2013 OCTOBER DOING BUSINESS IN MICHIGAN A Guide for Investors and Businesses www.butzel.com www.lexmundi.com Table of Contents Introduction .................................................................................................1 About Butzel Long ..................................................................................................................1 Practice Areas ......................................................................................................................1 Chapter 1 - Forms for Carrying on Business .................................................. 3 1.1 Sole Proprietorships .......................................................................... 3 1.2 Business Corporations ....................................................................... 3 a. Introduction ............................................................................................................. 3 b. Formation ................................................................................................................. 4 c. Organization ............................................................................................................. 5 d. Capitalization ........................................................................................................... 5 e. Management ............................................................................................................. 6 i. General .............................................................................................................. 6 ii. Section 488 ........................................................................................................ 6 f. Action by Directors and Shareholders ......................................................................7 g. Distributions to Shareholders .................................................................................. 8 h. Liability of Shareholders .......................................................................................... 9 i. Extraordinary Transactions ..................................................................................... 9 j. Foreign Corporations ............................................................................................... 9 k. Filing and Recordkeeping .......................................................................................10 l. Subchapter S Corporations .....................................................................................10 1.3 Nonprofit Corporations ....................................................................10 a. Introduction ............................................................................................................10 b. Formation ................................................................................................................ 11 c. Organization ............................................................................................................12 d. Capitalization and Distributions .............................................................................12 i. Capitalization ...................................................................................................12 ii. Distributions .....................................................................................................13 e. Management and Control .......................................................................................13 i. Directors ...........................................................................................................13 ii. Quorum .............................................................................................................13 iii. Members ...........................................................................................................14 iv. Liability Protection ..........................................................................................13 v. Recordkeeping ..................................................................................................14 f. State and Local Tax Requirements .........................................................................14 i. Michigan Corporate Income Tax; Income Taxes ...........................................14 ii. Michigan Sales and Use Tax ............................................................................15 iii. Employment Taxes...........................................................................................15 iv. Real Property Taxes .........................................................................................15 g. Michigan Attorney General Registration ................................................................15 i. Charitable Trust Registration .........................................................................15 ii. Charitable Trust Inventory .............................................................................15 iii. Application for License to Solicit Donations ...................................................16 iv. Annual Reports ................................................................................................16 v. Dissolution ........................................................................................................16 h. Bureau of State Lottery ...........................................................................................16 i. Federal Tax Exemption Requirements and Classification .....................................16 i. Annual IRS Returns .........................................................................................17 ii. Various Restrictions on Exempt Organizations .............................................17 1.4 Partnerships ..................................................................................... 17 a. General Partnerships ..............................................................................................17 i. Organizational Concerns .................................................................................17 ii. Capital of the Partnership ...............................................................................17 iii. Management; Authority ..................................................................................18 iv. Profits and Losses; Cash Flow .........................................................................18 v. Liabilities and Rights of Partners ...................................................................18 vi. Transferability of Partnership Interests .........................................................19 vii. Dissolution; Termination ................................................................................19 b. Limited Liability Partnerships ...............................................................................20 c. Limited Partnerships ..............................................................................................21 i. Organizational Concerns .................................................................................21 ii. Capital of the Limited Partnership................................................................. 22 iii. Management; Authority ................................................................................. 22 iv. Rights of Limited Partners ............................................................................. 23 v. Profits and Losses ........................................................................................... 23 vi. Transferability of Partnership Interests ........................................................ 24 vii. Dissolution; Termination ............................................................................... 24 1.5 Limited Liability Companies ............................................................ 24 a. Formation ............................................................................................................... 25 b. Organization ........................................................................................................... 25 c. Transfer of Membership Interest........................................................................... 26 d. Capitalization and Distributions ............................................................................ 26 e. Management and Control ...................................................................................... 26 f. Tax Status ................................................................................................................27 g. Low Profit Limited Liability Companies ................................................................27 1.6 Joint Ventures ..................................................................................27 1.7 Authorization of Foreign Entities to do Business ............................. 28 Chapter 2 - Trade Regulation ...................................................................... 29 2.1 Antitrust and Trade Regulation........................................................ 29 a. Federal Antitrust Laws ........................................................................................... 29 i. The Sherman Antitrust Act of 1890 ................................................................ 29 ii. The Clayton Act of 1914 ................................................................................... 29 iii. The Robinson-Patman Act of 1936 ................................................................. 29 iv. The Federal Trade Commission Act ..............................................................