On October 30, 2015, the SEC released its long-anticipated crowd-funding rules. For the first time, companies will be able to raise equity funding from the general public over the Internet. The opportunity for small businesses is revolutionary. That said, taking advantage of this new funding pathway is not going to be easy. The stack of rules is thick. (The SEC’s adopting release is 685 pages long!) Companies will want to find cost effective ways of being organized and ready to take advantage of the new rules when they take effect next year. Can AfterIncorporation help? Absolutely. We are here for small businesses and their lawyers….
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Corporate Powers of Attorney
What’s a Corporate Power of Attorney? People are used to thinking of powers of attorney in the personal context, such as for estate planning purposes or in medical situations. Companies also use powers of attorney, but for entirely different purposes. Companies use powers of attorney to manage signing authority. What is Signing Authority? It is important to manage who signs on behalf of a company in every context. Officers and manager will have general power to sign on behalf of a company pursuant to state law and/or the formation documents of a company. So it’s clear that your president…
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Keeping a Minute Book
We’ve talked plenty about keeping minutes and the reasons for doing so. Of course, a Minute Book is a little more than just the minutes. This is the place where all corporate records are stored, including charter documents, share transfers, shareholder agreements and the like. Here is a link to a nice blog post we came across from a California practitioner. Remember, After Incorporation is your souped up Minute Book, hosted online and always available, with you in control of who has access. If you haven’t already, give us a try.
Why we take minutes.
This afterincorporation.com video is completely hokey, but hopefully it gets the point across. Taking minutes of your board and shareholder meetings is important, and it’s not as hard as we fear. Check out the video here.
Issuing Shares and Membership Interests
Dana Shultz, a lawyer in the Bay Area, maintains a great blog on legal topics, and many of his posts cover questions relevant to maintaining the formalities of small businesses. Below are two that discuss questions of issuing new ownership interests, such as shares of stock if you have a corporation and membership interests if you have an LLC. While we recommend consulting a lawyer when bringing in additional capital due to the importance of getting it right, these posts are instructive so that you have a sense for the process. Issuing corporate shares Issuing LLC Interests
Signing Documents for your Company
The whole point to running your business through a corporation or limited liability company is to protect you from personal liability. Incredibly, this can all be thrown away if you are not careful about how you sign documents. Let’s say a major vendor pushes an invoice in front of you, and you simply sign your name on the dotted line. The question arises: in what capacity did you just sign, on behalf of your company or on your personal behalf? It may seem obvious what you intended, but you have left yourself open to a lot of second-guessing, and potentially…
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Using AfterIncorporation as a Due Diligence Dataroom
Normally, you limit access to your company’s information to insiders like your directors, existing investors and your trusted advisors. There are times, however, when you want to allow access to others for a limited period of time. This could make sense in the following situations: You are selling your business and want to provide information to potential buyers conducting due diligence You are considering bringing on a partner or additional shareholders You are conducting a debt financing, and your lender has requested more fulsome information If you already use AfterIncorporation, much of the information that is typically provided in these…
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We are a Small Business. Do we Need a Board of Directors?
The Harvard law blog on corporate governance usually includes posts on such lofty topics as activist shareholders, corporate takeovers, the latest SEC regulations for public companies and Delaware law updates. This week, there was a refreshing post on family-owned businesses and the question of whether they ought to implement boards (of directors for corporations, of managers for LLCs). Some of what they post assumes businesses that are large and complex, even if not publicly held. But much is relevant for small businesses as well. For example, we think the following excerpt is on point: Having a board does require certain formalities—like preparing…
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Why Keep Minutes?
It’s a good question. The traditional answer was that corporations needed to keep minutes as a matter of law in order to document decision-making by the Board of Directors. The idea was that, if a corporation couldn’t show that it was acting like a real company, and not some puppet, alter-ego, of its majority shareholder, the corporate veil could be pierced, and its owners could be held personally responsible for all the liabilities of the corporation. As such, the corporate formalities of having a board of directors that made key management decisions for the company, were critical, and the way to evidence…
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The Key Decisions to Make when Forming a Company
The act of forming a company is, actually, easy. Fundamentally, it means filling out a few blanks in a form from the Secretary of State website and mailing in a check. Done. In fact, for a business with only one owner, other organizational steps like appointing officers, signing up an LLC agreement and printing certificates, may not even be necessary. The harder part is making the key formation decisions, like what kind of legal entity to form, in what state to file and what tax elections to make. For questions like these, paying a website for a package of standard…
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