CONTENT CENTER
Statutory – not Shareholder – Activism: Governor Newsom Signs California’s Diversity Mandate into Law
By Jen Rubin
California has enacted the nation’s first diversity mandate for public company boards. As we previously reported, the new law (AB 979) builds upon California’s first-in-the-nation statutory gender mandate for public company boards.
SEC Proposes Relief from Broker-Dealer Registration for Certain Finders
By Steve Ganis
The SEC recently published in the Federal Register a proposed notice of an exemptive order (the “Proposal”) that would, subject to limitations and conditions discussed below, exempt certain individuals seeking to find investors for private companies and unregistered funds (“Finders”) from federal broker-dealer regulation requirements. Among other things the Proposal would allow Finders to earn commissions or other transaction-based compensation.
From New York to Delaware: The Process of Redomesticating a New York Corporation
By Ashna Pai
It is a common story we have heard from many emerging company clients: a young New York-based entrepreneur wants to start a company. The entrepreneur decides to incorporate his or her company in New York, believing New York to be the most obvious and best logistical choice because New York is where they are based, where the operations of the company, including its employees, offices etc. are to be based, and, not to mention, because of the many opportunities, diverse talent and creativity that has always attracted start-up companies to New York. Fast forward a couple of years, the company is starting to take off and has caught the eye of several institutional investors who are willing to invest in the company’s growth, however, before investing they are requiring the company to be incorporated in Delaware. Why? As many entrepreneurs will soon learn, Delaware is considered to be the “gold standard” among many for a corporation’s domicile. It is known to be business and management friendly, there is an extensive body of corporate cases for companies to refer to, it follows the “business judgement rule” regarding decisions of directors, and generally, the laws tend to be flexible and favorable for founders and their investors.
Management Carve-Out Plans
By Garrett Galvin
A company may find itself in a position to sell for a variety of reasons: a sale may be necessary to continue its growth, a potential buyer made an offer too good to pass up, or the owners are simply looking towards their next venture. Regardless of the reason for the sale, the prospect of selling the company can be a difficult but exciting time for all involved and it is important for the sellers to have management support of the transaction to bring it across the finish line.
Part Ten of the COVID-19 Roadmap Series: Workplace Communications and Trainings
By Tyrone P. Thomas & Danielle M. Bereznay
In the final part of our Roadmap Series, as employers prepare to transition to on-site operations for segments of their staff, we discuss considerations for COVID-19 related communications to the workforce. We also address the importance of conducting workplace trainings for managers and staff that address new regulatory considerations for workplace safety, telecommuting arrangements, health screenings, and leave and accommodation requests to prepare for the “new normal.”
Part Nine of the COVID-19 Roadmap Series: Ensuring Compliance – Leave Management
By Corbin Carter, Natalie C. Young, Michael S. Arnold & H. Andrew Matzkin
As management and human resources professionals are well aware, COVID-19 has drastically and rapidly impacted the workplace. Among other things, employees require more flexibility, employers are increasingly reliant upon remote work arrangements, and legislative and administrative responses to the pandemic from various levels of government have created new requirements for businesses, including new leave entitlements for employees. In Part Nine of our Roadmap Series, we explore key considerations surrounding leave management and compliance as employees and businesses navigate this new terrain.
Part Eight of the COVID-19 Roadmap Series: Avoiding COVID-19 Wage & Hour and Labor Law Pitfalls
By Jennifer R. Budoff, Delaney M. Busch, Brendan J. Lowd
In Part Eight of our Roadmap Series, we take a closer look at wage and hour compliance concerns that may arise during the COVID-19 pandemic, and what employers can do to minimize these pitfalls.
Part Seven of the COVID-19 Roadmap Series: Employee Physical and Mental Well-being During the COVID-19 Pandemic
By David Barmak & Jennifer R. Budoff
In Part Seven of our Roadmap Series, we take a closer look at the impact of COVID-19 on employee mental and physical well-being, and what employers can do to assist their workforce.
COVID-19 and Down-Round Financings
By Jeremy Glaser, Sebastian Lucier, and Sebastian A. Bacon
Although no one can predict the long-term economic impact of COVID-19, early indications show similarities to the last significant economic downturn that started in 2008. During that period, venture capital investment decreased significantly both domestically and abroad — in the first quarter of 2009, alone, there were double-digit declines in venture financings. The decrease in available capital during that time period led to a significant uptick in financing rounds at lower valuations than in previous rounds, or so-called “down-round financings.” Companies should be prepared for a similar occurrence, and be ready to take precautionary steps in order to minimize risks relating to a down-round financing.
Part Six of the COVID-19 Roadmap Series: Reporting to Work
By Andrew J. Bernstein & Brie Kluytenaar
As we continue to plan and prepare for the reopening of businesses, Part Six of our Roadmap series examines the when, what, where, and how of returning to work. Given the many considerations this process entails, we encourage employers to begin engaging with these issues now and to consult with counsel so that plans are in place and the groundwork is laid for the eventual reopening of the workplace, whenever that may be.
Part Five of the COVID-19 Roadmap Series: Ensuring a Safe Workplace - COVID-19 Screening and Testing
By Nicole M. Rivers, Michael S. Arnold, Karen S. Lovitch, Hope S. Foster & Cynthia J. Larose
In Part Five of our Roadmap Series, we take a closer look at COVID-19 screening and testing, including best practices and legal implications, as potential tools to maintain a safe workplace.
