Archives for October 2015 | The R. Shawn McBride Law Firm, PLLC

Archive for for October, 2015

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 2)

October 31, 2015

Verification of Accredited Investor Status.

The next set of questions are related to the requirement under Rule 506(c) that an issuer take reasonable steps to verify, and form a reasonable belief regarding, the accredited investor status of a purchaser at the time of the sale of securities.[1] This is important because, to qualify for an exemption from registration, an issuer must meet all the terms and conditions of the exemption, and verification of accredited investor status is a requirement under Rule 506(c).… Read the rest

SEC Votes To Adopt Federal Crowdfunding Rules

October 30, 2015

In our previous blog series on “Crowdfunding: Is It Right for My Business?”, we discussed Title III of the Jumpstart Our Business Startups Act (JOBS Act), popularly known as the “CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012),” which would exempt crowdfunded securities from the federal registration requirement.

On October 30, 2015, the Securities and Exchange Commission (“SEC”) finally voted to adopt final rules related to the offer and sale of securities through crowdfunding under Section 4(a)(6) of the Securities Act of 1933, as mandated by Title III of the JOBS Act. … Read the rest

LLC Owners, If You Owe Someone Money, Your Ownership of an LLC Might Not Be Protected: When It Comes to Single-Member LLCs, Charging Order May Not Be the Exclusive Remedy (Part 2)

October 29, 2015

Real Life Stories (Cases) on the Issue: In re Albright (Colorado).

In Albright, Albright was the debtor in bankruptcy and the sole member of a Colorado LLC, which owned certain real property.[1] The bankruptcy trustee contended that, because the debtor was the sole member and manager of the LLC at the time she filed bankruptcy, the trustee now controlled the LLC and could cause the LLC to sell the real property and distribute the net sales proceeds to the bankruptcy estate.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 1)

October 27, 2015

On August 6, 2015, the Securities and Exchange Commission (“SEC”) issued Compliance and Disclosure Interpretations (“C&DIs”). For the full text of the C&DIs, click here. C&DIs are not rules, regulations, or statements of the SEC, but reflect the current views of the staff of the agency, which should be of interest to many businesses that want to raise capital through exempt offerings. The recent C&DIs deal with a multitude of issues, through questions and answers, but in this blog series, we will focus on three topics that are particularly relevant: accredited investor status, general solicitation, and intrastate exemption.… Read the rest

LLC Owners, If You Owe Someone Money, Your Ownership of an LLC Might Not Be Protected: When It Comes to Single-Member LLCs, Charging Order May Not Be the Exclusive Remedy (Part 1)

October 24, 2015

As many of you know, an LLC’s assets are generally not subject to claims by creditors of LLC members for their personal debts. The LLC and its owner are generally considered separate legal entities with their own assets and liabilities. In our previous blog series on LLC statutes (available here), however, we mentioned that creditors of LLC members can get to the assets of the LLC by applying for a charging order, if the state law so provides. A charging order gives the creditor the right to receive distributions from the LLC to which the debtor/member would otherwise be entitled, if any, but does not confer any right to order distributions or participate in the LLC’s management.… Read the rest

Can I Be Held Liable As Partner When in Fact I Am Not? (Part 3)

October 22, 2015

Branscome v. Schoneweis.

In Branscome v. Schoneweis, Schoneweis and Woodrum, brothers-in-law, were associated in the operation of a livestockyard called Tallula Cattle Company (“Tallula”).[1] Schoneweis was the owner (providing the initial working capital) and Woodrum was the manager (entitled to an equal share of commissions on the sale of all cattle) of the livestockyard (market agency business), while at the same time, both men continued as individuals in the business of buying and selling livestock in commerce (dealer business).… Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 5)

October 20, 2015

Texas: An Issue for the Jury.

In Texas, a holder of shares of a corporation for at least six (6) months, or a holder of at least 5% of all of the outstanding shares of a corporation, is entitled to examine and copy the corporation’s relevant books, records of account, minutes, and share transfer records at a reasonable time, in person or through an agent, subject to the governing documents and on written demand stating a proper purpose.[1] If the corporation raises a fact issue on the shareholder’s proper purpose, the issue will go to a jury trial.… Read the rest

Can I Be Held Liable as Partner When in Fact I Am Not? (Part 2)

October 17, 2015

Cox Enterprises, Inc. v. Filip.

In Cox Enterprises, Inc. v. Filip, Filip was owner of Trans Texas Properties and Elliott was not. [1] One of its employees filled out a credit application to obtain newspaper advertising services for the business and falsely listed Elliott as an owner.[2] The employee had no authority to make such representation and Elliott did not hold himself out to the advertising company as having any ownership interest.[3] The advertising company relied on the employee’s representation that Elliott was an owner and rendered its services to the business on credit, but made no effort to verify the accuracy of the representation.… Read the rest

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Archive for for October, 2015