shareholders to oversee major decisions, and officers (e.g., Chief Executive Officer, Chief Financial Officer) appointed to manage day-to-day operations.
7 - Ownership and Control
(1) LLCs shall have the following ownership characteristics:
(a) Membership Interests:
(i) Ownership in an LLC is represented by membership interests rather than shares of stock. These interests are defined in the LLC's operating agreement, which outlines the rights and responsibilities of each member.
(b) Flexible Number of Member:
(i) LLCs may have an unlimited number of members.
(c) Types of Members:
(i) LLCs may have natural persons and/or firms as members.
(d) Transferability of Interests:
(i) Transferring ownership interests in an LLC requires the approval of other members and may be subject to restrictions outlined in the operating agreement.
(2) Corporations shall have the following ownership characteristics:
(a) Shares of Stock:
(i) Ownership in a Corporation is represented by shares of stock. Shareholders own these shares, which can be easily bought, sold, or transferred.
(b) Unlimited Shareholders:
(i) Corporations may have an unlimited number of shareholders.
(c) Types of Shareholders:
(i) Corporations may have various types of shareholders, including individuals, other corporations, and foreign entities. There are no restrictions on the nationality or residency of shareholders.
(d) Classes of Stock:
(i) Corporations may issue multiple classes of stock, each with different rights and privileges. This is outlined in their Certificate of Incorporation.
8 - Liability Protection
(1) Limited Liability for Shareholders:
(a) Shareholders' personal assets are protected from the firm's debts and liabilities.
(b) Shareholders are only liable up to the amount they have invested in the firm by purchasing shares.
(2) Firm as Separate Legal Entity:
(a) The firm is treated as a separate legal entity from its owners and managers. This separates the firm’s liabilities from the personal liabilities of shareholders and managers.
(3) Exceptions:
(a) Owners can be held personally liable if they provide personal guarantees for the firm, commit torts/negligence, or fail to maintain the firm's separate identity.
(b) Managers can be liable for their own negligent acts or failure to pay certain taxes on behalf of the firm.
9 - Corporate Governance
(1) Fiduciary Duties:
(a) In corporations there are fiduciary duties of care and loyalty on directors and controlling shareholders towards the corporation and minority shareholders.
(b) For LLCs, there shall be flexibility in the operating agreement to modify or eliminate fiduciary duties, except the implied covenant of good faith and fair dealing.
(2) Board of Directors and Officer Roles:
(a) Corporations are required to have a board of directors responsible for overseeing the corporation's management. Officers, appointed by the board, handle day-to-day operations. This separation of roles ensures a system of checks and balances.
(3) Corporate Governance Best Practices:
(a) Corporations must follow corporate governance best practices, encompassing principles such as transparency, accountability, and fair treatment of shareholders. These practices aim to ensure that the corporation's activities are in line with its long-term objectives and the interests of its stakeholders.
(4) Flexibility in Officer Roles:
(a) Officer positions may be flexibly appointed to accommodate the specific needs of corporations. However, clear responsibilities must be established, and accountability maintained, particularly in cases where one individual holds multiple roles.
10 - Operating/Shareholders' Agreements
(1) For LLCs, the operating agreement is a key document that outlines the rights, responsibilities, and decision-making processes for members. This agreement can be tailored to address issues like profit distribution, voting rights, and transfer of interests.
(2) For corporations, shareholders' agreements may specify rights and protections for minority shareholders, such as veto rights over certain actions or board representation.
11 - Entire Fairness Review
(1) If a controlling shareholder/member in a firm engages in a conflicted transaction, courts shall apply the entire fairness review, requiring the controlling shareholder to prove the transaction was entirely fair to the minority. This heightened scrutiny helps protect minority shareholder/member rights in conflicted transactions.
12 - Statutory Rights of Shareholders
(1) Right to Inspect Books and Records:
(a) Shareholders have the right to inspect the corporation's books and records if they state a proper purpose that is reasonably related to their interests as shareholders. This allows shareholders to investigate potential wrongdoing, mismanagement, or to value their shares. The court determines what specific documents are "necessary and essential" for the stated proper purpose.
