Business Startup

The Social Purpose Corporation: A New Corporate Form in Washington?

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

The Washington State Senate and House are considering legislation that would create a new corporate form: the social purpose corporation. The Senate bill is SB 6230, and the House bill is HB 2239. The legislation was drafted and requested by the Corporate Act Revision Committee of the Washington State Bar Association.

Background Under current Washington law there is no ideal corporate form for businesses that want to consider both the bottom line and a social mission. You can create a business that focuses on profits, a corporation. Alternatively, you can create a business that focuses on a social mission,...

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Corporate Finance & Securities

Key Term Sheet Provisions: Dividends

Continuing our series on key term sheet provisions, this week we will be taking a look at dividends.

What Are Dividends? Dividends are distributions of company cash (or stock) to shareholders, and are most typically issued by mature companies. It is very rare for start ups and emerging companies to have extra cash to give back to shareholders. Dividends are only issued if authorized by the board of directors, and directors have nearly complete discretion in determining if and when they opt to distribute company cash to shareholders rather than opt to reinvest the money back into the company.

Stock Dividends vs. Cash Dividends Dividends are most commonly issued in the form of cash disbursements. But dividends can be structured in the form of...

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Intellectual Property

Bid Farewell to SOPA

The chief sponsor of SOPA, Lamar Smith (R-Texas), reported Friday that SOPA will be pulled “until there is wider agreement on a solution.” Smith said he has heard all the criticism andconcerns regarding the proposed anti-piracy legislation. He said “it is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products.”

It’s not surprising that the bill was pulled Friday, following widespread Internet protests, White House opposition, and several key players in Congress dropping their support for SOPA and PIPA. Both bills have been pulled for now.

It’s interesting how quickly things change in Congress. Just two days ago, Smith told the Wall Street Journal that he would...

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Intellectual Property

The Latest in the Battle Against Piracy

Megaupload Employees arrested for “Mega Conspiracy” The hottest topic of 2012, the debate over the anti-piracy legislation SOPA and PIPA, just got hotter. In the wake of widespread website blackouts and decreasing congressional support for the broad anti-piracy legislation, U.S. authorities charged Megaupload.com, a major Internet content hosting site, for a massive copyright infringement scheme. The group of employees, including the founders, have been dubbed by prosecutors as “Mega Conspiracy.” They are accused of employing a scheme that took more than $500 million away from copyright holders and generated proceeds over $175 million from subscribers and advertisers. The allegations include copyright infringement, conspiracy to commit copyright infringement, conspiracy to commit money laundering, and conspiracy to commit racketeering. The group of Megaupload employees...

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Intellectual Property

Co-Sponsors of SOPA and PIPA Abandon Ship

As promised, we’re bringing you the latest SOPA (and PIPA) updates. The latest news came late in the day Wednesday, a day where major sites including Wikipedia, and Reddit (and the Google banner) blacked out their sites to protest the overly broad anti-piracy legislation, SOPA and PIPA. SOPA co-sponsor Ben Quayle (Arizona), and PIPA co-sponsor Marco Rubio (Florida) announced they will no longer support the bills. Sen. Quayle pulled his name Tuesday, while Sen. Rubio didn’t pull his name until Wednesday.

Sen. Rubio announced his withdrawal through Facebook, noting that he believed the bill was being rushed through Congress and is likely to have unintended consequences if passed. Rubio is also trying to persuade his fellow co-sponsor, Harry Reid (Nevada), to...

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Business Startup

News Roundup 2012 Week Three: SOPA, Director Compensation, Federal Securities Law, Professional Responsibility, etc.

SOPA Update

We caught you up to date on all of the recent SOPA developments in yesterday’s post, but there’s more news today. A handful of websites including Wikipedia shutdown their services today in protest of SOPA. Others, like Google, took a milder approach in illustrating solidarity in opposition to SOPA. Google replaced the image of its name with a black box blocking out the image. It seems like the protests have been effective as SOPA is finally getting the national media attention it deserves, and many supporters have reversed position on the bills today including Senators (who supported SOPA’s sister bill in the Senate-PIPA) Rubio, Boozman, Hatch, Blunt, and Inhofe, and Representatives Quayle, and Holden. SOPA news was at a...

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Intellectual Property

White House Opposition Signals the End for SOPA; Anti-Piracy Legislation Continues to Brew

We wrote a post a few weeks ago discussing the reasons why we oppose SOPA (Stop Online Piracy Act). Here’s a quick update of where the bill stands currently.

Late last week, opponents of SOPA felt a sigh of relief. The reason? Perhaps the most powerful ally the Internet community could ask for, President Barack Obama, announced his Administration will not support SOPA, effectively putting a halt to passage of the bill. The White House announcement came in response to widespread opposition for SOPA, in particular, a We the People Petition signed by nearly 52,000 opponents of SOPA. The message behind the petition read “the more freely information flows; the stronger that society becomes,” a quote from President Obama.

“We we will not support...

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Corporate Finance & Securities

Securities Registration and Private Placement Exemptions

Last week we talked about the securities registration requirements for public offerings. This week we’re taking a look at the registration exemptions.

Some Background on Securities Registration Exemptions Under the Securities Act of 1933 (the ’33 Act), a private securities offering is exempt from the registration statement and prospectus requirements of public securities offerings. Section 4(2) of the ’33 Act provides that the registration requirements “shall not apply to transactions by an issuer not involving any public offering.” Shockingly (if you’re not familiar with federal regulations), the terms “public” and “private” are not defined in the ’33 Act.

In general, an offering is considered to be private when the number of offerees and ultimate purchasers is relatively small, the investment is prudent in the...

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Business Startup

Social Media Legal Issues: (Post Number 3): Privacy Law, Privacy Policies, and Your Company’s Social Media Strategy

Privacy law is important for the vast majority of business owners and managers to understand, particularly those whose businesses operate online and employ social media as a marketing tool. Privacy law is not one of the areas of law we consider “overhyped,” as running afoul of privacy laws can be exceptionally costly to your business. Accordingly, your social media strategy, including your company’s social media policy, should be created with privacy law in mind.

Unfortunately, “privacy law” is also an incredibly broad subject that cannot be given due treatment within the confines of anything less than a legal treatise. Nevertheless, keeping the answers to the following questions in mind as you define your social media strategy (and your online strategy generally)...

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Business Startup

Incentive Stock Option Basics

If you’re looking for a way to incentivize employee performance in your company without having to hand out hefty salaries and bonuses, you may want to consider incentive stock options (ISOs). Often referred to as qualified (or statutory) stock options, ISOs are a type of employee stock option that provide employees with non-cash compensation in the form of stock options. Today’s post will examine some of the key features of ISOs, as well as the basic requirements to be a qualified ISO.

Tax Benefits of Using ISOs Perhaps the most significant benefit, especially from the employee’s perspective, of using ISOs is the tax benefit. An employee who exercises the option to purchase stock does not have to pay ordinary income tax on...

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