Founder’s Stock – a Legal Fiction

By Michael Bill

In common usage, a founder is an individual who creates or helps create a company, but in legal terms, there is no such thing as a “founder” or “founder’s stock,” only early participants in a company’s organization and ownership of its initial equity capital. Why is this so? Because, for all practical purposes (from a startup’s point of view), there are two types of stock – common stock and preferred stock – and “founders” are just the initial holders of the company’s common stock, usually before any financing, in-licensing, or contribution of assets.

Liability Considerations for Delaware Public Benefit Corporations

By Christina S. Bailey and William S. Perkins

A public benefit corporation (PBC) is a statutorily designated type of corporation in Delaware that melds two concepts that are often seen as opposites: maximizing profit and providing public benefit. This choice of entity presents a compromise for those companies who are committed to operating in a responsible and sustainable manner, while acting as a for-profit entity.

The Form is Always Wrong

By Daniel DeWolf and Samuel Effron

Mintz attorneys are often asked as to why we don’t simply provide “forms” on our website that can be downloaded and used.  After all, a number of law firms let you download term sheets and other forms such as SAFEs. Our simple answer is: THE FORM IS ALWAYS WRONG! Legal forms are merely starting points and most forms are typically only half an inch deep. A successful enterprise truly needs so much more depth than what is provided in a basic form.

What to Do Now if You Want to Sell Your Company

By Jeremy Glaser

A typical sale transaction can take six to eight months to complete from the time the decision to sell is made. Consequently, it is important that any business owner seeking to sell his or her business in the near term take immediate steps.  The following are some key questions every potential seller should ask to assess their readiness and some key steps they should take to make sure they are ready for a sale.

New Beneficial Owner Threshold Eases VC Fundraising

By Talia Primor, Rachel Gholston, and Dan DeWolf

Small venture capital funds and special purpose vehicles, which otherwise qualify as “venture capital funds,” can now raise money from up to 250 beneficial owners and remain within the 3(c)(1) exemption of the Investment Company Act of 1940 (the “Investment Company Act”).

How to Leverage Privacy as a Key Competitive Advantage

By Brian Lam and Cynthia Larose

“Privacy by design” – while not a new concept – is certainly enjoying a new spot in the sunshine thanks to the European Union’s General Data Protection Regulation (“GDPR”) (93 days and counting…) and its codification of “privacy by design and default” in Article 25.

Privacy can also be a key differentiator and a competitive advantage.  Read on for some points that can help drive your data privacy/data management program.

New York City Bans Salary History Inquiries

By Alexander Song 

In accordance with a new regulation that took effect on October 31st, 2017, New York City employers are now prohibited from inquiring about or relying on salary history during the hiring process. This ban makes it an unlawful discriminatory practice for an employer, employment agency, or employee or agent of the employer to: (1) inquire about the salary history of an applicant; or (2) rely on salary history of an applicant to determine salary, benefits, or other compensation for such applicant during the hiring process. Employers should revise their hiring processes in order to ensure their compliance with the new law as soon as possible.

Are You An Owner Or Employee? The Inflexibility of the Federal Tax Rules To Be Treated As Both.

By Dan Wilcox and Scott Pinarchick

Over the last twenty years or so, the limited liability company (“LLC”) has become a popular entity choice as a business entity.  An LLC offers a great deal of flexibility in how it is structured and operates, including the ability for its owners to decide to be classified as a partnership, S corporation, C corporation or, if there is only one owner, to be disregarded as an entity for federal income tax purposes.  Notwithstanding the great deal of flexibility afforded to LLCs, the federal tax rules do not permit a person to be treated as both an owner and an employee of a LLC that is treated as a partnership or a disregarded entity.  As a result, owners of these types LLCs who are employees of the LLC should be aware of how both their salary and income are treated for federal income tax purposes. 

Company “Branding” and the Benefits of Federal Trademark Registration

By Susan Neuberger Weller

Selecting and protecting your “brand” should begin from the very moment a business is in the process of being formed, whether that business is a sole proprietorship, partnership, corporation, limited liability company, or some other type of entity. It makes no difference whether the entity is a for-profit or not-for-profit organization, and the size of the entity is also irrelevant. Your “brand” is your public facing identity by which you will be known and through which your reputation will be developed. The goodwill you develop in your “brand” will be one of the most important and valuable assets you own.

Is a Series LLC Right for Your Business?

By Amy Burkhoff

The Series limited liability company (the “Series LLC”) is more nuanced than an ordinary limited liability company, and for the right user, it provides flexibility that will streamline administration better than other alternative entities. Although there are some risks and uncertainties relating to the Series LLC, as discussed further below, the Series LLC is a useful tool to create a series of limited liability companies in a single vehicle, preserving limited liability and reducing the administrative expenses necessary to organize different lines of business or manage different properties.

InsureTech Connect 2017 Panel Discussion: Maximizing Profits via Products and Alternative Business Model Innovation

By Heidi A. Lawson

After being in the insurance industry for several decades in a variety of roles, I frequently get asked which insurtechs I think are going to be successful. In sum, I believe the insurtechs best positioned for success are those that are unlocking entirely new markets, thinking past the standard producer model, adding additional revenue streams, and utilizing distribution channels that allow them to efficiently reach more customers. Here are some of the topics our panel discussion focused on at InsureTech Connect 2017.