(2) Right to Vote on Major Corporate Actions:
(a) Shareholders have the right to vote on major corporate actions such as mergers, sales of substantially all assets, amendments to the Certificate of Incorporation, and election of directors.
(3) Right to Bring Derivative Suits:
(a) Shareholders may bring derivative lawsuits on behalf of the corporation against directors or officers for breaches of fiduciary duties.
(4) Appraisal Rights:
(a) Shareholders shall have appraisal rights in merger transactions, allowing them to seek a judicial determination of the fair value of their shares. This provides a remedy for dissenting shareholders who believe the merger consideration is inadequate.
(5) Right to Transfer Shares:
(a) Shares of stock are deemed personal property and are freely transferable, subject to any restrictions in the Certificate of Incorporation and/or Shareholder Agreement.
(6) Right to Dividends:
(a) Shareholders have the right to receive dividends if and when declared by the board of directors.
(7) Right to Elect Directors:
(a) Shareholders have the right to elect directors at annual, quarterly, or monthly meetings, as laid out in the Certificate of Incorporation or By-Laws of the corporation.
(8) If an individual/entity is inactive for more than 3 months, companies can reclaim their stocks by purchasing back all shares owned by them.
(9) This is recorded by the company informing the Department of Commerce of the share repossession, including the individual/entity's username, playtime information, and number of shares.
13 - LLC Operating Agreements
(1) Ownership and Management:
(a) The operating agreement should clearly define the ownership interests of members, voting rights, and management structure (whether member-managed or manager-managed).
(2) Capital Contributions:
(a) The agreement should specify the initial and (if applicable) additional capital contributions required from members and the consequences of failing to meet these requirements.
(3) Profit and Loss Distribution:
(a) The agreement should outline how profits and losses will be distributed among members.
(4) Transfer of Ownership:
(a) The agreement should clarify the process for transferring ownership interests and any restrictions on such transfers.
(5) Dispute Resolution:
(a) Including provisions for resolving disputes, such as mediation or arbitration, shall be included to resolve disputes.
14 - Corporation Shareholder Agreements
(1) All Corporation Shareholder agreements shall be subject to the restrictions and requirements as described within this section;
(a) Ownership and Equity Distribution:
(i) This section delineates the methodology for distributing shares among shareholders, including protocols for issuing new shares, stipulations on share transfer, and the establishment of pre-emptive rights.
(b) Ownership and Equity Distribution:
(i) This section delineates the methodology for distributing shares among shareholders, including protocols for issuing new shares, stipulations on share transfer, and the establishment of pre-emptive rights.
(c) Management and Decision-Making:
(i) This section lines out procedures for appointing directors, delineating voting rights, and managing major decisions within the company are explicitly defined.
(d) Roles and Responsibilities:
(i) This section outlines the respective roles and anticipated contributions of each shareholder within the company's framework.
(e) Transfer of Shares:
(i) Conditions governing the transfer of shares, rights regarding first refusal, and methodologies for valuing share prices are detailed in this section.
(f) Dividends and Distributions:
(i) This section lays down the regulations for declaring and disseminating dividends and profits within the company.
(g) Dispute Resolution:
(i) Mechanisms such as arbitration or mediation for the resolution of shareholder disputes are established and elaborated upon in this section.
(h) Exit Strategies:
(i) Provisions for events such as shareholder demise, incapacitation, or the desire to divest shares, encompassing buy-sell, drag-along, and tag-along rights, are expressly outlined herein.
(i) Confidentiality and Non-Compete:
(i) Safeguarding sensitive information and potential restrictions on competitive activities are enshrined in this section.
(j) Financing Arrangements:
(i) This section addresses the methodologies by which the company secures funding and the consequent implications for existing shareholders.
(k) Parties:
(i) This section identifies the corporation and its shareholders as parties to the agreement.
(l) Board of Directors:
(i) The role, conduct of meetings, process for selection, and replacement of the board are meticulously described within this section.
(m) Reserved Matters:
(i) Issues necessitating unanimous shareholder approval, as opposed to majority approval, are explicitly outlined in this section.
