Category Archive: All Posts

Other Economic Development Organizations

Tuesday, July 26th, 2016 | Category: All Posts,Legal
Other Economic Development Organizations •    Organization for Economic Cooperation and Development (OECD) – The OECD is an international organization of 35 countries with the propose of fostering economic development and international trade. The objective of the organization is to develop common policies and understanding with regard to international trade practices. read more »

Trademark Symbol

Tuesday, July 26th, 2016 | Category: All Posts,Legal
21. What are common trademark designations used to indicate a claim of trademark rights in a mark? The traditional trademark designation is (“TM”) or ™. Anyone who uses a distinctive mark may employ this symbol to put others on notice of the trademark claim. If a trademark is registered with read more »

Major Federal Labor Laws

Tuesday, July 19th, 2016 | Category: All Posts,Legal
    16. What are the major federal labor laws? •    Norris-LaGuardia Act – This law prevents courts from issuing injunctions (stop orders) to individuals or groups of striking employees. •    National Labor Relations Act (or Wagner Act) – This law takes affirmative steps to allow unionization of employees. •   read more »

Article I Federal Courts

Thursday, June 30th, 2016 | Category: All Posts,Legal
Article I Federal Courts Article I federal courts include “legislative courts” & “administrative courts”. Legislative courts are those created by Congress pursuant to authority granted under Article II to handle special jurisdictional matters. Administrative courts are those created to adjudicate disputes of a particular administrative agency. Note: Examples of legislative read more »

Options Contract and Firm Offers – Exception to Consideration Requirement

Thursday, June 30th, 2016 | Category: All Posts,Legal
Other Exceptions to Consideration Requirement There are two very broad, common exceptions to the requirement that a contract be supported by consideration. ⁃    Option Contracts – An option contract is an agreement between parties that allows one party a specific period of time to purchase a particular asset at a read more »

Intentional Interference with Economic Relations

Thursday, June 30th, 2016 | Category: All Posts,Legal
12. What is the “intentional interference with economic relations”? This is a tort based in common law rather than statute. There are several categories of conduct that may violate common law rights of individuals: •    Disparagement – This is an untrue statement about someone’s business acumen, product, or service. This read more »

Class Action – Procedural Requirements

Thursday, June 30th, 2016 | Category: All Posts,Legal
Procedural Requirements for a Class Action • Notice to Opt-Out – Once certified, the lead plaintiff must give notice of the litigation to all prospective members of the class who can be found through reasonable efforts. Once identified, the prospective members are then given the option of opting out of read more »

Class Action Lawsuit – Certify a Class

Thursday, June 30th, 2016 | Category: All Posts,Legal
Requirements for a Class Action – Certifying a Class The requirements for a plaintiff to bring a class action against a defendant are as follows: •    Certify the Class – The primary hurdle for the plaintiff is to “certify” all potential plaintiffs as a class. To certify a class, the read more »

What is a Class Action Lawsuit?

Thursday, June 30th, 2016 | Category: All Posts,Legal
5. What is a “class action” lawsuit? A class action is a special type of lawsuit in which one or more plaintiffs file suit on their own behalf and on behalf of all other persons who have a similar claim against the defendant. The individuals represented by the lead plaintiff(s) read more »

Shareholder Direct and Derivative Actions

Tuesday, June 14th, 2016 | Category: All Posts,Legal
12. How can shareholders enforce their rights? Shareholders may generally enforce their rights against the corporation (or its officers and directors) in one of two ways. Direct Actions – A shareholder may directly sue the corporation, an officer, or director if one of these individuals takes actions that result in read more »

Consumer Protection Law (Intro)

Saturday, May 21st, 2016 | Category: All Posts,Legal
Overview Consumer protection law concerns the body of statutes and regulations protecting consumers against deceptive practices by merchants or service providers. This chapter introduces the concept of consumer protection and its purpose. It then introduces the numerous federal statutes that protect consumers in specific situations. While these are the primary read more »

Counsel and Expenses

Friday, April 24th, 2015 | Category: All Posts,Finance
Counsel & Expenses The venture funding process often requires extensive legal services. An attorney serves the role of helping each party: Understanding the important considerations, Negotiate the funding deal (often with the other party’s counsel), Conduct or facilitate examination of the target company (due diligence), and Memorialize the transaction through read more »

Special Employee Provisions

Friday, April 24th, 2015 | Category: All Posts,Finance
Special Employee Provisions The parties often negotiate numerous employee-related provisions into the term sheet. These provisions serve as control mechanisms to either incentivize current management or allocate control over management to the investor. As discussed throughout, the control provisions employed by the investor seek to wrest away control of aspects read more »

Management and Information Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Management and Information Rights Information rights require the company to provide investors with a certain level of information. State corporate law requires a certain level of disclosure (e.g., the articles and bylaws), but investors may require a higher level of record maintenance and disclosure. The rights are generally assured in read more »

