Corporate Legal Questions

Since you have majority control, you should be able to do pretty much whatever you want, as long as it is not punitive to your other shareholders and intended to either hurt them or benefit yourself. I would want to document a strong case that whatever you choose to do is in the best interests of the company and its shareholders. 15% should not stop you, unless he also has other contractual rights. I need to know what other rights you might have given him. Suing the finder isn't going to get you those new investors. If that finder's fee is too expensive, you'll just have to find other investors. We advise clients regarding these kinds fo problems and problems with suppliers and customers, all the time. It helps to have us already know all about your business, so that when you have a question, we already know enough about you and your business that we can get right to the current problem and not learn about your business first. Please call me to set up a time to meet and learn more about your company. Dana Sack 510-286-2200  ... Read More

If you are a corporation or limited liability company, then you can either change the legal name of the company by filing an amendment to the Articles of Incorporation or Articles of Organization with the Secretary of State or you can file a fictitious name statement and have both names. The legal name would remaing the same, but your company would also be entitled to legally use the other name, as well. If your company is just some people acting together with a fictitious name statement filed and published somewhere, then you can just file another one and have both names. I strongly urge you to conduct this business as either a corporation or a limited liability company. We can discuss the choice. If there are several of you, and especially if you have an paid employees, each of you is personally liable for any harm caused by any wrongful conduct of any of the others, including failure to pay for goods and services any of them agree the group will pay for. We form simple corporations and limited liability companies for $1200.00, about $200 of which is filing fees. That includes filing the Articles with the Secretary of State, Bylaws for a corporation and an operating agreement for an LLC, and organizational resolutions to cover certain decisions needed to get started. If you would like to discuss this further, please call me at 510-286-2200. Dana Sack... Read More

What you are describing sounds like an arrangement called a series LLC. In Texas, it is perfectly legal to arrange companies as series LLCs where one or more umbrella companies own other companies in whole or in part. The Business Organizations Code Chapter 601 is the law that made Texas one of the few states that legally recognizes this business structure. For a long read on the pros and cons of series LLC, please go here: http://www.mondaq.com/unitedstates/x/89858/tax+authorities/The+Texas+Series+LLC+Sophisticated+Planning+Tool+Or+Trap+For+The+Unwary... Read More

Did the new company (B) buy the old company (A) and dissolve the old company? Or did the new company (B) simply replace the management of A? This is an important distinction. If the company that issued your stock options still exists, you have a right to sue them to enforce your options under the agreement. If the new company completely replaced the old company and the old company dissolved, you may be out of luck. An attorney would need to review your agreement and investigate the terms of the merger or corporate takeover that took palce in your case.   ... Read More

I would recommend that your company and your partner set up a new company, maybe a corporation, maybe a limited liability company, maybe even a limited partnership, to operate the new granite business, in order to protect you and your company against any losses or claims caused by either the new partner or any employees of the granite business. If you would like to discuss the proper entity, negotiate an appropriate agreement with your new granite partner, and setting up the appropriate entity, please call me at 510-286-2200, or email me at ds@sackrosendin.com Dana Sack  ... Read More

Lots of precautions. Clients and investors are very different categories. Investors give you property or money which you are going to use to operate a business, and the investors are going to share in the  profits. The interests in your business are securities. That's the definition of a security. All securities must be registered with the SEC, a lengthy and expensive process, unless the securities are exempt from registration. Many state have their own registration and exemption rules to protect investors who live in that state. Many of these exemptions require that no commissions be paid. So you really need to find an exemption which allows commissions and make sure you set up the investment to qualify for that exemption. If clients give you their money to invest for them in other businesses, you are an investment advisor or investment bank, which are heavily regulated industries. You and certain of your employees may be required to obtain the appropriate securities license, which may require hours of classes and passing a rigorous test. If you would like to discuss your proposed business and the legal way to set it up, please call me at 510-286-2200 or email me at ds@sackrosendin.com Dana Sack  ... Read More

You are going to need to discuss many aspects of your business and your future plans with a knowledable attorney or accountant  in order to arrive at the right answer. California imposes a 10.4% income tax on regular C corporations and a 1.50% tax on income of even S corporations. Most states have lower rates and no tax on income of S corporations. So you are probably going to end up forming a new non-California entity for your non-California business. You will probably keep the California entity for your California clients and customers, so only the revenues from them will be taxable by California. Depending on your exit strategy, who you might sell the business to, you might want to be a Delaware corporation. Depending on the number of investors, you might prefer to be a Delaware limited partnership or limited liability company. Depending on how much exposure there is to the general public, might also recommend a Delaware entity, maybe a corporation, but maybe an LLC. Every time my clients by or build a new property, we set one or more new entities to own and possibly to operate it. As a result, I go through this calculation with my clients all the time. If you would like to discuss what entity you should use for your new Texas location, please call me at 510-286-2200 or email me at ds@sackrosendin.com. To learn more about my law firm, go to www.sackrosendin.com Dana Sack  ... Read More