Shareholder Information and Meetings:(i) Requirements for disseminating updates to shareholders and stipulations regarding the conduct of shareholder meetings are elaborated upon in this section.
15 - Firm Names
(1) Firms shall have at least one of the following words in their name: “association,” “company,” “corporation,” “club,” “foundation,” “fund,” "group," “incorporated,” “institute,” “society,” “union,” “syndicate,” or “limited” (or abbreviations thereof, with or without punctuation).
(2) Firms shall not have the words “bank” or “trust” or similar such words in their name unless they register as a Financial Institution with the Department of Commerce.
16 - Enforcement and Implementation
(1) Registration and Certification:
(a) The Department of Commerce shall be responsible for processing applications for firm incorporation under this Act. This includes verifying submitted documents, issuing incorporation certificates, and maintaining a registry of registered firms.
(2) Compliance Monitoring:
(a) The Department of Commerce has the authority to monitor registered firms' activities to ensure adherence to this Act. This involves conducting periodic audits, inspections, and reviews of firm documents and operations.
(3) Enforcement Actions:
(a) In cases of non-compliance or violations, the Department of Commerce can take various enforcement actions, such as issuing warnings, imposing fines, suspending or revoking incorporation certificates, or initiating legal proceedings. Legal proceedings shall be initiated by the Attorney General, upon request by the Department of Commerce.
(4) Dispute Resolution:
(a) The Department of Commerce may handle disputes arising from interpreting or applying this Act. This may involve mediation, negotiation facilitation, or referral to courts for resolution.
(5) Information Disclosure:
(a) The Department of Commerce ensures transparency by providing public access to information on registered firms, including names, registration status, management structure, and enforcement actions taken.
(6) Educational Outreach:
(a) The Department of Commerce conducts educational initiatives to inform the public, prospective firm owners, and stakeholders about this Act's requirements and benefits. This includes organizing seminars, workshops, or publishing informational materials.
(7) Coordination with Other Agencies:
(a) The Department of Commerce shall collaborate with relevant government agencies and regulatory bodies to ensure coordinated enforcement efforts and information exchange on firms' activities.
(8) Rulemaking Authority:
(a) The Department of Commerce is authorized to create rules and regulations essential for enforcing and managing this Act. These rules will address procedural guidelines, reporting obligations, accounting norms, and compliance standards. Additionally, the Department of Commerce is empowered to form committees dedicated to crafting rules tailored to distinct areas such as accounting and financial reporting.
(9) Customer Service:
(a) The Department of Commerce shall establish a customer service unit to assist individuals and businesses with inquiries, applications, and compliance issues related to this Act. This unit is accessible through Discord consultations in the Department of Commerce Discord Server.
17 - Bankruptcy Code
(1) Intent and Purposes:
(a) References to this section of The Firm Act is to be known as “The Bankruptcy Code”.
(b) For all applications of this law, judicial officers are to apply the law with the golden and mischief rule for the benefit of rights of creditors and debtors as to close gaps within this code in any given case before a court of law.
(c) While the Bankruptcy Code is attached to The Firm Act, its application does apply generally as Redmont’s bankruptcy law, and thus will be written and interpreted inclusively to the law.
(2) Definitions:
(a) Debtor: An individual, corporation, or other entity that owes a debt to another. This includes any person or organization that has a legal obligation to pay money, deliver goods, or perform services to another party.
(b) Creditor: An individual, corporation, or other entity to whom a debt is owed. This encompasses any person or organization that holds a claim against the debtor, whether the claim is secured or unsecured.
(c) Insolvency: The state of being unable to pay debts as they come due. A debtor is considered insolvent when their liabilities exceed the fair value of their assets by 25% (Insolvency at $125 dollars with $100 dollars of assets); or when they are generally not paying their Active Debts as they become due, unless such debts are the subject of a legal dispute.
(d) Bankruptcy Trustee: An officer appointed to administer the debtor's estate. The trustee is responsible for collecting the debtor's assets, liquidating them, and distributing the proceeds to creditors in accordance with the priorities established by this code. The trustee also investigates the financial affairs of the debtor and performs other duties as specified by the court.