Board Observer Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Board Observer Rights Board observer rights, as the name states, allows investors to observe board meetings. This allows non-directors to be a part and presence in the corporate meetings. This includes taking part in discussions and committee meetings. The limitation is when attorney-client privilege is required. These rights are often read more »

Registration Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Registration Rights Registration rights are control provisions that allow an investor to force the business to file a registration statement with the Securities and Exchange Commission (SEC) and state regulators. The Securities Act of 1933 regulates the transfer or sale of securities. Specifically, it requires that securities be registered prior read more »

Drag Along Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Drag-Along Rights Drag-along rights, on the other hand, are control provisions that can protect against minority shareholders holding up a deal for the sale of the company. Specifically, it requires a stockholder to vote in favor of sale if the transaction is approved by a certain percentage of stockholders and/or read more »

Protective Provisions

Friday, April 24th, 2015 | Category: All Posts,Finance
Protective Provisions Another common investor control provision, known as “protective rights”, requires voting approval (either majority or unanimous vote) by a class of preferred shareholder for certain events, such as pursuing an exit event. These rights allow the preferred shareholder the ability to thwart or hold up certain corporate action. read more »

Investor Voting Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Voting Rights “Voting rights” generally refers to the right granted to preferred shareholders to participate in voting along-side common shareholders. This is an important power, as the ability to vote on corporate affairs is often a primary characteristic separating preferred and common shareholders. The articles may allow for special voting read more »

Preemptive Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Preemptive Right of First Offer Rights of first offer grant shareholders the right to purchase new shares issued by the corporation before others have the opportunity to purchase. The primary purpose of the provision is to allow current shareholders to avoid dilution of ownership by participating as purchasers of any read more »

Carveouts to Antidilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Carveouts to Anti-Dilution Triggering anti-dilution protection can be detrimental to common shareholders, who are subject to dilution. As such, the common shareholder may attempt to negotiate barriers to triggering an anti-dilution provision (i.e., a change in the anti-dilution conversion ratio).  Below are common carveouts to corporate actions that that will read more »

Broad Based & Narrow Based Calculation

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Broad-Based vs. Narrow-Based Weighted Averaged Calculation There are two primary variations of the weighted average formula depending on what constitutes “common outstanding” in the above formula. The first, and more common, is referred to as “broad-based, weighted average” while the second is referred to as “narrow-based, weighted average.” The broad-based read more »

Weighted Average Antidilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance
Weighted Average Dilution The most common anti-dilution protection is called “weighted-average,” anti-dilution protection. This approach employs a formula to adjust the rate at which preferred stock converts into common stock based upon: the amount of money previously raised by the company, the price per share at which it was raised, the amount read more »

Full Ratchet Antidilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Full Ratchet Anti-Dilution Protection Full-ratchet, anti-dilution protection prevents an investor from being diluted at all from subsequent investment. Basically, the conversion price of the preferred stock (the price at which the preferred stock is converted to common stock) is reduced to allow the investor to convert the preferred shares into read more »

Anti-Dilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Dilution & Anti-Dilution Protection Dilution is the reduction in the percentage ownership interest of an existing investor when a company issues new equity or the number of outstanding shares otherwise increases (exercising options, warrants, stock split, etc.). Anti-dilution provisions protect early investors from the risk of dilution by later rounds read more »

Conversion Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Conversion Rights Conversion rights refers to the shareholder’s ability to convert the preferred shares into common shares. Conversion rights are important as they affect the calculation of other rights of shareholders. Most calculations use the number of outstanding shares “on an as-converted basis”.  This means that the total number of read more »

Redemption Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Stock Redemption Rights Redemption occurs when the company repurchases shares from the company’s equity holders. Redemption rights are the rights of the shareholder to force the company to repurchase shares. Redemption rights are generally either mandatory or optional. Example: Unless prohibited by Delaware law governing distributions to stockholders, the Series read more »

Liquidation Preference in Follow On Rounds

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Liquidation Preference in Series B Rounds Preferred shares with a liquidation preference in a seed or series A round will generally be the only preferred class of shares issued. The liquidation preference and its priority may become an issue with later rounds of investment. Series B investors will want priority read more »

Participation Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Participation Rights & Caps In some cases, the investor will negotiate for the ability to participate with common shareholders in the distribution of proceeds after receiving the liquidation preference. That is, the investor is paid the full liquidation preference, then they participate with common shareholders in receiving a percentage of read more »

Liquidation Preference

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Liquidation Preference Investors in a startup venture want to make certain that they will receive a return of their money invested before the entrepreneur receives any funds for the sale of the business venture, merger, liquidation, or public offering. Investors achieve this desire by incorporating an liquidation preference into the read more »

Dividend Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Dividend Rights Dividend rights are a common attribute of preferred stock and are detailed in the . Early stage investors are rarely concerned with dividends; nonetheless, the parties will address dividend rights as a method of controlling the decision to issue a dividend. Dividend rights may be structured in a read more »

Term Sheet Overview

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Overview of the Term Sheet At this point during the negotiation process the entrepreneur and investor discuss the major issues surrounding the transaction. The term sheet is the result of initial negotiation and agreement between the parties regarding the funding transaction. Term sheet negotiations begin once the investor and entrepreneur read more »