Part Four of the COVID-19 Roadmap Series: Ensuring a Safe Workplace – Reimagining the Physical Workspace and Business Travel
By Delaney M. Busch, Morgan G. Tanafon & Angel Feng
Given the challenges presented by COVID-19, many businesses must consider large-scale, transformational changes to their operations. As social distancing continues and safety concerns pervade the public consciousness, adjustments to the physical workspace and business travel practices will be necessary to reflect these new considerations. In Part 4 of our COVID-19 Roadmap Series, we outline important planning steps and concerns employers need to consider relating to physical workspaces and business travel.
Part Three of the COVID-19 Roadmap Series: Ensuring a Safe Workplace - Key Guidance for a Healthy Workspace
By Delaney M. Busch & Morgan G. Tanafon
As economies begin restarting and the doors to traditional workplaces are opening, employers face challenges in reorganizing and protecting their places of business. However, the exact measures appropriate and effective for each workspace will largely depend on a worksite risk assessment (see our prior blog posts regarding OSHA and COVID-19 infrastructure). In Part 3 of our Roadmap Series, we outline important guidance, procedures, and concerns employers need to consider to successfully and safely bring back employees to their worksite.
Part Two of the COVID-19 Roadmap Series: Creating a COVID-19 Operations Infrastructure
By Katharine O. Beattie & Emma Follansbee
With the reopening of the economy on the horizon, employers are looking ahead to welcoming employees back to the traditional workplace. Business operations will look vastly different during and after the COVID-19 pandemic. In Part 2 of our Roadmap Series, we outline important operational planning steps and actions employers can take now to successfully and safely bring employees back to the workplace. Future posts in this series will address many of these issues more in-depth, so be sure to stay tuned.
Part One of the COVID-19 Roadmap Series: Introduction
By Jennifer B. Rubin
The rapid onset of the coronavirus crisis stripped many employers of the opportunity to prepare an orderly retreat from the physical workplace. Following the government-imposed stay-in-place orders, employers shifted their attention to managing a remote workforce, coping with the financial impacts of the economy’s precipitous closure, and digesting the rapid legislative developments that ensued. While we do not know what the “normal” American workplace will look like exactly during and after the pandemic, employers should plan now for this transformation. Mintz is pleased to provide this Roadmap for Employers in the Time of COVID-19 series that will provide guidance on critical issues employers should focus on as they prepare for what promises to be a very different workplace.
Choice of Business Entity: Pros and Cons of Corporations and LLCs
Choosing the form of your business entity is one of the first and most important steps toward running a successful business. Three of the most common entity types are C-Corporations, S-Corporations and Limited Liability Companies (LLCs). Each entity type has its own advantages and disadvantages, including with respect to taxation, attractiveness to investors and simplicity. For most companies intending to raise money from venture capital funds, a C-Corporation is the most common choice. However, S-Corporations and LLCs provide tax advantages that may make them more suitable for certain businesses. This article addresses the pros and cons of C-Corporations, S-Corporations and LLCs, and how you can determine which one may be right for your business.
Stock Vesting in Startup Companies
By Alex Civetta and Garrett Galvin
Why “Vesting?”
Building a company from the ground up is a risky (but hopefully rewarding) endeavor for founders. In exchange for the founders’ efforts and devotion to the success of the company, the founders take a significant equity stake in the company, with the expectation that the value of these shares will grow substantially as the company grows. However, where there are multiple founders involved, each founder will want to ensure that their co-founder(s) are incentivized to stay with the business and work hard to make it successful, rather than holding on to a large equity stake and relying on the other founders to put in the lion’s share of the work needed to grow the business. To address this concern, the initial grant of shares to each founder is often made subject to “vesting,” which links a founder’s right to keep such shares (or some portion thereof) to their continued service with the company.
Fiduciary Duties in M&A Transactions
By Page Hubben
The board of directors of a corporation owe fiduciary duties to the corporation and its stockholders under Delaware law. In most general matters, the actions and decisions of the board and the company’s officers are viewed through the standard of the business judgment rule. In a change in control transaction, however, a court reviewing the actions of a board will apply a heightened standard, and the actions and decisions of the board and officers become subject to a greater level of scrutiny. Courts often examine the board’s decision-making process, the reasonableness of actions taken and the information on which decisions are based. To build a strong case against potential litigation during a significant transaction, companies and their boards should be well informed about their duties and follow best practices for evaluating, structuring and approving a deal.
Fixing Void or Voidable Stock Issuances with Section 204 of the Delaware General Corporation Law ("DGCL")
By Paula Valencia-Galbraith
Has your corporation sold stock before having a sufficient number of shares authorized under its Certificate of Incorporation? The DGCL requires that the authorized capital be increased before the sale is consummated because the Corporation needs to create the stock it is going to sell. Without the stock’s creation there is nothing to sell to the investors and failure to increase the authorized capital could deem the sale and issuance void or voidable due to the Corporation’s failure to comply with the technicalities of the DGCL. Before 2014 there was no mechanism that could retroactively fix issuing equity with an insufficient number of authorized capital or any other type of transaction that required certain technical requirements by the DGCL. These types of mistakes led to potentially embarrassing conversations with a corporation’s investors but in 2014 this all changed.
Seed Funding Basics
By Jason Miller
After forming a company and dividing equity amongst the co-founders, a founding team’s next questions are typically about funding. Often among ambitious founders, venture capital first comes to mind. Today, venture capital is well-suited for growing early-stage companies but rarely available for truly starting companies. In recent years, venture capital has been deployed in larger amounts to fewer companies and there has been a corresponding shift toward larger and more frequent seed or angel investments.
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