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In today's blog post, we'll discuss the non-waivable provisions of the Washington Limited Liability Company Act in more detail.

Significant changes to the Washington Limited Liability Company Act went into effect on January 1 of this year. As I wrote in a previous blog post on the Washington Limited Liability Company Act changes, the changes were intended to make the law easier to understand and give members more flexibility in how they want to manage and operate an LLC. Under the old act, the non-waivable provisions were scattered throughout the act. Under the new act, the non-waivable provisions are all listed in one place for convenience— in Section 25.15.018 of the RCWs. In this blog post, we’ll discuss the non-waivable provisions in more detail.

The LLC Act allows members of an LLC flexibility in outlining through the LLC Operating Agreement how…

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Issuing employee equity in a startup, or any business, is a great way to compensate and incentivize employees.

Issuing equity to employees in a startup, or any business, is a great way to compensate and incentivize employees. However, employers and employees are often confused about the various types of equity compensation available and the pros and cons of each type of employee equity. In this series of blog posts on employee equity, we will detail the various types of equity that employers can grant and lay out the reasons for choosing one over the other.

When someone receives “equity” in a company, this means that they are receiving stock or future rights to stock in the company. By owning stock in a company, that person will then become a shareholder, which entitles them to various rights. Often, startups and…

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Employee Equity

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This post discusses Section 4(a)(7) of the Securities Act of 1933 and its impact in potentially making the resale of private stock easier.

Congress recently passed a new securities law exemption (Section 4(a)(7) of the Securities Act of 1933) that eases the limitations and restrictions surrounding the resale of private stock.  Prior to the new law, there were several regulatory hurdles that made the resale of private stock in a company difficult. As we’ve highlighted in prior posts, securities regulations require any sale of stock to be registered with the SEC (a time-consuming, expensive process), unless the sale is “exempt”—which means that the sale falls within one of the exemptions provided for in the securities regulations. (Check out one of our prior posts on securities exemptions and Rule 144 for more background on the regulations specifically surrounding selling stock in private companies as they applied…

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New Law Reduces Hurdles to Resale of Private Stock

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In today's blog post, we discuss the basics of how to complete an entity conversion in Washington state.

In a previous post, we discussed how the entity conversion bill passed by the Washington State Legislature in 2014 allowed companies to complete a conversion (instead of going through a merger) to change a company’s entity structure. You can use a conversion to change your entity structure to a different form (i.e. from an LLC to a corporation) or change your domicile to a different state. We continue the discussion about conversion in this post by going into more detail about the steps to complete a conversion.

Eligible Entities

Washington law allows conversions between domestic limited liability companies (LLCs), corporations, and limited partnerships. Washington law also allows these domestic entities to convert to foreign entities (a foreign entity is an entity incorporated in…

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Entity Conversion

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This post in the purchase and sale of a business series discusses employees and employment matters to consider when purchasing (or selling) a business.

One of the most important parts of a business is the people doing the day-to-day work. When looking into purchasing a business, it’s important to identify and understand the needs and rights of key employees, review existing employment agreements, and consider any employment related successor liability issues that may come up as part of the transaction. We’re continuing our series on the Purchase and Sale of a Business by highlighting important employee related considerations when purchasing a business.

Identifying (and Locking Up) Key Employees

Does the business you’re purchasing rely heavily on a few key employees? Especially for service-based businesses that rely heavily on relationships, these key employees can be one of the most valuable assets for the business. Making sure you…

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Locking up Key Employees

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This post in the Understanding Your Commercial Lease series discusses insurance, subrogation, and indemnification.

In this latest post in the Understanding Your Commercial Lease series we’re going to discuss insurance, subrogation, and indemnification. (Subrogation will often be grouped under the insurance provision in your lease.) These provisions of your commercial lease allocate risk between the landlord and the tenant (and each of their insurers).

Insurance

Generally, in every commercial lease there’s going to be robust insurance requirements for the tenant that are mandated by the landlord. The tenant is going to be required to pay for insurance that will include general liability insurance, property damage insurance for the tenant’s property, business interruption insurance, automobile liability insurance, worker’s compensation insurance, and then often an umbrella policy. The landlord will often ask the tenant for insurance they would probably…

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Insurance, Subrogation, Indemnification

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Today we will discuss the frequency and type, notice requirements, and voting protocol of shareholder meetings in Washington State.

As a shareholder in a corporation it is important to know your rights. One of those rights is the right to attend shareholder meetings. Today we will discuss the frequency and type, notice requirements, and voting protocol of shareholder meetings in Washington State.

Washington corporations are governed by the Washington Business Corporation Act, which is codified in RCW 23B. Shareholder meetings are specifically outlined in RCW 23B.07.

Frequency and Type of Shareholder Meeting

The two types of meetings that shareholders attend are “annual” and “special” meetings. RCW 23B.07.010 lays out the requirements for annual shareholder meetings and is summarized as follows:

1) Corporations must hold an annual shareholder meeting;

2) Meetings can be held in or out of state but if the place is not…

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In today’s blog post, we review employer policies regarding parental leave and discuss what businesses can expect in the future.

We’ve been reading the business news surrounding companies increasing the parental leave they offer their employees. In today’s blog post, we take a more in depth review of the trend locally, discuss what businesses can expect in the future, and remind employers to understand applicable law before developing their parental leave policy.

Parental Leave in the News

Washington tech giants Microsoft, Amazon, and Zillow have recently announced plans to increase their parental leave. Microsoft now offers 12 weeks of fully paid parental benefits to all new mothers and fathers. Amazon also introduced a revamped parental leave policy. Amazon will offer birth mothers up to 20 weeks of leave. Amazon has also introduced a shared leave program; employees whose partners do not receive parental leave…

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Parental Leave

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The latest post in the Understanding Your Commercial Lease series discusses Damages, Destruction, and Business Interruption.

This latest post in the Understanding Your Commercial Lease series discusses damages, destruction, and business interruption. The damages and destruction provisions of your commercial lease will detail who (between the tenant and landlord) will be responsible for damages to (or destruction of) the premises, the building, and the entire real estate complex. Business interruption is often closely associated with damages and destruction as those events often interrupt the tenant’s business, but business interruption can also come about in the context of repairs, maintenance, and utility-related issues. The language in your commercial lease that discusses “smaller” damages is often included in the repairs section of the lease, and the destruction clause (sometimes called the “casualty” clause) will generally cover major damages.

Damage

Damages…

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Damages

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In today's blog post, we discuss how you can dissolve your Washington business entity.

If you’ve decided to move on from the business you’ve started and it doesn’t make sense to sell it, you’ll likely want to dissolve your Washington business. To do so, you’ll need to consider the following steps:

Dissolving a Corporation 

To voluntarily dissolve a Washington corporation, generally the corporation’s board of directors will propose dissolution and submit the proposal for a vote by the shareholders. Two-thirds of the authorized shareholders then must approve the proposed dissolution. The initial directors, incorporators, or board of directors may also dissolve the corporation by majority vote under certain circumstances, like when no shares have been issued.

Following the vote to dissolve, the corporation must file Articles of Dissolution with the Secretary of State to notify the state of the corporation’s intention to…

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