Are Uber Drivers Employees? My Analysis

Saturday, April 11th, 2015 | Category: All Posts,Legal
Issue: The specific legal issue with Uber centers on whether the drivers should be ICs or Employees. The change affects the legal requirements on the company under state law and federal laws. Specifically, Uber would be required to meet state and federal minimum wage standards (FLSA), reimburse for costs incurred read more »

Funding Transaction Costs

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Legal Fees in a Funding Transaction Legal counsel plays and important role in funding transaction. The process can be quite complicated and the counsel helps negotiate the deal as well as draft the applicable documents. The startup venture will always have counsel. In a seed round it is not common read more »

Rolling Closing Dates

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Rolling Closing Date In seed rounds it is common to have a rolling closing date. This means that investors will join the round and provide funding before all investors necessary to meet the target amount have committed. The startup cannot wait to close the seek round until all investors commit, read more »

Company Legal Opinion

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Company Legal Opinion As part of the funding process (particularly the due diligence process), investors will require that the attorney for the startup venture deliver a legal opinion concerning certain organization and governance requirements. This opinion letter allows for counsel to make certifications regarding aspects that may or may not read more »

Stock Purchase Agreement Structure

Monday, April 6th, 2015 | Category: All Posts,Legal
The Stock Purchase Agreement The stock purchase agreement is the central contract between the parties where the business agrees to exchange as specific number of shares of the business venture for the agreed upon funding. The stock purchase agreement is made up of the following elements: Preamble  –  This provision read more »

Due Diligence

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Due Diligence The due diligence process is where investors (mainly through there representatives) do a thorough inspection of the startup venture. The purpose is to verify the information supplied by the entrepreneurs and to identify any points of risk in investing in the firm.  The extent of diligence varies depending read more »

Board and Stockholder Approval

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Board and Stockholder Approval The investment process generally requires significant board and shareholder approval. First, in drafting the standard documents, the board of directors will need to initiate an amendment of the articles of incorporation (and potentially the bylaws) to accommodate the issuance of a preferred share of stock with read more »

Standard Equity Financing Documents

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Equity Financing Documents There are several standards documents employed in the equity funding transaction. Many of these documents surround the formation of a new business entity (or modification of the existing entity), governance procedure, and the actual purchase and transfer of an ownership interest. Below are brief explanations of the read more »

Series A Funding

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Overview of Series Funding Following the seed or startup funds stage of financing, startup ventures seek to raise funds through specific rounds of financing. A financing round will have a target amount of money to raise at a given valuation. Sometimes the early round is structured as debt (rather than read more »

Funding Deal Process

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Funding Deal Process The process for arranging financing will vary depending on the stage of investment and nature of the business. A common model of steps in a venture capital funding transaction includes: Review of the business plan by the potential investor; Note: The business plan review step may be read more »

Overview of Funding Stages

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Overview of Funding Stages The defining characteristic that distinguishes a startup venture from a lifestyle (or small business) business is the growth-based nature of the venture. Both ventures generally begin with personal, friend, or family financing. A non-growth-based venture must achieve sustainability within the confines of personal funds and debt read more »

Vesting Schedule and Follow On Financing

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Vesting Schedule & Follow-On Financing As discussed in prior lectures, investors will seek to use a fully diluted capitalization calculation when investing in a startup. This includes the shares issued but not fully invested in founders. As such, the founders may want all unvested shares to vest at the time read more »

Stock Vesting Schedule

Saturday, April 4th, 2015 | Category: All Posts,Finance
Stock Vesting Schedule Early business ventures typically reorganize into corporations. The purpose of reorganizing is to establish a formal business ownership and management structure, as well as establish classes of ownership interest that can be efficiently transferred. As previously discussed, founders generally reserve some form of founder’s stock for themselves. read more »

Class FF Stock

Saturday, April 4th, 2015 | Category: All Posts,Finance
Class FF Stock Series FF stock is yet another variation of founder’s stock that has characteristics similar to a preferred class of share. The FF stock was originated with the Founders Fund, as part of their investment deals. As with most startup ventures, the FF class has been employed in read more »

Class F Stock

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Class F Common Stock Class F stock is founders stock that is a unique class of common stock, which was generated by the Funded Founder Institute. This type of stock has become sufficiently common that I feel the need to explain it as part of this general venture financing lecture read more »

Founders Stock

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Founder’s Stock Founder’s stock is simply the common stock of the corporation issued to founders at the time of formation. At the time of formation, founders issue the stock at a very low valuation (e.g., .01 or .001). This is permissible, as the company is simply a shell at the read more »

Issues Contributing IP for Equity

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Early Creators of IP as Founders or Equity Holders Often, intellectual property is the most valuable assets a company has. For an extreme example, think of the music industry. At Michael Jackson’s death his portfolio of music masters was worth more than $1 Billion. In many cases, early founders will read more »

