Business Startup

Incorporating in Washington Versus Delaware: What’s Best for Your Startup?

One of the first steps when forming a company is to decide which state is best to “register” your company. Today’s post highlights some of the reasons why you may want to considering incorporating in Washington versus Delaware.

I heard Delaware was the best state to incorporate my company, is that true?

It is true that Delaware has a specialized court that handles corporate disputes (the “Court of Chancery”) and is recognized as the nation’s preeminent forum for determining internal corporate and other business disputes. Delaware also has friendly corporate statutes and a well-developed, widely understood, and closely followed body of corporate law. But Washington state also offers advantages unmatched by Delaware (and many other states).

Two of these advantages are the simple incorporation...

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Business Startup

Can You Convert Your Company Into a Social Purpose Corporation?

Yes, an existing Washington business entity can convert into a social purpose corporation (“SPC”). In this blog post, we’ll discuss how an existing traditional corporation can become a social purpose corporation.

To convert a corporation into an SPC, the company needs to take a few steps. First, the board of directors has to recommend the corporate action to the shareholders. The action must pass by at least two-thirds of the votes of the voting group entitled to vote on the corporate action. Further, the action must pass by two-thirds of all other shares voting as separate voting groups. Essentially, the SPC conversion statute controls over any existing arrangement in the corporation’s governing documents. So the corporate action to convert to an...

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Intellectual Property

Brewery Law 101: Washington State Beer Labeling Requirements

You’ve perfected your recipe, bottled your beer, and now it’s time to slap labels on the bottles. Before creating your labels, you’ll need to know the Washington State beer labeling requirements . Below are the basic guidelines you should have in mind as you begin brainstorming labels for your brew.

Washington’s Rules Versus the Federal Labeling Requirements

If you comply with the federal labeling requirements under the TTB regulations, you will comply with most of Washington’s labeling requirements. However, Washington’s Liquor Control Board (LCB) has put in place a few extra regulations to be aware of.

You must obtain a federally-approved label, or a Certificate of Label Approval (COLA), before you are allowed to sell your beer in Washington. You must submit a copy of...

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Litigation & Dispute Resolution

Website Leverages the “Crowd” to Finance Lawsuits with Crowdfunding

A few weeks back a new website was unveiled that uses crowdfunding to finance high-value commercial lawsuits. According to the Wall Street Journal and the company’s press release, LexShares connects accredited investors with plaintiffs in commercial lawsuits.

“Invest in Justice”

The company’s slogan suggests a novel idea in the crowdfunding world, and breaks away from the “traditional” reasons for raising capital through crowdfunding, which is raising operating capital to fund startups and small businesses.

LexShares’ staff of securities professionals review the lawsuits and only post suits that have “strong merit.” The target lawsuit for the company is one with $10 to $40 million in claim value. According to the press release, if the plaintiff wins the case, then the investors will recover an...

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Corporate Finance & Securities

You Can Now Use Crowdfunding in Washington State

As of this month, you can officially utilize crowdfunding to raise money in Washington for your startup. This new opportunity allows companies to advertise their securities offering and raise money from all investors. Traditional securities offerings restrict advertising and limit offerings to those who satisfy the income and net worth standards to qualify as an accredited investor. This new opportunity is different from platforms like Kickstarter, because with Kickstarter campaigns you can’t offer stock in exchange for the donations; instead the donations are usually straight gifts or made in exchange for a product or promotional item. Crowdfunding is not yet available on a national scale despite a section in the JOBS Act directing the SEC to enact crowdfunding rules (Congress...

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Corporate Finance & Securities

Basics of Broker-Dealer Regulation

Generally speaking, broker-dealers are people that are in the business of buying and selling securities or in the business of helping others buy and sell securities. Brokers and dealers are subject to extensive regulation by the Securities Exchange Commission and state regulators.

The broker-dealer regulations are designed to make sure that people in the business of buying and selling securities meet professional standards, have adequate capital, and provide adequate disclosures to investors.

What is a broker?

The Exchange Act, in Section 3(a)(4)(A), defines a broker as any person or company that is engaged in the business of effecting transactions in securities for the account of others. This definition is analyzed in three parts. A broker must:

be “engaged in the business,” of “effecting transactions in...

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Business Startup

iVLG News Roundup Week 13 2014: Facebook Buys Oculus VR; Washington Passes Crowdfunding; Bitcoin Taxation

Facebook Buys Oculus VR; Non-equity Stakeholders Feel Slighted

After raising $2.4 million through a Kickstarter campaign that helped bring their virtual reality headset to real reality, Oculus VR sold to Facebook in a cash and stock deal worth $1.99 billion. The company announced it was joining Facebook because “[t]his partnership is one of the most important moments for virtual reality: it gives us the best shot at truly changing the world. It opens doors to new opportunities and partnerships, reduces risk on the manufacturing and work capital side, allows us to publish more made-for-VR content, and lets us focus on what we do best: solving hard engineering challenges and delivering the future of VR.”

The trajectory the company took to a $2...

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Corporate Finance & Securities

Washington Senate Passes Version of House Crowdfunding Bill

Friday afternoon the Washington Senate passed its version of a state crowdfunding bill by a 46-2 margin. It was a bit dramatic for those of us invested in the bill, as the Senate had to put the bill to a vote by the end of the day Friday, and it wasn’t certain the bill would be considered. But the Senate passed the crowdfunding bill with only few hours to spare.

The Senate bill is largely similar to the crowdfunding bill passed by the Washington House of Representatives on February 13. But, the Senate bill includes an amendment drafted by Senators Angel and Hobbs that makes a few crucial improvements.

Details of Washington Senate Crowdfunding Bill

We’ve already looked at the House’s original crowdfunding...

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Business Startup

iVLG News Roundup Week 8 2014: Mergers and Acquisitions for Google (and Apple?); Tesla Celebrates in Seattle; Seattle to Host First Bitcoin ATM (not)

Google Continues Mergers and Acquisitions Spree Buying to Protect Ad Revenue Web

Google announced Friday that it has acquired London based ad fraud detection group, which is led by a small team of talented developers. The firm specializes in discovering pay per click ad fraud, which has for a long time cost web marketers big money. Terms of the acquisition weren’t announced. Considering Google makes money from clicks, it may seem like the fox is now guarding the hen house. But a more appropriate analogy is probably that Google’s is now guarding its massive online advertising web.

Tesla Beats Washington State Auto Dealers and Does Not Deny Apple Acquisition Rumors

Tesla won a victory at the Washington State Legislature this week...

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Business Startup

Washington House Passes Crowdfunding Bill

A few weeks back, we provided you with an overview of Substitute House Bill 2023, the new legislation that would bring crowdfunding to Washington state.

Crowdfunding allows companies to raise funds from the public in exchange for equity in the company (as opposed to just company swag or first delivery of a product). The bill—which has now passed the House by a vote of 89-9, but is waiting to be passed through the Senate—includes obstacles that may trip up companies trying to take advantage of the new crowdfunding rules in Washington. Since our last discussion of this topic, the bill was amended, and we’ve highlighted some of the major amendments below.

Highlights from the Amended Bill

The notable changes to the bill include:

A definition...

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