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From New York to Delaware: The Process of Redomesticating a New York Corporation
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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.

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Management Carve-Out Plans
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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. 

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MintzTech Connect Industry News — June 2020
Newsletter, MintzTech Connect Dan DeWolf Newsletter, MintzTech Connect Dan DeWolf

MintzTech Connect Industry News — June 2020

By Dan DeWolf and Samuel Effron

In Harper Lee’s book, To Kill a Mockingbird, the protagonist Atticus Finch tells his son: “One never really understands a person until you consider things from his point of view, until you climb into his skin and walk around in it”. Unless you take the time to stand in another person’s shoes and see the world from that person’s perspective, we really don’t process very well what others may be saying or feeling. In this challenging time of a global pandemic and national outrage for systemic social injustices, we urge all of our readers to listen (truly listen) to your colleagues and try to understand better what it is like to be in another person’s shoes. Black Lives Matter and it is up to all of us to listen, support each other, and to see how we can make this world better. We have assembled a list of books that may help deepen that understanding and encourage us all to work diligently to build the equitable world we all want for ourselves and our fellow citizens.

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Choice of Business Entity: Pros and Cons of Corporations and LLCs
Form a Company, Articles Christian Hollweg Form a Company, Articles Christian Hollweg

Choice of Business Entity: Pros and Cons of Corporations and LLCs

By Christian Hollweg

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.

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Stock Vesting in Startup Companies
Form a Company, Articles, Build Your Team Alex Civetta Form a Company, Articles, Build Your Team Alex Civetta

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.

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Fiduciary Duties in M&A Transactions
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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. 

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Fixing Void or Voidable Stock Issuances with Section 204 of the Delaware General Corporation Law ("DGCL")
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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.

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