Cofounder Equity Split

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Equity Split Between Co-Founders As discussed in previous lecture, the founders of the business provide the initial infusion of assets to fund the business. Allocating the shares of ownership interest in the business between founders can be difficult. Allocation of ownership is based on any number of factors, but it read more »

Equity Distribution to Founders

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Startup Founders and Equity Funding At the beginning of the life of any business venture, the business has no resources. It is, in fact, a legal shell that must be filled. Founders are generally the sole source of assets in a startup venture. That is, the founders undertake the task read more »

Options Pools and Capitalization

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Option Pools When seeking equity investment, the investor will generally require that a pool of stock (generally common stock) be set aside from the authorized shares to compensate new and current employees. More specifically, the shares are used as a method to attract new talent that are are only interested read more »

Capitalization and How to Calculate It

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Capitalization – An How to Investors Calculate It Capitalization refers to the value of the outstanding shares. As such, the calculation of outstanding shares is relevant to determining the percentage of ownership. As mentioned a separate lecture, the number of outstanding shares may be calculated as: issued shares only; issued read more »

Issued Outstanding and Fully Diluted Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Issued and Outstanding Shares  As previously discussed, authorized shares are the number of shares (of any class) that are listed in the articles of incorporation. Issued shares are shares that are actually distributed to shareholders. Outstanding shares may have a little more broad of a definition. It may include all read more »

Participating Convertible Preferred Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Participating Convertible Preferred Shares The class of equity demanded by investors in most venture capital financings is preferred convertible participating shares (PCP). As discussed in prior lectures, this class of shares has conversion rights to common stock. The shares will have both voluntary and mandatory conversion provisions. It also grants read more »

Participating Preferred Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Participating Preferred Participation rights give the shareholder the right to participate, along with other shareholders (the entrepreneur), in receiving any distributions from the sale of the business or other exit event. The participating stockholder receives a percentage of the funds distributed that is equal to her percentage of equity ownership read more »

Preferred Shares Liquidation Preference

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Preferred Share Liquidation Preference A liquidation preference for preferred shares allows the investor priority in recuperating her investment if the company is sold or undergoes some other exit event. A liquidation preference is a security measure to mitigate the investor’s risk of financial loss as compared to other shareholders (the read more »

Preferred Convertible Stock

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Preferred Convertible Stock Voluntary Conversion Provisions Equity investors often demand preferred shares from the corporation. The most common characteristic of preferred shares issued to equity investors is the ability to convert the preferred shares into common shares. Investors often negotiate for a liquidation preference upon the sale of the company. read more »

Common and Preferred Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Common Shares Common shares of stock are the basic unit of ownership for every corporation. Every corporation must have a class of common stock. A common share represents one unit of all of the authorized units (authorized shares) of ownership of the corporation. It entitles the holder to one vote read more »

Authorized Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Concept of “Authorized Shares” A business is capitalized by capital contributions from shareholders and retained earnings from operations. Shareholders receive shares of the corporation (representing an ownership interest in the corporation) in return for their contributions. To distribute shares, the corporation must “authorize” those shares. This is done in the read more »

Employee and Intellectual Property Matters

Saturday, March 14th, 2015 | Category: All Posts,Finance
Employee and Contractor Matters At-Will Employment Offer Letter: The at-will employment letter will outline the rights of employer and employee to end the employment relationship. Note: State law differs with regard to the extent to which an employee is at-will. Proprietary Information and Inventions Agreement: Employees will often develop intellectual read more »

Capitalization Matters

Saturday, March 14th, 2015 | Category: All Posts,Finance
Capitalization Matters Capitalization is the funding of the business venture. A startup will be capitalized by contributions from founders. In exchange for contributed value (funds or assets) the founders will receive shares of the corporation. The corporation should follow the following steps regarding capitalization: Subscription Agreements: A subscription agreement (or read more »

Initial Board Actions

Saturday, March 14th, 2015 | Category: All Posts,Finance
Initial Board Actions The initial board is charged with establishing the operations of the corporation. This begins with resolutions approving and authorizing certain corporate actions. Approving or setting these actions in motion are the core responsibilities of the board. They will take the following organization and corporate governance matters through read more »

Incorporation and Organization Documents

Saturday, March 14th, 2015 | Category: All Posts,Finance
Incorporation and Organization Documents Incorporating and organizing a startup generally requires the following steps: Reservation of Corporate Name: Prior to filing the articles of incorporation, you should research to see if the desired corporate name is available. If the name is already registered in the state, then it will be read more »

Overview of Startup Package of Documents

Saturday, March 14th, 2015 | Category: All Posts,Finance
Startup Package of Documents A startup venture will inevitably become a corporation. The corporate entity form provide the structure necessary to effectively manage and fund the venture. For example, corporations allow for the established roles of shareholder, directors, and managers. It further allows for the distribution of preferred ownership interests. read more »

Venture Capital Investment

Saturday, March 14th, 2015 | Category: All Posts,Finance
What are Venture Capitalist and Capital Funds? Venture capital funds are pools of funding used to purchase equity interests in growth-based, startup ventures. The venture capitalist is the fund manager who raises funds (raises a fund) from investors seeking to allocate a portion of their investment portfolio to investing in read more »