(e) Estate: All legal or equitable interests of the debtor in property as of the commencement of the bankruptcy case. This includes tangible and intangible assets, whether located within or outside the jurisdiction, and all proceeds, products, offspring, rents, or profits of or from such property.
(f) Secured Claim: A creditor's claim that is backed by collateral. If the debtor fails to pay the secured debt, the creditor has the right to repossess or sell the collateral to satisfy the debt.
(g) Unsecured Claim: A claim or debt for which a creditor holds no special assurance of payment.
(h) Proof of Claim: Any contract or other legal obligation between the creditor (or creditors) and the debtor that establishes an amount owed.
(i) Discharge: The release of a debtor from liability for certain debts.
(j) Liquidation: A conversion of all or part of the debtor’s assets to convert into cash.
(k) Reorganization Plan: A proposal by the debtor, or sometimes by creditors, or sometimes organized by a court of law; to restructure the debtor's obligations. The plan outlines how debts will be paid over time, how the business will be operated, and how the debtor will return to a sound financial footing.
(l) Bankruptcy: a legal process through which any debtor who cannot repay debts to creditors may seek relief.
(m) Active Debt: Is any debt that is under an active repayment plan or is a Secured Claim.
Passive Debt: All other debt that is not Active Debt.(3) Bankruptcy Process
(a) If a debtor is able to demonstrate their ability to pay off a debt to a creditor, they will never be subject to the bankruptcy process or any part of the Bankruptcy Code, unless the debtor is insolvent by way of their debt being greater than their assets.
(i) Accountants can serve as expert witnesses in any court of law regarding any issue in the Bankruptcy Process.
(b) Bankruptcy can be declared in the first instance by the debtor:
(i) The debtor who declares bankruptcy in the first instance has priority and agency in resolving their debt obligations. The Debtor must meet some definition of Insolvency with Proof of Claim as well as proof of being unable to pay their debts.
(ii) The debtor must announce publicly within their own discord (if they have one) and to the DOC Secretary that they are declaring bankruptcy. The DOC Secretary, upon confirmation, that the Debtor’s Insolvency is valid, will post a government announcement informing the public and any prospective creditor of the bankruptcy.
(iii) Creditors are compelled to work with a debtor in this instance to amicably resolve debts in this instance. Debtors will be allowed to submit their own Reorganization Plan to establish repayment of Active Debts and/or to reduce debt beneath 75% of their total assets (if applicable).
- All creditors are not allowed to have their debts involuntarily lessened under this instance unless ordered so by a court.
- Debtors are allowed to freely choose whether to use Liquidation to pay for debts, provided the asset they are liquidating is not controlled by a secure claim nor otherwise protected nor is the liquidation of said asset is prohibited by law.
- Creditors with a Secured Claim can choose to exercise their right to secure the collateral they own and have their debt paid off in that manner.
- Only Creditors with an Active Debt with the debtor can exercise their right with proof of claim to be included on the Reorganization Plan.
- Debtors must be authorized by the DOC Secretary or a designated employee to pay-off debt by issuing new debt, such as getting a loan to pay for debts or issuing new stock.
- Debtors have the right under this instance to apply to a court of law, depending on the value of the case, to place themselves into an Estate and for a Bankruptcy Trustee to manage the Reorganization Plan. If this happens, this will become a Bankruptcy in the third instance.
(iv) A public accounting of the Reorganization Plan must be made by either an Accountant or a member of the DOC if there is no Accountant available. The Reorganization Plan must have a clear path to paying Active Debt to Creditors who are included on the Reorganization Plan.
(v) In order for a Reorganization Plan to be enacted, the Debtor must get all Creditors to agree to the terms. Creditors in this instance are expected to work with the Debtor to compromise on issues that they have with the Reorganization Plan. Creditors may be sued for failure to cooperate with the debtor under this instance of bankruptcy and have their debt discharged. Cases under this situation should be handled by motion for summary judgment as the facts should be agreed on, except for the issue at play keeping that Creditor from agreeing with the Debtor. The finalized Reorganization Plan with the public accounting attached must be submitted to the DOC Secretary for the purposes of keeping a public record.
