Articles Posted in Corporations

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AdobeStock_250195228-300x192In September 2020, California Gov. Gavin Newsom signed into law Assembly Bill 979, also known as AB 979, in an effort to increase the diversity of the board of directors of publicly traded corporations headquartered in California. Corporations that meet the criteria must have at least one director from an underrepresented community by the end of this year.

In addition, the new law imposes strict reporting requirements to ensure that publicly traded companies comply with AB 979 and other diversity laws.

What is Assembly Bill 979?

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AdobeStock_333504091-300x200One of the many changes brought by the COVID-19 pandemic was the work-from-home shift. As millions of workers across the nation had to switch to remote work during the pandemic, many employers wonder, “How does working from home affect the productivity of employees?”

The impact that remote work has on workers’ productivity levels is a controversial topic. While some employees believe that they are more productive when working from home, others believe that their productivity decreased because they switched to remote work.

Since an increasing number of employees are working from home nowadays, more employers want to keep an eye on their work-from-home employees through the use of remote monitoring technologies.

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AdobeStock_429521227-300x212After California has fully reopened its economy on June 15, 2021, many California employers and employees alike have been wondering, “Can an employer compel its workforce to get vaccinated prior to returning to work?”

The short answer is, “Yes.” An increasing number of companies in California have mandated vaccination policies for their employees. Under federal and California state law, employers can require all or some of their employees to be vaccinated in order to return to work.

Under the Fair Employment and Housing Act (FEHA), employers are allowed to mandate vaccinations against COVID-19 as long as the decision to require an employee to be vaccinated harasses or discriminates against the employee. Employers should also keep in mind that they are required to provide reasonable accommodations related to employees’ disabilities and religious beliefs.

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IPO-e1640887497504-300x202An ever-increasing number of startups and companies in California are opting for direct listings as an alternative to going public through an initial public offering (IPO). If you ask any business owner in California, “What is the hardest part of launching and running a company?” you will probably hear, “Raising capital.”

Once, IPOs were the only real option to grow a company and raise money for your business. However, in recent years, new trends have emerged, making direct listings a more viable option.

If you are not sure whether you should pass on initial public offerings and go the route of direct listings, consult with a legal and business expert. At Structure Law Group, our LA and Silicon Valley business lawyers give practical business advice to clients whether they are running a one-person business or a company that employs hundreds of employees.

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AdobeStock_243450386-300x214After the Securities and Exchange Commission (SEC) amended its “accredited investor” definition in August 2020, it amended its rules once again in November of the same year. In its latest rule amendments, the SEC increased the annual caps on equity crowdfunding and raised the maximum offering amounts for Reg A+ offerings and Rule 504 of Reg D offerings.

In November 2020, the SEC amended its rules to expand investment opportunities and promote capital formation while also strengthening protections for investors in the United States. Some of the most significant rule amendments included:

  • Amend the rules governing the integration of private and public offerings to permit concurrent private and public offerings;
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AdobeStock_446615933-300x200In December 2020, the Delaware Supreme Court broadened the scope of stockholders’ pre-litigation inspection rights. In a unanimous decision, the Supreme Court reaffirmed the Delaware Court of Chancery’s ruling in Lebanon County Employees’ Retirement Fund vs. AmerisourceBergen Corp.

When reaffirming the court’s decision, the Delaware Supreme Court addressed the circumstances in which stockholders have a right to demand books and records under Section 220 of the Delaware General Corporation Law (DGCL).

How Will the Supreme Court’s Decision Affect Section 220 Demands?

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LLC-300x297As a business owner, one of the first decisions you will make is to choose a business entity type. California recognizes many different types of business entities. Each comes with both benefits and limitations, so it is important to work with an experienced California business lawyer to be sure that you select the business entity type that is right for your unique business. The right business entity type can give you flexibility in running your business, confer tax benefits, and ensure that your new business is run as effectively as possible. Learn more about the flexibility – and limitations – of LLCs and corporations in California.

Flexibility Of LLCs Versus Corporations

Many business owners are familiar with the benefits of an LLC. Because the company is created with limited liability, owners can not generally be held personally liable for debts of the business so long as they continue to meet LLC legal requirements. This means that the business owner’s liability is usually limited to whatever funds are invested in the business. Entrepreneurs are usually familiar with these benefits and instinctively want to form an LLC to avail themselves of these benefits. But an LLC is not the only business entity you can form. In some cases, a corporation might give your business greater flexibility to raise funds and conduct business.

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AdobeStock_423161698-300x200Running a business is complicated in the COVID era, especially if you run a business in California. After California reopened its economy in June 2021, employers have had to make sure they comply with all applicable state laws, local ordinances, and rules to stay open and avoid hefty fines.

Below we have highlighted some of the most significant COVID-related employment laws that apply to businesses and employers in California in 2021.

AB 685: COVID Reporting Requirements

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AdobeStock_87806470-300x200Accredited investors have access to a wider range of investment opportunities under federal securities laws. While there may be more opportunities available to accredited investors, these opportunities can also carry greater financial and legal risks. The law assumes that accredited investors have enough knowledge to protect themselves from these risks. But how does a person or company qualify as an accredited investor? In the United States, the Securities and Exchange Commission operates under the rules of Regulation D, which provides exemptions from securities registration requirements. Businesses and individuals who qualify as “accredited investors” can qualify for a registration exemption under Regulation D. There are two main tests used to prove this accreditation:

Income Test

Rule 501 of Regulation D sets forth specific income requirements for accredited investors. To qualify, an investor must earn at least $200,000 for the two years prior to the investment, with the expectation of earning the same or more income in the following year. (Couples must earn at least $300,000 annually to qualify.) An individual can not qualify by showing a single year of individual income and two years of joint income as a spouse. These qualifications can become complicated – particularly when a person’s marital status changes over the three-year period – so it is important to consult with a securities lawyer prior to making an investment requiring accreditation.

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AdobeStock_279104502-300x200Capitalizing any new company can be a complicated matter. If too much equity is given away, founders can lose control of their own ideas and innovations. On the other hand, if not enough capital is raised, the business could be more likely to fail due to a lack of critical resources. Consult with an experienced California startup lawyer before structuring the capitalization of any new business.

What Is Dual Class of Share Structure?

One popular method of selling equity in the early phases of a business is to create two separate classes of shares of equity. A dual-class structure gives disproportionate voting control to one class of shareholders (usually “Class A” shareholders). Thus, founders can retain control of their companies by selling stock to a concentrated voting block of owners whose judgment is trusted. Other shares can be sold to Class B shareholders, who still provide the capital that is critical to a company’s success, but whose voting rights are limited. This allows founders to retain control over the management and overall direction of the company.

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