Corporate Finance & Securities

Investment Club: Securities Laws

Raising capital is a costly endeavor and it requires compliance with securities laws. But people who want to pool their funds to help businesses grow have some options to avoid being subject to more restrictive securities requirements. One option is to put together an investment club.

What is an investment club?

Investment clubs are groups of people who pool their money together to make investments. Members of investments clubs study different types of investments and then the group decides to buy or sell based on a majority vote of the members. The meetings of members may be educational and each member must actively participate in investment decisions. Often, investment clubs are set up as partnerships.

What’s the role of the SEC?

Investment clubs...

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Business Startup

Why a Repurchase Option Matters to Startups

Most founders are concerned about making sure each of the co-founders are invested in the company. Founders often ask about protecting against a co-founder leaving the company, taking his or her equity, and sharing in the potential future upside value of the startup without continuing to work for that right. To protect against this, startups often have a “repurchase option” to buy back shares from the departing founder.

When Can the Company Exercise the Repurchase Option?

While terms can vary, the shares issued to the founders are often subject to a vesting schedule that requires the founder fulfill certain obligations—e.g. to stay with the company a period of time, achieve certain milestones, or any other creative requirements the founders agree on— in...

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Corporate Finance & Securities

SEC Form D Amendments

When a company decides to raise capital, the company must file Form D giving notice of an exempt offering of securities with the Securities and Exchange Commission. Commission rules require the notice to be filed by companies and funds that have sold securities without registration under the Securities Act of 1933 in an offering based on a claim of exemption under Rule 504, 505 or 506 of Regulation D or Section 4(5) of that statute.

Companies and funds must file their Form D amendments with the SEC online using the SEC’s EDGAR (electronic gathering, analysis and retrieval) system. One question that often arises is this: when is a person or company required to file Form D amendments?

Form D Amendments Filing

A Form D filer should...

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Business Startup

New Seattle Minimum Wage Law Goes Into Effect April 1

Last time we wrote about the new Seattle minimum wage ordinance, we discussed how the International Franchise Association (IFA) filed a federal lawsuit claiming that the ordinance unfairly discriminates against franchisees. The IFA was asking for an injunction to prevent the law from going into effect on April 1. On March 17, federal Judge Richard Jones denied the group’s request for an injunction. Although IFA’s claim still hasn’t been fully litigated, Judge Jones decision regarding the injunction means the law will go into effect on April 1.

What you need to know?

The increase to the $15 minimum wage will be phased in, and April 1 marks the first incremental change.

Large Companies

If your business employs more than 500 people in the United States,...

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Corporate Finance & Securities

When is a loan subject to securities regulations?


What is a security? Securities are contracts for an interest in a company, sometimes called an “investment contract.” A typical example of a security transaction is the sale of company stock in exchange for cash. The SEC’s definition of “security” includes a 30-item list that stocks, notes, bonds, and investment contracts, among others. We recently discussed the Howey case, which provides the test courts use when determining whether something is an investment contract. Today’s post looks into the circumstances under which a note or loan would fall within the SEC’s definition of a security.

To start: Why does it matter if something’s a security? Securities are extensively regulated because of the real risk that individuals and the companies they control could swindle unwitting...

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Business Startup

Why You Should Consider a Social Purpose Corporation When Choosing Your Business Entity Type

Prior to the emergence of the Washington social purpose corporation (“SPC”) and similar corporate forms in other states, entrepreneurs who wanted to build for-profit companies with specific social values faced a dilemma. They could create a business structured to focus primarily on profits, a corporation. Alternatively, they could create a business focusing on a social mission, a non-profit corporation. But the non-profit corporation could not operate for profit. So if they wanted to be profitable, they couldn’t as effectively capitalize on the socially responsible reputation that non-profits achieved, even if it was an important part of their business identity. However, SPCs can now bridge that gap. In today’s blog post we discuss how an SPC allows a company to more...

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Brewery Law 101: Key Contracts for Breweries

We continue our Brewery Law 101 series by exploring some key contracts to consider when opening a brewery. Below we’ve highlighted a few key contracts for breweries. These agreements are importnat to have in place and understand in order to keep your brewery as protected as possible.

Commercial Lease Agreements

When you get to the point that it is no longer feasible to brew batches of beer in your basement, backyard, or garage, it’s time to begin exploring a commercial space to house your operations. Some important considerations (among others) to sort out as you begin hunting for the right space include: how large of a space do you need? Will you operate a tasting room or just brew beer to distribute...

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Business Startup

Brewery Law 101: Navigating the TTB

If you are considering opening a brewery, you will need to navigate the Alcohol and Tobacco Tax and Trade Bureau (“TTB”). In this latest post in our Brewery Law 101 series, we outline the general process for fulfilling the TTB requirements.

1) Beer Operation Identification:

One of the most important steps when starting out in the brewing industry is to decide the type of operation you want to build:

Brewery/Brewpub Pilot Brewing Plant Brewery/Brewpub

If you are interested in producing beer, malt beverages, or Saké for sale, operating a brewpub, or wish to alternate brewery premises with another brewery, you fall into this category.

Pilot Brewing Plant

You fall into this category if you wish to establish a pilot brewery either on or off brewery premises for research,...

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Mergers & Acquisitions

Purchase and Sale of Business: Drafting the Business Purchase and Sale Agreement

Once you’ve nailed down the terms of the acquisition (usually in a letter of intent), it is time to begin putting the terms into a formal agreement usually referred to as a business “purchase and sale agreement.” This agreement will spell out the seller’s and buyer’s rights and responsibilities with respect to the transaction. We’re continuing our series on the Purchase and Sale of a Business by highlighting some of the major considerations when putting together the business purchase and sale agreement for your acquisition.

Structure of the Sale: What assets and liabilities are included?

As we discussed in a prior post in this Purchase and Sale of a Business series, you’ll need to sort out whether the sale will be an...

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5 Contract Clauses to Help You More Quickly Resolve Contract Disputes

The purpose of executing written business contracts instead of relying on oral agreements is to manage risks and expectations. When I draft contracts, my job is to state clearly the parties’ responsibilities under an agreement. My  job is also to prepare my clients for the possibility that things take a turn for the worse and the other party fails to fulfill their promises. A major benefit of having a contract is to help you more quickly and easily resolve a dispute if it arises. Quickly and easily resolving disputes means your business will spend substantially less money dealing with dispute resolution, so it is important for your bottom line that you ensure your contracts are well drafted to prepare you for...

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