That language does not cancel the need to acquire any other license associated with the activity. For example, lots of construction companies are LLCs. They still require a contractor's license. If you set up a massage business or a driving lesson business, you would still need those licenses. And if your investment banking business requires an SEC or state license, being an LLC does not cancel that requirement. Dana... Read More

Yes, you can make a gift of stock. The person who recieves the gift will have the same tax basis in those shares that you had when you transferred them. If the value is $14,000 or less, then there is no gift tax. If it is more than $14,000, then it counts against your uniform lifetime exemption from estate and gift taxes, but no gift tax will be due now. If the person receiving the stock is making any contribution of cash or property to the corporation, then it is better to treat the stock as payment for such cash or property. Then the buyer of the stock will receive a tax basis equal to the amount of cash or the fair market value of the property. He might elect to take a tax basis equal to his tax basis in the property, in order to avoid tax on any capital gain for selling property in exchange for stock, since he won't receive any cash from the sale with which to pay the tax. If you would like me to help document such a gift on the records of the corporaton, I am Dana Sack at ds@sackrosendin.com,510-286-2200.... Read More

It could be legal if the facts regarding the landlord are correct. I would want to make a thorough record, including signatures and representations by the landlord in order to make sure the units for the landlord would be exempt from federal and state registration requirements. Reg D is a safe harbor, but it is not the only way for units to be exempt from registration. If you can make a strong case that these non-voting units are not part of any public offering and are being offered privately and only in this state, you should be able to warn off any disgruntled investor trying to get his money back from the promoters by arguing that the offereing was not exempt and since it was not registered the investors are entitled to back out and get their money back. I would be able to help you work this out with your landlord and the appropriate documentation to protect you. Dana Sack www.sackrosendin.com 510-286-2200  ... Read More

Unfortunately, the answer to your question regarding the amount of legal fees required to prepare, file and attend a hearing on a motion to dismiss is "it depends".  If the facts of your case are not complex, the case is filed in the State court (as opposed to Federal Court) and the basis for the motion to dismiss is fairly straightforward then the cost could be as minimal as $750-$1000.    If the case is filed in Federal Court and there are legal/factual complexities, it could cost between $2000-$4000.    You will only have twenty days to file an answer to the lawsuit from the date the you are served so you will want to retain an attorney as soon as reasonably possible.  ... Read More

It sounds like you’ve got quite a complex (and frustrating) situation on your hands.  I don’t mean to be obtuse here, but, in my experience, at least, your best bet may be to see an attorney and discuss all of the details in a confidential environment.  There’s a lot that goes into the purchase and sale of a business, and this just isn’t the environment to go through it all.  And then there’s the actual non-compete and whether or not is enforceable.  Set up an appointment with an attorney to discuss everything and see where you stand in your legal options. ... Read More

Employers are required, by the Fair Labor Standards Act, to have certain personal information about on file.  However, that doesn't necessarily apply to the company seeking to contract out your services.  It depends on the arrangement between your employer and that company.  If the company is going to pay a flat hourly or other rate directly to your employer for your services, then it would probably be sufficient under the law for the company to accept some type of affirmation or verification statement from your employer that you are a U.S. citizen or otherwise authorized to work in the U.S.  I don't think the company needs your information unless it was "employing" you directly.  Now, does that mean you can be fired for refusing to cooperate?  I don't think there's any law that would prevent your employer from terminating you for refusing to provide the information.  If you want to be certain your information is not provided, you should inform your employer, in writing preferably, that you do not authorize your employer to release your information to the company (that probably would be a violation of the law if it were shared without your authorization).  If you want to keep your job, perhaps you could ask about questions about what security measures the company would use to protect your information; the manner in which it will be conveyed (hopefully not public email, which is not secure), and things like that.  Maybe you can become "comfortable" that your information will be adequately protected and would then be more willing to comply with your employer's request.  Contracting employees out is not uncommon so if you do have a concern about sharing your information, you may want to explore other employment.  Best wishes! -- Mike... Read More

First, you have used two separate terms to describe directors: "directors" and "executive directors." Do such distinct titles or offices exist under your company's Articles of Incorporation or Bylaws, or does your company have just one class of directors? Companies with large boards sometimes have an executive committee to provide guidance to the officers and answer their questions between meetings of the larger board. Is that what you mean by "executive directors?" If so, then the answer is no. At a meeting of directors, all directors are equal. The absence of directors who are members of an executive committee cannot prevent the other directors from taking action. In order for the board of directors to take any action a quorum must be present. Most bylaws provide that a quorum is half the total number of directors. Some provide that it is half the total number of directors offices including vacancies. Resolutions are approved by majority vote. If there are 3-6 directors, then the quorum would be either 2 or 3 directors, and the votes of two of them would be enough to pass a resolution. Smaller quorums for meetings of shareholders are sometimes provided in the bylaws and may be appropriate, especially for corporations with a large number of shareholders, and many actions for which shareholder approval is required. I cannot think of any situation in which a smaller quorum for meetings of directors would be appropriate. That you should discuss with an experienced corporate attorney. Please call me if you would like to discuss this further. Dana Sack 510-286-2200... Read More