Angel Investment

Saturday, March 14th, 2015 | Category: All Posts,Finance
What is an Angel Investors? Angel investors are high-net-worth individuals who seek to invest personal funds in early or startup-stage companies. Generally, these investments represent a given percentage of the angel investor’s overall personal wealth investment strategy. Startup companies provide a source of high-risk and high-potential-return investments within the Angel’s read more »

Overview of Angel and Venture Capital Investment

Saturday, March 14th, 2015 | Category: All Posts,Finance
What Angel and Venture Capital Investors Angel investors and venture capitalist are equity investors in startup ventures. These individuals (or funds) provide much-needed capital at various stages of the startup’s lifecycle. Angel investors and venture capital funds are discussed in detail in subsequent lectures. Before doing so, however, it is read more »

Business Plan for Equity

Thursday, March 12th, 2015 | Category: All Posts,Finance
Equity Investors and the Business Plan Equity investors come in a number of forms. For purposes of this lecture, let’s look at angel investors and venture capitalists. These investors have similar interests and expectations with regard to the business. See our Business Planning resources for a detailed analysis of what read more »

Business Plans for Loans

Thursday, March 12th, 2015 | Category: All Posts,Finance
Using a Business Plan The business plan describes the current activities, aims and objectives, and how they are going to be achieved over a set period of time. The primary sections of the business plan are: Concept Marketing Management and Operations Financials The basic premise is to show: Who you read more »

Debt vs Equity in the Startup Venture

Thursday, March 12th, 2015 | Category: All Posts,Finance
Debt versus Equity in the Startup Venture Both debt and equity funding have significant advantages for the startup venture. The primary advantages (and disadvantages) of each and the are discussed below: Debt Capital – Liability or obligation owned to another person or institution and legally required to be paid by read more »

Strategic Considerations in Valuation

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Strategic Considerations in Valuation  Subjective factors are routinely used to either discount or justify a premium valuation. For example, a specific company may derive a valuation for a firm based upon strategic considerations that are unique to that entity. Strategic considerations when valuing a business include the synergies that will read more »

First Chicago Valuation Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
The First Chicago Method of Business Valuation  The First Chicago Method is a hybrid approach that employs multiples to derive a terminal value and discounts future cash flows to arrive at a present valuation. Notable about this method is that it requires three projections based upon company performance. A “best read more »

Venture Capital Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Venture Capital Method   The venture capital method (VC Method), as the name implies, is most commonly used in the venture capital industry and for valuing startup ventures.    As discussed in separate lectures, investors seek to capitalize on their investment via an exit at some future date in the read more »

Angel Investor Methods

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Angel Investor Methods Investors have developed multiple valuation strategies to account for the difficulty in assessing the value of early-stage, growth-based startups in the technology space. Two well-known methods are the “Berkus Method” and the “Scorecard Method”. Berkus Method The Berkus method was developed by a well-known angel investor named read more »

PreMoney and Post Money Calculations

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Overview of Pre-Money and Post-Money Calculations The value of a business in a funding transaction begins with determining the pre-money and post money valuation. This valuation will be used to determine how many shares are issued to the investor and what percentage of ownership all owners will have following the read more »

Value of Dividends Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Value of Dividends Method This method relies on the idea that a stock is only worth what it will provide to investors in future dividends. If a business does not currently distribute dividends, the value of the stock will appreciate under apprehension of future dividend distributions. As such, the firm read more »

Economic Value Added

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Economic Value Added (EVA)   This methodology focuses on the return on investment expected from the company above the relative cost of capital.  Take the amount of requested or required investment. Determine the cost of obtaining that capital. That is, what will investors require as a return (dividend or capital read more »

Excess Earnings Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Excess Earnings Method   Another earnings-based method is excess earnings. This method discounts company earnings based on two capitalization rates: a rate of return on tangible assets and a rate attributable to company goodwill. The method is often described as a hybrid method because it takes into account the company’s read more »

Discount Future Cash Flows Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Discount Future Cash Flow Method The Discounted Cash Flow (DCF) method uses the projected future cash flows of the business after subtracting the operating expenses, taxes, changes in working capital, and capital expenditures. This figure is known as the free cash flow of the business because it accurately represents the read more »

Build Up Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Build-Up Method of Valuation In the “buildup method” valuation begins with the risk-free rate. The individual valuing the firm then makes the subjective determination of what percentage to add to the risk-free rate. The amount added depends upon the amount of risk associated with the business’ earnings. The value of read more »

Earnings Capitalization Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Earnings Capitalization Model   The earnings capitalization model values the company based upon the company earnings. To determine normalized earnings, you calculate a weighted average of earnings over a period of years. The earnings reported on financial statements or tax returns are normalized through several steps. These modifications include the read more »