(c) Bankruptcy can be declared in the second instance by a creditor:
(i) An individual creditor who is owed an Active Debt or Passive Debt by a Debtor, even with Proof of Claim, cannot demand insolvency of that Debtor under normal circumstances.
(ii) Creditors, as a class, may demand Bankruptcy in the second instance when a debtor fails to:
- Make bond interest payment.
- Pay dividends.
- Meet the obligations of a stock buyback.
- Allow creditors to withdraw money (outside of any withdrawal limits created by contract) from their bank or stock exchange account.
- Pay creditors’ wages.
(iii) In order to establish a class for creditors, a creditor who has been harmed by a debtor in one of the situations described in the above subsection (The Firm Act - 17.3(c)(ii)) must seek out competent legal counsel. Once a retainer has been signed between a creditor and legal counsel, the legal counsel must immediately notify the DOC Secretary of their intention to form a class of creditors against a debtor. Only one legal counsel is allowed to form a class against a specific debtor at a time, on a first-come-first-serve basis. The DOC Secretary, upon confirmation that the Debtor’s Insolvency is valid, will post a government announcement informing the public and any prospective creditor of the bankruptcy. Prospective Creditors are to reach out to the legal counsel to become part of the class.
(iv) The Debtor is compelled to work with the Creditors to amicably resolve debts in this instance. Creditors’ counsel will be allowed to submit the Reorganization Plan to establish repayment of Active Debts and resolve the Insolvency.
- Creditors may choose to allow the Debtor to Discharge Active Debts that the Debtors have to streamline debt repayment.
- In this instance, Creditors are not allowed to demand a Debtor to use Liquidation to pay for Active Debts if said liquidation harms Debtor’s income stream.
- Any Liquidation done to any of the Debtor’s assets must not be controlled by a Secured Claim held by a Creditor nor otherwise protected by law nor should the Liquidation be prohibited by law.
- Creditors with a Secured Claim can choose to exercise their right to secure the collateral they own and have their debt paid off in that manner.
- All Creditors with either an active or passive debt with the Debtor can exercise their right with Proof of Claim to be included on the Reorganization Plan.
- Debtors must be authorized by the DOC Secretary or a designated employee to pay-off debt by issuing new debt, such as getting a loan to pay for debts or issuing new stock.
- Creditors have the right under this instance to apply to a court of law, depending on the value of the case, to place the debtor into an Estate and for a Bankruptcy Trustee to manage the Reorganization Plan. If this happens, this will become a Bankruptcy in the third instance.
(iv) A public accounting of the Reorganization Plan must be made by either an Accountant or a member of the DOC if there is no Accountant available. The Reorganization Plan must have a clear path for the Debtor to pay the Creditors who are included on the Reorganization Plan.
(v) In order for a Reorganization Plan to be enacted, the Creditors’ counsel must get the debtor to agree with the Reorganization Plan. Debtors in this instance are expected to work with the Creditor’s Counsel to compromise on issues that they have with the Reorganization Plan. Any draft of the Reorganization Plan must be approved by a simple majority of Creditors. Creditors’ voting power regarding the approval of the Reorganization Plan drafted by their counsel shall be distributed based on the percentage of Active Debt and Passive Debt that they own against the Debtor. The finalized Reorganization Plan with the public accounting attached is to be submitted to the DOC Secretary for the purposes of keeping the public informed.
(v) In order for a Reorganization Plan to be enacted, the Debtor must get all Creditors to agree to the terms. Creditors in this instance are expected to work with the Debtor to compromise on issues that they have. Creditors may be sued for failure to cooperate with the debtor under this instance of bankruptcy and have their debt discharged. The finalized Reorganization Plan with the public accounting attached must be submitted to the DOC Secretary for the purposes of keeping a public record.
(d) Insolvency can be declared in the third instance by a court order:
(i) A court of law must have a case of Bankruptcy brought before it from the first or second instance.
The debtor who declares bankruptcy in the first instance has priority and agency in resolving their debt obligations. The Debtor must meet some definition of Insolvency with Proof of Claim as well as proof of being unable to pay their debts.
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