No, not if you did not agree to it. What would happen if there were such a policy and no one told you about it before you took the course? The answer should be the same. What would happen if the policy were buried at the back of a thick employment manual? What if you signed something saying you agreed to everything in the manual, but had never been given time to read it? What if you were given the opportunity to read the employment manual, but never got as far as this provision before you gave up and signed the agreement? The answer should be the same, unless you were specifically told that reimbursement would be required if you left before the company had earned the cost of the course back from your work. If they call and threaten you, consider hiring us to defend you. Dana Sack 510-286-2200  ... Read More

MGL c.258B s.3(l) states that "for victims or witnesses who have received a subpoena to testify, to be free from discharge or penalty or threat of discharge or penalty by his employer by reason of his attendance as a witness at a criminal proceeding. A victim or witness who notifies his employer of his subpoena to appear as a witness prior to his attendance, shall not on account of his absence from employment by reason of such witness service be subject to discharge or penalty by his employer. Any employer or agent of said employer who discharges or disciplines or continues to threaten to discharge or discipline a victim or witness because that victim or witness is subpoenaed to attend court for the purpose of giving testimony may be subject to the sanctions stated in section fourteen A of chapter two hundred and sixty-eight;"... Read More

Petition for Writ of Mandate. I've never done one against a private corporation. Usually I have defended against them when neighbors sued the city or county over permits my clients had obtained. I am familiar with the procedures and legal standards, even though I've nver actually sued a corporation to force a meeting. If you would like me to help you with this, please call me. Sometimes a phone call to the president, the property management company, or the HOA's attorney is all it takes. But if it takes more, our lawyers love a good courtroom fight. Dana Sack 510-286-2200  ... Read More

If you went through probate court proceedings in California, the probate department clerks are very thorough in searching for undisclosed assets and making sure every bit of the estate gets to the person the decedant designated in his or her will. During the probate, your attorney had the power to subpoena the bank's records regarding the CDs and your brother's bank accounts. Those should have shown which accounts the CDs went into and where they went after that, whether he sold them or spent them. If the probate is closed, I don't know what's left to do. There are statutes of limitation on all claims. When the statute of limitation expires, the claim becomes unenforceable. The statute of limitation for a claim based upon a writing is 4 years. The statute of limitation for fraud is the later of 3 years or 1 year after discovery. There are others for other types of claims, but most are shorter. The point is that you might have waited too long, but if there are any claims that have not expired, they may expire very soon. If you're not ready to give up on this, then you better hire an attorney and get him going immediately. If you would like me to look into this for you, we charge $300.00 per hour plus expenses. We send out detailed invoices monthly and expect to be paid upon delivery of the bills. Since we do not have a prior relationship with you, we would want a $5000.00 deposit before beginning, and we would expect you to maintain that deposit by paying our invoices promptly. If these terms are acceptable, please let me know and I will send you our usual attorney client fee agreement so we can get started. Dana Sack www.sackrosendin.com ds@sackrosendin.com 510-286-2200  ... Read More

The short answer is yes. But for some states you might not want to. All the assets and any profits of the company, even a non-profit, which signs the contract are available to creditors  and claimants if something bad happens. As a company grows, it usually separates different geographical or operational sections of the company in order to limit the assets available to satisfy a judgment arising out of the activities of one portion of the company. For example, if you have a lot of valuable contracts in both California and Arizona, you might want to guard against an expensive debt or judgment in one of those statement bankrupting all the work in both states. The solution is separate corporations for the two states. You don't need a separate corporation for every state. Your Board should decide how big any of the companies can get before you start the next one. $5 million or $10 million seem like logical levels at which to break into separate companies. We set up corporations and limited liability companies and limited partnerships all the time. Dana Sack www.sackrosendin.com 510-286-2200 ds@sackrosendin.com    ... Read More

Owners of corporations can own any percentage of stock.  Assuming that the two of you should own the business 50/50, one way of facilitating stock for future investors is to have the company maintain the unused stock for later use, sometimes called treasury stock.  If the company is split 65/35, then your partner will own 65% of the company.  Now, he could transfer any amount of his stock to a future investor, but that would be up to him.  Also, I am assuming there are no restrictive stock agreements and the future offerings will not be substantial enough that you need to register the offering. There are several other ways to set the transaction up that are somewhat more complicated, but the easiest way would be for the company to own the unused stock and then it can be sold to investors at a later date.... Read More

I am not a class action lawyer, but no, I have never heard of that. I am not convinced that the legalese that accepting the money meant you could not sue is enforceable. Why couldn't you take the position that you accepted it as a downpayment and partial compensation for what you are really owed and what your really damages are? Just because they write something like "in full and final satisfaction" on the back of the check doesn't mean you can't cross it out and treat it as just money they have paid you. You can still ask for more. They probably figure that having received that amount, most people will respect their language about it constituting a release and waiver of further claims, most people won't bother trying to get any marginal additional money, and if they did, the court might make you return the money as a condition precedent to hearing your case. Even you aren't inclined to pursue the matter further. But this is not my area. I'm a real estate and construction attorney. Dana Sack 510-286-2200 www.sackrosendin.com  ... Read More