Income Based Valuation Approaches

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Overview of Income-Based Approaches  Income based approaches value a business based upon the past, current, or expected future cash flows of the business and the risk that the business will not produce the desired return. Estimating and valuing flows of income is done through a process called capitalization. Capitalizing the read more »

Issues with Market Based Methods

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Issues Associated with Market-Based Valuation Methods As will all valuation methods, market-based valuation methods have negative aspects – particularly when they are used to value startup ventures. Some of the notable issues with market-based approaches are discussed below. Comparable Companies, Transactions, Industries The primary difficulty associated with using market-based, comparables read more »

Characteristic Based Ratios

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Common Characteristic-Based Ratios or Multiples  The following subsections contain a non-exclusive list of characteristic-based ratios used to value a business. These ratios are derived from a comparable transaction, firm, or industry. Sometimes, multiple ratios are used to derive a single valuation for a target business. Price/Earnings Ratio (P/E Ratio)  The read more »

Types of Comparables

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Types of Comparables  A company may be valued using any number of characteristics about the business. In general, the price of that company’s total equity is compared to some value characteristic of the company, such as the before or after-tax earnings, cash flow, or revenue of the company. This ratio read more »

Overview of Market Based Approaches

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Overview of Market-based Approaches Market-based approaches value the business based upon the productive characteristics of the business in a given market. These methods focus on comparisons of like businesses, transactions, or industries (known as comparables or comps). Most of these methods focus on identifying a value-based, characteristic of the comparable and read more »

Liquidation Value

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Liquidation Value  Liquidation value is an asset-based method based upon the value that the business would immediately receive upon selling the asset on the open market. Immediately means selling the asset within a six to twelve month period. This method takes into consideration the age, wear, and technological innovations associated read more »

Replacement Value

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Replacement Value (or Substantial Value) of Assets  A second, asset-based valuation method looks at the operating assets of a business and assigns a value based on what it would cost to replace them. This approach evaluates the cost of replacing the assets to achieve a commensurate output given the current read more »

Book Value and Adjusted Book Value Methods

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Book Value (and “Adjusted Book Value”)  The book value represents the value that the company based upon the internal financial statements. Specifically, book value concerns the total value of company assets minus the total value of company liabilities. This amount will equal the owner’s equity in the firm and, likewise, read more »

Morality of Property

Friday, January 30th, 2015 | Category: All Posts
What views characterize the debate surrounding the morality of property ownership? The primary criticism of private property is that it allows some people to possess more than they need while others have need. The moral defense of property is that it produces a greater common good than other systems for read more »

Key considerations for terms of private international agreements

Sunday, January 25th, 2015 | Category: All Posts,Legal
14. How do parties determine the rules, location, and method of resolving a dispute under an international agreement? Parties to an international agreement generally employ various provisions to reduce uncertainty in the relationship and add a degree of confidence that a party will be able to enforce her rights. Below read more »

How are private international agreements enforced?

Sunday, January 25th, 2015 | Category: All Posts,Legal
13. How are private international business agreements generally enforced? The first method of enforcing one’s rights pursuant to an international agreement is through a lawsuit or judicial action. When a dispute involves multiple parties from multiple countries, it becomes an issue as to how and where to handle the dispute. read more »

What are limitations on importing goods into the US for resale?

Sunday, January 25th, 2015 | Category: All Posts,Legal
12. What are the limitations on importing goods into the United States for sale? Below are the primary laws governing the importation of commercial goods. •    The Customs Modernization Act (CMA) – The CMA, a part of NAFTA, requires importers to declare attributes of imported goods with the Customs and read more »

What laws apply to the export of goods from the US?

Sunday, January 25th, 2015 | Category: All Posts,Legal
11. What regulations apply to exports from the United States? US Export Administrative Regulations (EAR) cover the export and re-export of most commercial items, including some civilian and military grade items. An export includes any item transported outside of the country, whether temporary or permanent and whether sold, gifted, or read more »

What US laws prohibit business practices in foreign countries?

Sunday, January 25th, 2015 | Category: All Posts,Legal
10. What US laws apply to limit specific business practices in all foreign countries? Numerous US laws limit specific types of conduct or business activity in foreign countries. Major limitations under US law include: •    Antiterrorism and Effective Death Penalty Act of 1996 – This act prohibits doing business with read more »

What is the significance of Boycotts on International Law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
9. What is the significance of boycotts between foreign countries? The US issues restrictions on international business relationships through embargoes and targeted business sanctions. The US is not currently a part of an official boycott of countries or individuals. In fact, the US recognizes two prohibitions against US companies taking read more »

When is foreign business prohibited under US law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
8. When is carrying on business in a foreign country prohibited under US Law? Embargoes are prohibitions against carrying on business transactions with certain countries. The Office of Foreign Assets Control (OFAC), a division of the US Department of Treasury, is charged with carrying out embargoes and “targeted sanctions” against read more »

Types of International Agreement Affecting US Trade

Sunday, January 25th, 2015 | Category: All Posts,Legal
7. What major international agreements affect international trade? The United States has entered into two types of treaty with multiple countries regarding the trade and shipment of goods. These treaties allow individuals from the US and the host country to sell and ship goods to the other country without special read more »

