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Remaining or Going Private: Traditional and New Rationales
The going private transaction has been popular in the past and will likely continue in popularity, given the number of startup “exits.” In the alternative, companies could continue to remain private, as venture capital funding and mega-rounds give companies a way to operate privately and their founders to retain control. Traditional rationales were centered around public speculation and filing or disclosure requirements. I suggest that new rationales include control by founder/CEOs, although it is hard to be sure. In the future, there could be new trends, less founder-centric companies, and more rationales for remaining, or going, private.
The Corporate Transparency Act: What You Need to Know Now
This is the slide deck for the presentation
Shareholder Agreements as Mechanisms for Dealing with Shareholder Oppression
It is important to evaluate the nature and role of shareholder agreements as mechanisms to protect against shareholder oppression.
Drafting Governing Documents
One of the very first steps in the lifecycle of a business is to form the business entity. The first decision will be to determine which type of legal entity will be the best fit for the business. Once the type of entity has been selected, the governing documents for that entity will provide the framework for the ownership, management and corporate governance structures of the business. This article provides an introduction to the types of entities available in Texas, the steps required to form a legal entity, and certain drafting considerations in connection with preparing an operating agreement for the entity.
Governing Persons in Action: Overview of Fiduciary Duties, Excupation, and Indemnification in Texas Business Organizations Code Chapter 7.1
Statutory developments beginning in the 1990s have impacted the analysis of fiduciary duties in the business organizations context. The duties of general partners are now defined by statutory provisions that delineate the duties without referring to them as “fiduciary” duties and specifically provide that partners shall not be held to the standard of a trustee. Whether limited partners in a limited partnership have fiduciary duties is not well- settled, but the Business Organizations Code (BOC) clarifies that a limited partner does not owe the duties of a general partner solely by reason of being a limited partner. While the fiduciary duties of directors are still principally defined by common law, various provisions of the corporate statutes are relevant to the application of fiduciary duty concepts in the corporate context. Because limited liability companies (LLCs) are a relatively recent phenomenon and the Texas LLC statutes do not specify duties of managers and members, there is some uncertainty with regard to the duties in this area, but the LLC statutes allude to or imply the existence of duties, and managers in a manager-managed LLC and members in a member-managed LLC should expect to be held to fiduciary duties similar to the duties of corporate directors or general partners. In each type of entity, the governing documents may vary (at least to some extent) the duties and liabilities of managerial or governing persons. The power to define duties, eliminate liability, and provide for indemnification is addressed somewhat differently in the statutes governing the various forms of business entities.
Drafting Governing Documents
One of the very first steps in the lifecycle of a business is to form the business entity. The first decision will be to determine which type of legal entity will be the best fit for the business. Once the type of entity has been selected, the governing documents for that entity will provide the framework for the ownership, management and corporate governance structures of the business. This article provides an introduction to the types of entities available in Texas, the steps required to form a legal entity, and certain drafting considerations in connection with preparing an operating agreement for the entity.
Governing Persons in Action: Overview of Fiduciary Duties, Excupation, and Indemnification in Texas Business Organizations Code Chapter 7.1
Statutory developments beginning in the 1990s have impacted the analysis of fiduciary duties in the business organizations context. The duties of general partners are now defined by statutory provisions that delineate the duties without referring to them as “fiduciary” duties and specifically provide that partners shall not be held to the standard of a trustee. Whether limited partners in a limited partnership have fiduciary duties is not well- settled, but the Business Organizations Code (BOC) clarifies that a limited partner does not owe the duties of a general partner solely by reason of being a limited partner. While the fiduciary duties of directors are still principally defined by common law, various provisions of the corporate statutes are relevant to the application of fiduciary duty concepts in the corporate context. Because limited liability companies (LLCs) are a relatively recent phenomenon and the Texas LLC statutes do not specify duties of managers and members, there is some uncertainty with regard to the duties in this area, but the LLC statutes allude to or imply the existence of duties, and managers in a manager-managed LLC and members in a member-managed LLC should expect to be held to fiduciary duties similar to the duties of corporate directors or general partners. In each type of entity, the governing documents may vary (at least to some extent) the duties and liabilities of managerial or governing persons. The power to define duties, eliminate liability, and provide for indemnification is addressed somewhat differently in the statutes governing the various forms of business entities.
Wyoming H 185
Relates to corporate shares and distributions; authorizes corporations to issue certificate tokens in lieu of stock certificates as specified; makes conforming amendments; provides for an effective date.
Section Newsletter Summer 2015
This issue includes articles on "Trap for Nonprofit Corporations: Using Single Member LLCs" by Darren Moore and Frank Sommerville; "Form of Nonprofit Corporation Governing Documents Available to Members" by Elizabeth Miller and Frank Sommerville; "Delaware Judge Fines Dole Food Executives $148 Million for Merger Fraud" by Byron Egan; and "Common Qualifications to a Remedies Opinion in U.S. Commercial Loan Transactions" by Gail Merel and Steve Tarry.
Section Newsletter Summer 2015
This issue includes articles on "Trap for Nonprofit Corporations: Using Single Member LLCs" by Darren Moore and Frank Sommerville; "Form of Nonprofit Corporation Governing Documents Available to Members" by Elizabeth Miller and Frank Sommerville; "Delaware Judge Fines Dole Food Executives $148 Million for Merger Fraud" by Byron Egan; and "Common Qualifications to a Remedies Opinion in U.S. Commercial Loan Transactions" by Gail Merel and Steve Tarry.
The Walking Dead: Forfeitures and Involuntary Terminations of Filing Entities
Do either of these sound familiar? 1) Your client tells you she wants to terminate her entity and she has heard that if she just ignores the notices from the Comptroller’s officer to file the franchise tax report the state will terminate her company for her. Your client called the Secretary of State’s office, and they told her she needs to file documents with the Comptroller and Secretary of State. The client asks why she should go to all that trouble when the state will terminate the entity for her if she does nothing? or 2) The client’s existence was forfeited for failure to pay franchise taxes in 2011, but the company has continued to operate and has a substantial amount of real and personal property, including intangible property such as receivables. This situation comes to your attention when you filed suit for the company to collect on a promissory note executed in favor of the company in 2010 that became due in 2016. The maker of the note is arguing that the company cannot sue on the note and that the claim is barred because it was not brought within three years after the company’s existence was forfeited. Now that the company’s “forfeited existence” has come to your attention, you and the client have many questions. Can the company collect on the note? Where does the company stand with respect to its assets, rights, and liabilities?Does anyone in the company have any personal liability for liabilities incurred in the business? Can the company reinstate even though it is beyond the three-year post-termination survival period? What effect will a reinstatement have?