The Canal Street Blog

Business-focused legal discussion

Keeping Good Business Records

We discuss the importance of keeping good business records and how to create good business records, including meeting minutes.

  Charlene Angeles

In today’s post, we’ll discuss why it’s important to maintain good business records, what records you should preserve, and how to produce meeting minutes.

What Are “Good Business Records”?

A “good business record” is clear documentation that captures important information at the time the information is created or exchanged (and a “generally better than nothing business record” is one created later to document something that happened in the past). Examples of important information that a business should document are agreements made between business partners, decisions made by the company, and information collected from customers. One of the simplest forms of a good business record is “minutes” created at or directly after a meeting documenting the discussion and decisions from the meeting.

Why Should You Maintain...

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HALOS ACT: Will Congress Give the Green Light to Investment Pitches at Startup Demo Days?

In this post we discuss a bill in Congress (HALOS Act) that would make it easier for startups to raise funds at pitch events.

  Brandon Mahrt

Presentations made at startup demo days on college campuses and at accelerator pitch events routinely mention the details of a company’s effort to raise capital through the private sale of securities. This practice, however, raises concerns over whether these presentations amount to a ‘general solicitation’ for a company’s securities under Regulation D of the Securities Act. The definition of a general solicitation could include any advertisement, article, or other communication, including any meeting where the attendees were invited by a general advertisement that present the opportunity to participate in a company’s securities offering. If an early stage company makes a general solicitation, then it may be precluded from using certain valuable exemptions from registering their security offering with the SEC.

Companies...

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News Roundup: Instagram in Plain Language; Recent Trademark Battles

Instagram's website policies get plain language overhaul, and a first amendment trademark battle headline this week's news.

  Anne Pfeifle Plain Language, Privacy, and Instagram

A lawyer rewrote Instagram’s terms of use in plain language so that young people using the app could understand their privacy rights. The rewrite was a part of a task force convened to study Internet use among teenagers. The teenagers in the study said “the sheer amount of writing and the lack of clarity within the document” prevented them from understanding Instagram’s terms of use.

The rewrite took the terms of use from over 5,000 words of legalese to a single page of plain language. Illustrating the importance of plain language, after reading the rewritten terms, the teenagers decided to change their behavior. They vowed to post less and not to use direct messaging, because Instagram...

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Attorney-client Privilege: What to Know to Protect Your Business

This post discusses attorney-client privilege and what you need to know about the concept to protect yourself and your business in a future legal dispute.

  Gideon Dionne What is the attorney-client privilege generally?

The attorney-client privilege is the legal right that protects communications between a person and her attorney from compelled disclosure in a legal action. Attorney-client privilege is most often invoked when a person is asked to provide details of communications in a court proceeding or regulatory hearing, and it is codified in Washington as a rule of evidence. In a hearing, if a party otherwise entitled to the information asks for details or copies of communications and the communications are subject to attorney-client privilege, then the person being asked to disclose the information can withhold certain parts of those communications by claiming the attorney-client privilege. 

Why do we have the attorney-client privilege?

The attorney-client privilege exists because it...

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Integration in Securities Offerings

Today's post discusses the concept of securities offering "integration" or "integrated transactions" in securities law and startup law.

  Gavin Johnson

When companies raise money from investors, the transaction will be governed by securities laws. These securities laws have complex requirements that often “trip up” companies unfamiliar with the rules and their application. In today’s post, we tackle one of those areas of securities and startup law where companies often trip up: integration.

What is “Integration” in the context of a securities offering?

To better understand integration, you’ll need to first understand what a “securities offering” is. In very simple terms, a securities offering is a transaction where a company is offering to sell a security in exchange for (in most cases) cash. You can check out a discussion of the more precise definition of a security in our prior post.

Integration is a term in...

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Understanding Your Commercial Lease: Taxes

We continue the Understanding Your Commercial Lease series by discussing how commercial leases treat taxes and what tenants can do to improve tax treatment.

  Gideon Dionne

Taxes are another important consideration when working towards understanding your commercial lease. The tax provisions of your lease will detail what taxes are required to be paid by the tenant and what taxes are required to be paid by the landlord. The tax provisions will also detail how and when all taxes must be paid. To understand the true costs of your lease, you must understand what taxes you are required to pay and who takes on the risk that tax rates rise or additional taxes are levied.

What taxes will you be required to pay under your commercial lease?

The taxes you are required to pay are generally described in the definition of “Taxes” in the lease. How the definition will be written...

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Commercial Lease Letter of Intent (LOI) Basics

In this post we discuss the commercial lease letter of intent and why it is important to fully consider even if it is non-binding.

  Gideon Dionne

In an earlier post in our understanding your commercial lease series, we discussed the value of hiring a broker and briefly discussed letters of intent. We’ve have had many questions about letters of intent recently, so I am taking a quick detour to address this topic in more detail. I hope this post helps to shed light on what a letter of intent is and why it is an important part of understanding your commercial lease.

What is a commercial lease letter of intent?

A letter of intent (LOI) is a document that includes the important terms of the commercial real estate leasing deal and consolidates those terms in writing prior to the commercial lease being prepared. The letter of intent is designed to...

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Four Important Considerations When Launching a Startup

In this post we discuss four important legal considerations for every startup.

  Gavin Johnson

Today’s post highlights some of the key considerations that founders of any startup company should have in mind as they begin the process of turning an idea into a business. The action items we discuss in this post are simple things to address early on in the company and can have immediate and lasting positive impacts for the company and its founders.

Forming a Corporation or LLC to Limit Personal Liability

One of the first steps the initial partners should take is to form a limited liability entity (either corporation or LLC in most cases) in order to limit the owners’ personal liability. Forming the entity will also open the door to discussing the initial ownership percentages, vesting provisions, and management rights....

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Employee Equity Explained: Stock Options

Today, we are continuing our series on Employee Equity Explained by discussing stock options.

  Collin Roberts

Today, we are continuing our series on Employee Equity Explained by discussing stock options specifically.

Stock options are contracts that allow an employee to buy shares (this is called “exercising” the option) at a fixed price. Options are different than receiving stock because an option is exactly as it sounds; it’s an option to buy stock upon certain conditions being met, such as vesting (discussed below).

There are two standard types of stock options: Incentive Stock Options (“ISOs”) and Nonstatutory Stock Options (“NSOs”).

ISOs provide the recipient with certain tax benefits but they can only be provided to employees of the company, not independent contractors or non-employee board members. Additionally, only $100,000 in ISOs can be exercisable in any given year. NSOs on...

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The Definition of “Accredited Investor” and Why It Matters

Today’s post dives specifically into the definition of “accredited investor” as defined in Rule 501 of Regulation D of the Securities Act of 1933

  Gavin Johnson

The definition of accredited investor is a topic we’ve touched on briefly in several posts throughout the years, but today’s post dives specifically into the definition of “accredited investor” as defined in Rule 501 of Regulation D of the Securities Act of 1933. We’ll also point out why it’s important for you to understand who is considered an accredited investor.

Definition under Rule 501

The SEC states that the definition of accredited investor is “intended to encompass those persons whose financial sophistication and ability to sustain the risk of loss of investment or ability to fend for themselves render the protections of the Securities Act’s registration process unnecessary.” The definition of accredited investor under Rule 501 includes several types of individuals and...

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