Legal Risks and Considerations in International Business

Sunday, January 25th, 2015 | Category: All Posts,Legal
6. What are the legal risks associated with carrying on international business? The competitive risks associated with carrying on business in a foreign market are numerous. For example, understanding the foreign market, communicating in a foreign language, and understanding the competitive environment can be extremely difficult. Important for this chapter, read more »

Methods of Carrying on International Businesss

Sunday, January 25th, 2015 | Category: All Posts,Legal
5. What are the methods of carrying on international business? US companies intending to carry on international business can do so in three separate manners: •    International Sales – A US company can carry out international sales by either selling directly to customers, selling to retailers, or selling to distributors read more »

What are the International Courts and their Function?

Sunday, January 25th, 2015 | Category: All Posts,Legal
4. What international courts exist and what are their functions? International courts exist as a result of agreement between nations as to their formation and authority. The authority of the court over a country or its citizens may result from that country becoming a member of an international organization or read more »

What is the European Union?

Sunday, January 25th, 2015 | Category: All Posts,Legal
The European Union  (EU) The EU is a group of 27 European countries banded together the promote economic and social prosperity among the nations. Most notably, the EU has a pseudo-governmental body made up of representatives of member countries. The EU provides a standardized legal system governing trade and commerce read more »

What is the World Trade Organization?

Sunday, January 25th, 2015 | Category: All Posts,Legal
World Trade Organization (WTO) At the end of WWII, a large block of countries signed a treaty known as the General Agreement on Tariffs and Trade (GATT). The purpose of the treaty was to demonstrate an intent to foster trade among the countries of the world. In 1995, 123 countries read more »

What is the World Bank?

Sunday, January 25th, 2015 | Category: All Posts,Legal
The World Bank The World Bank is a financial institution that promotes economic development in developing countries with the purpose of fostering economic strength and reducing poverty through increased foreign investment and international trade. The World Bank is a division of the World Bank Group, which is an affiliate of read more »

What is the International Monetary Fund

Sunday, January 25th, 2015 | Category: All Posts,Legal
International Monetary Fund (IMF) The IMF is similar to an international bank with the underlying purpose of fostering global monetary policy, commerce, and trade. The intended result is to increase employment levels, drive economic growth, and reduce poverty. The IMF makes loans to developing countries, provides stable exchange rates between read more »

What is the North Atlantic Treaty Organization (NATO)

Sunday, January 25th, 2015 | Category: All Posts,Legal
The North Atlantic Treaty Organization (NATO) NATO is a military alliance among 28 member countries. Numerous other countries also participate in NATO programs to promote peace and international dialogue. Member nations agree to provide collective support to member nations in the event of attack by non-member nations. NATO also provides read more »

What is the United Nations Conference on Trade and Development

Sunday, January 25th, 2015 | Category: All Posts,Legal
United Nations Conference on Trade and Development (UNCTD) UNCTD is another UN affiliate organization that addresses matters of international trade reform. More specifically, it seeks to foster international trade globally with the purpose of providing trade benefits among developing countries.   read more »

What is the United Nations Commission on International Trade Law

Sunday, January 25th, 2015 | Category: All Posts,Legal
United Nations Commission on International Trade Law (UNCITRAL) UNCITRAL is a affiliate organization to the UN made up of business and legal professionals. This group develops model standards and procedures for dealing with issues affecting international business. Perhaps most notably, UNCITRAL promulgated the Convention on International Sale of Goods (CISG). read more »

What is the United Nations and how does it affect international law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
3. What are the major international inter-governmental organizations? Much public international law derives from treaty or agreement between individual nations and the law elected by private parties to govern their agreements. Other sources of international law are the numerous international organizations which develop standards for conduct among member nations or read more »

What is public and private international law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
2. What are the types of international law? International law is commonly divided into two categories: •    Public International Law – Public international law examines relationships between nations and the rules that are binding upon countries in the international community. It also governs the relationship between states and international entities. read more »

What is International Law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
1. What is “international law”? International law includes all of the generally accepted rules that govern the relations between nations or countries and their citizens. The concept of international law is much broader than domestic law, which is generally attributed to statutory authority vested by a federal, state, or local read more »

Requirements for Cancelling an Insurance Contract

Saturday, January 24th, 2015 | Category: All Posts,Legal
10. What is required for termination of an insurance contract? An insured may terminate an insurance policy at any time. Generally, it requires that the insured express intent to cancel the policy. This may include notifying the insurer in writing or discontinuing payment of premiums. If the insured stops paying read more »

Common Legal Disputes over Insurance Agreement

Saturday, January 24th, 2015 | Category: All Posts,Legal
9. What are the common provisions in an insurance contract subject to legal dispute? State law requires that insurance contracts contain certain provisions protecting the rights of the insured against the insurer. These provisions are commonly the subjects of litigation. An insurer that fails to pay an insurance claim for read more »

