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Archive for for January, 2016

Hidden Liabilities After You Buy a Business? It Could Be. Logan Bus Co. v. Auerbach and Successor Liability Under New York Law

January 28, 2016

Acquiring another company is a common way to expand a business. The potential advantages of a strategic acquisition are numerous—it can add value to the combined entity by eliminating redundancies in operational costs, diversifying (if adding a new line of business), solidifying a supply line (by acquiring a supplier or customer), or increasing the market share and reducing competition (if buying a company in the same field). At the same time, there can be potential disadvantages as well, ranging from cultural integration problems to hidden liability issues.… Read the rest

Business Divorces: What Happens When Partners Separate

January 26, 2016

A Delaware Case: Meissner v. Yun. In our previous blog series on business divorce (available here), we focused on the break-up between two or more business owners due to disagreement or other circumstances, leading to a deadlock, forced sale of the business, or total dissolution. Oftentimes, disputes arise either because there is no written agreement, or if there is, it is poorly drafted, inadequately addressing keys terms like ownership, buy-out, and dispute resolution mechanisms. As we emphasized over and over, the importance of advance planning and carefully thought-out “business prenup” should not be underestimated.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 3)

January 21, 2016

Allowing More Access to Capital?

Proposed Amendments to Rule 504 of Regulation D.

As we explained in our previous blog post on exempt offerings under Regulation D, Rule 504 of Regulation D currently provides an exemption for offerings up to $1,000,000 in a 12-month period.[1] Although Rule 504 allows general solicitation in certain limited situations, a major downside to Rule 504 offerings is that it does not preempt state law, which often means registration and substantive disclosure requirements in compliance with applicable state law, a disproportionately expensive exercise for an offering of $1,000,000 or less.… Read the rest

Crowdfunding Gone Wrong: Some Points of Caution SEC Investor Alert: Ascenergy LLC Oil and Gas Crowdfunding Scheme

January 19, 2016

We’ve covered crowdfunding extensively in our previous posts “Crowdfunding: Is It Right for My Business,” “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Rules,” and “An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption.” As crowdfunding gains popularity, not only has it proved to be a process of trial and error (see, for example, our previous posts “Eureeca: A Cautionary Tale on How Not To Do Crowdfunding” and “Update on Eureeca Capital”), but schemes to defraud unsophisticated investors with the allure of crowdfunding also seem to have been on the rise.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 2)

January 14, 2016

More on the Rules for an Offering in a Single State

Rule 147 Intrastate Exemption: Proposed Amendments.

The proposed amendments would: (1) eliminate the current restriction on offers, while continuing to require that sales be made only to residents of the issuer’s state; and (2) redefine what it means to be an “intrastate offering” and ease some of the issuer eligibility requirements, among other things. The SEC noted that the use of the Internet for offerings makes it difficult for issuers to limit offers to in-state residents, especially in the context of intrastate crowdfunding.… Read the rest

Personal Liability of Business Owners Update: You Don’t Buy Immunity from Suits for Your Own Wrongdoing by Forming an LLC: LLC Member’s Personal Liability for Torts

January 12, 2016

As many of you know, one of the greatest advantages of forming an LLC is that it offers protection from personal liability for business debts and liabilities. As we explained in our previous blog series “Personal Liability of Business Owners,” however, the liability shield is not absolute, and there are limited circumstances in which courts will impose personal liability on LLC owners. One such situation is where a member or manager commits a tort (wrongful act) while acting in furtherance of LLC business, the consequence of which is often misunderstood by LLC owners (and even some lawyers).… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 1)

January 7, 2016

October was a busy month for the Securities and Exchange Commission (SEC). On October 30, 2015, the day the agency finally voted to adopt the crowdfunding final rules, it also issued proposed rules to amend: (1) Rule 147, which currently provides a safe harbor for compliance with the intrastate exemption; and (2) Rule 504 of Regulation D, which provides an exemption for certain offerings conducted in compliance with applicable state law.[1] (For more discussion on Rule 504 of Regulation D) The full text of the proposed rules is available here.… Read the rest

An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption (Part 5)

January 5, 2016

Texas Crowdfunding Portal Registration and Activities (in Detail).

Simplified/Streamlined Registration Process. The simplified registration process for TCPs, which we discussed previously, is designed so that TCPs are subject to fewer regulatory requirements than general securities dealers, because they are limited in what they can do.[1]

No Investment Advice. Of note, a TCP is prohibited from offering investment advice or recommendations, so in listing issuers on its platform, it is important for the TCP not to provide an implicit endorsement or recommendation.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.