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The JOBS Bill & Securities Laws

Senate and House Approve Major Overhauls of Federal Securities Law
This week the house and senate JOBS bills were reconciled and H.R. 3606 was sent to the president to be signed into law. The White House has publicly supported the bill, and is expected to sign the bill soon. The 22 page bill has seven different titles, each of which is intended to make it easier for companies to raise money.

Title I “Reopening American Capital Markets to Emerging Growth Companies” creates reduced reporting obligations for “emerging growth companies,” a newly defined classification of businesses. These reduced filing and reporting obligations mean that only the largest companies will have to fully comply with the burdensome filing and…

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Today's post boils down the complexities of leasing and provide a guide to assist startups in finding the ideal work space, under reasonable terms.

Leasing commercial office space often involves a unique set of complexities and elements. Today’s post will boil these complexities and elements down to a very basic level. The goal is to provide a simple guide to assist startups in finding the ideal work space, under reasonable terms.

Typical Pricing for Commercial Office Spaces
Generally, commercial office space is leased on a “dollars per square foot per year” basis. For example, you may see lease pricing in terms such as $15/foot; 3,000 square feet. Under this scenario, the lease would be $45,000 per year, paid off in monthly installments of $3,750. The landlord may also require a security deposit, similar to when you rent a residential space.

Useable Square Footage
Often, the numbers aren’t as…

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Corporate Finance & Securities Regulation

Senate JOBS Act Passes Key Hurdle
Today the Senate voted 76-22  to pass a cloture motion (a motion to end debate) on the JOBS (Jumpstart Our Business Startups) Act. This controversial legislation would enable businesses to raise money through crowdfunding, and would reduce other restrictions on raising capital. The Wall Street Journal, and the Chicago Tribune support the JOBS Act, but others including the New York Times and the Securities Exchange Commission have spoken against the bill. One the one hand, the Journal and the Tribune are taking the position that the bill should be passed because it will boost the economy, and on the other, the Times and the SEC are concerned that without appropriate regulation the…

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Buy Sell Agreements are important for pre-determining the rights and obligations of remaining owners, departing owners, and other interested parties.

A Buy Sell Agreement is a legal contract between the owner(s) of a business and the entity, to purchase and sell interests in the business at a pre-determined price if certain future events occur (e.g. death, disability, outside party purchase offer, or termination of employment). The Buy Sell Agreement can help ensure a smooth transition for the entity, remaining owners, and departing owners of a business.

Benefiting the Entity
There are a number of reasons why you may want to have a Buy Sell Agreement drafted for your business. The business may want to prevent unwanted or adverse third parties from acquiring an ownership interest in the entity. You can structure the Buy Sell Agreement in a way that triggers an buy-out…

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This post details transferring member interests, the right of first refusal, and admission of a new LLC member.

As is the case with just about every provision in an operating agreement, the rules are flexible in regards to transferring member interests and admitting new members. This latest post in our series on LLC operating agreements details the default rules and common types of provisions related to transferring member interests, rights of first refusal, and admission of a new member.

Transferring LLC Ownership Interests
Most LLC statutes distinguish between membership interests and member rights. The most important difference between the two is that the member’s transferable interest usually (but not always) includes only the member’s share in profits and losses and the right to participate in distributions (i.e. financial interests), and not the right to participate in management and control. Generally, a member’s financial…

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Securities Law

SEC Cracks Down on Sales of Private Securities
The Securities and Exchange Commission has filed civil charges against three brokerage firms, Felix Investments, EB Financial, and SharesPost, that trade shares of privately held technology securities. According to the SEC, fund managers at Felix and EB Financial misled investors and took undisclosed fees and commissions. SharesPost, an online exchange for private shares, reportedly brokered transactions and failed to register as a broker-dealer. EB Financial settled for about $310,000, and SharesPost and its founder will pay about $100,000 combined. Meanwhile the SEC is progressing with a lawsuit against Felix and its manager. US legislators are considering adopting new laws that would make it easier to trade shares on the secondary markets.

Employment Law

CA…

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Proposed regulation requires federal contractors and subcontractors to have disabled workers comprise a minimum of seven percent of their work force.

In December 2011, the United States Department of Labor announced a new plan that requires federal contractors and subcontractors to have disabled workers comprise a minimum of seven percent of their work force. The public comments period for this proposal expired on February 21, 2012, and the Office of Federal Contract Compliance Programs (OFCCP) is reviewing public reaction. Although the department says it would not be an explicit requirement, companies that do not meet this target could nevertheless be penalized with revoked contracts or could be barred from winning future contracts until they show they are taking steps to meet the target.

Current law encourages federal contractors to maintain a diverse work force but does not specify what percentage of jobs…

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Legislation creating social purpose corporations has passed both the Senate and the House, and is expected to be signed by the Governor this month.

In January, we wrote about bills in the Washington legislature that would create of a new corporate form for Washington businesses–the social purpose corporation. In February, the House passed HB 2239, a bill creating social purpose corporations, by a margin of 62-31. And in early March the Senate passed its version of the bill, SB 6230, by a margin of 34-14. Governor Gregoire is expected to sign the bills into law this month. To view the bill creating social purpose corporations as passed by the legislature, click here.

For more information about what social purpose corporations are, and…

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The sixth post in the social media legal issues series explores labor laws and using social media to make employment decisions for your business.

The people it hires are an essential part of a company’s brand and should be carefully vetted to protect and promote that brand. As a part of the vetting process, and also as part of ongoing employee monitoring, it has become popular for employers to examine employees’ social media profiles.  Social media is a tempting medium through which a company can review applicants’ personal information—information that may not come up on an application or during an interview. While social media profiles provide a lot of useful information for employers, the use of information gleaned from social media profiles also presents a real legal risk. To help avoid these risks, employers should remember the following when using social profiles as a…

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Details on the basics of agency law and some of the principles that determine personal liability when you act on behalf of another person or business.

There’s a common phrase in the business world; “acting on behalf of” seems to find it’s way into a number of business documents and legal contracts. What does it really mean to be acting on behalf of? Who’s liable for what in these situations? Today’s post will detail some of the basics behind agency law and some of the principles that determine liability when you act on behalf of another person or business.

Determining the Agency Relationship
The term “agency” refers to a legal relationship between two parties, the agent and the principal.  The agent is the legal representative of the principal, which may be a person or entity. The agency relationship is established once one person has the legal authority to…

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