1. Who Has Authority to Approve a Company Sale?
A purchase agreement cannot replace required corporate approvals. The entity's governing documents determine who may authorize the sale and what rights transfer.
Check What an LLC Buyer Receives
New York LLC Law §417 requires a written operating agreement, adopted before, at, or within 90 days after filing the articles of organization. Its terms may restrict transfers and voting rights. Under LLC Law §603, an assignee generally receives assigned economic rights without automatically gaining membership or management authority. Section 604 ordinarily requires consent from a majority in interest of the other members for admission, unless the agreement provides otherwise. An attorney handling corporate and business matters can examine these restrictions and identify necessary approvals.
Confirm Board and Shareholder Approval
Business Corporation Law §909 generally requires board authorization and shareholder approval to sell all or substantially all corporate assets outside ordinary business operations. Voting requirements depend on the statute, incorporation date, and certificate of incorporation. Review resolutions, bylaws, and shareholder agreements before relying on an officer's signature.
2. Which Liabilities Can Remain after Closing?
An acquisition may preserve existing debts or individual obligations. Asset purchases and equity transfers create different liability questions.
Distinguish Asset Purchases from Equity Transfers
Asset buyers generally do not inherit seller liabilities solely through the purchase. Exceptions include assumed obligations, de facto merger, mere continuation, and fraudulent transfers. In an equity purchase, the acquired entity ordinarily retains its liabilities. LLC Law §604(b) may also impose specified contribution obligations on an admitted assignee, subject to statutory limitations.
| Transaction | Liability Question |
|---|---|
| Asset purchase | Could successor-liability exceptions apply? |
| Stock or LLC interest purchase | What obligations remain with the entity? |
| Sale involving a guarantee | Has the creditor released the guarantor? |
Asset purchase
- Liability QuestionCould successor-liability exceptions apply?
Stock or LLC interest purchase
- Liability QuestionWhat obligations remain with the entity?
Sale involving a guarantee
- Liability QuestionHas the creditor released the guarantor?
Determine Whether Personal Guarantees Continue
LLC Law §609 generally limits liability based solely on membership, subject to exceptions. It does not discharge a separate personal guarantee. Lender consent to a sale does not necessarily release the guarantor. Examine the guarantee and any written release before closing.
Check Bulk-Sale Tax Requirements
For qualifying bulk sales involving sellers required to collect New York sales tax, Tax Law §1141(c) requires purchaser notification at least 10 days before payment or possession, whichever occurs first. Purchasers generally file Form AU-196.10. Failure to comply may create liability for unpaid sales and use taxes, subject to statutory limits. A notice alone may not authorize payment. Form AU-196.2 can require withholding until the tax claim is addressed. A stock sale ordinarily falls outside this process when assets remain with the same entity.
3. What Can Delay a Business Closing?
Corporate approval does not replace contractual consent or government authorization. Lenders, landlords, and licensing agencies may impose separate requirements.
Review Contract Consents and Permits
Loan agreements, leases, and supplier contracts may restrict assignments or ownership changes. Certain operating licenses also cannot transfer automatically. Nassau County Consumer Affairs licenses specified businesses, including home improvement contractors and locksmiths. A corporate transaction attorney can review consent provisions, licensing requirements, and closing conditions.
Confirm Registration before Operating
Corporations and LLCs generally file assumed-name certificates with the New York Department of State. Sole proprietors and general partnerships using trade names generally file with the appropriate county clerk. A new entity making taxable sales must generally obtain its own sales tax Certificate of Authority. The seller's certificate is not transferable, and an application ordinarily must be filed at least 20 days before taxable operations begin.
4. What Happens If a Company Sale Fails?
A failed closing may lead to contract claims or ownership disputes. The claimant and remedy depend on who suffered the loss and which obligations were breached.
Identify Who May Bring a Claim
A seller denied payment under a purchase agreement may have a direct claim. Diverted company funds may instead support a claim belonging to the entity, potentially pursued derivatively by an eligible owner. A shareholder dispute review can address standing, contractual rights, and applicable demand requirements.
Preserve Evidence and Calculate Deadlines
CPLR §213(2) generally provides six years for contract claims. UCC §2-725 generally allows four years for contracts involving the sale of goods. Exceptions and enforceable contractual terms may change these periods. Preserve:
- Purchase agreements, amendments, and approvals
- Payment records and closing correspondence
- Notices and evidence of alleged breaches
Review cure provisions and dispute-resolution clauses before filing a breach of contract lawsuit.
Choose the Appropriate Nassau County Court
Nassau County District Court generally hears civil money claims up to $15,000. Eligible commercial small claims are capped at $5,000. Other disputes may proceed in Supreme Court or arbitration. Under 22 NYCRR §202.70, the Nassau Commercial Division generally applies a $200,000 threshold to qualifying cases, with exceptions for certain proceedings, including derivative actions and business dissolutions. Assignment ordinarily requires an RJI and Commercial Division Addendum within 90 days after service of the complaint, subject to specified exceptions. This is not the deadline to commence suit.
5. Frequently Asked Questions
How Much Does a Business Attorney Charge to Review a Company Sale?
Fees may be hourly, fixed, or based on an advance retainer. Costs depend on transaction complexity, due diligence, and negotiations. Confirm whether the engagement includes contract revisions, closing documents, and filing expenses. Litigation may require separate terms.
What Should a Business Owner Avoid Saying in a Demand Letter?
Avoid unsupported accusations, inflated amounts, unnecessary admissions, and threats without a lawful basis. Identify the agreement, alleged breach, requested remedy, and any required notice or cure period. A demand letter is not mandatory in every dispute, but the contract may require one.
6. Request a Nassau County Business Transaction Review
Business owners preparing a sale, LLC interest transfer, or dispute response can request a review of purchase documents, governing agreements, guarantees, consents, and deadlines. Our firm's attorneys can assess transaction approvals, surviving liabilities, potential claims, and the legal work needed for drafting, negotiations, or litigation.
09 Nov, 2026