General Structure of an Insurance Contract

Saturday, January 24th, 2015 | Category: All Posts,Legal
8. What is the general structure of an insurance contract? •    Declarations – The declarations section of an insurance contract identifies the parties to the contract and dictates that the following provisions constitute an insurance contract. It will generally state the intentions of the parties with regard to the subject-matter read more »

Primary Obligations of an Insured

Saturday, January 24th, 2015 | Category: All Posts,Legal
7. What are the primary obligations of the insured? The primary duties of an insured in an insurance contract are as follows: •    Duty to Disclose Information – The insured must inform the insurer of any events relevant to the contingent risk transferred to the insurer. This includes disclosing information read more »

Duties of an Insurer

Saturday, January 24th, 2015 | Category: All Posts,Legal
6. What are the primary obligations of the insurer? The primary duties of an insurer in an insurance contract are as follows: •    Payment for Losses – An insured is responsible for indemnifying the policyholder or paying for the losses suffered by the insured or a third party as a read more »

Common Types of Business Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
Common Types of Business Insurance •    Business Liability Insurance: Business liability insurance can have any number of property and liability protections. The most common form of business liability insurance is a “comprehensive general liability” (CGL) policy. These policies will insure any number of risks commonly faced by businesses, such as read more »

Insurance Policies Relevant to Real Property ( Land )

Saturday, January 24th, 2015 | Category: All Posts,Legal
Homeowner’s & Renter’s Insurance Homeowner and renter’s insurance are combination policies that protects property as well as individuals present on the property. The primary characteristics of a homeowner and renter’s policies are as follows: ⁃    Property Coverage – The homeowner or renter’s policy will generally insure the subject property against read more »

Characteristics of Life Insurance Policies

Saturday, January 24th, 2015 | Category: All Posts,Legal
What is Life Insurance? Life insurance provides financial benefits in the event a covered individual passes away. The beneficiaries of the policy are generally third parties rather than the insured or the insured’s estate. An insured must provide permission or consent for a third-party to purchase a policy covering her. read more »

What is Disability Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
What is Disability Insurance? Disability insurance provides financial benefits to someone who becomes disabled and is unable to continue working in a given profession or function. Disability insurance coverage is generally divided into short-term and long-term disability. ⁃    Note: Long-term disability insurance is generally in addition to any benefits provided read more »

Common Health Insurance Plan Characteristics

Saturday, January 24th, 2015 | Category: All Posts,Legal
Health Insurance Plan Characteristics Health insurance pays the medical expenses incurred by an individual pursuant to treatment of covered health risks. Health plans may include medical, pharmaceutical, dental, and vision services by health providers. A health insurer will often disclaim or limit coverage for known conditions of the insured present read more »

What is Automobile Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
5. What are the common types of insurance coverage? Individuals may purchase insurance coverage for nearly any foreseeable risk. The following are common types of insurance policies: •    Automobile Insurance – Vehicle insurance covers damages suffered by either the individual or automobile pursuant to any number of risks. Common risks read more »

Common Characterizations of Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
4. What are the common categorizations of insurance? An insurance policy may have any of the following characteristics: •    Individual vs Group – Insurance policies may cover individuals or groups of individuals for identified risk(s). ⁃    Example: Ralph purchases a life insurance policy to cover him individually. Sam purchases a read more »

What is an Insurable Interest

Saturday, January 24th, 2015 | Category: All Posts,Legal
3. What is an “insurable interest”? For a party to seek insurance against a potential loss, the insured must have some form of interest in the insured property or be subject to a particular loss from an occurrence or event affecting the insured property or individual. This is known as read more »

What is an Insurance Contract or Policy

Saturday, January 24th, 2015 | Category: All Posts,Legal
2. What is an “insurance contract”? An insurance contract, or “insurance policy”, establishes the legal relationship between the insurer and the insured. A potential insured makes an offer to the insurer to purchase the insurer’s services. In the application, the insurer will reveal all information relevant to the insurance relationship. read more »

What is Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
1. What is “insurance”? Insurance is a risk management and mitigation relationship between an insurer and the insured party. The primary participants and characteristics of the relationship are as follows: •    Insured – The insured allocates the contingent risk of loss in a particular situation to an insurer. •    Insurer read more »

Insurance Law (Intro)

Saturday, January 24th, 2015 | Category: All Posts,Legal
Overview of Insurance Law Insurance is a method of mitigating the risk associated with a particular situation or transaction. This chapter introduces the concept of insurance and its importance to individuals and businesses. It explains the mechanics for establishing insurance coverage for specific occurrences. It outlines the rights and obligations read more »

International Protection of Intellectual Property

Friday, January 23rd, 2015 | Category: All Posts,Legal
36. What international protections exist for intellectual property rights? International intellectual property law is the subject of treaties between nations throughout the world. The United States is a signatory to numerous international agreements respecting intellectual property rights. Some of the primary agreements are as follows: •    Trade-Related Aspects of Intellectual read more »

What is the First Sale Doctrine

Friday, January 23rd, 2015 | Category: All Posts,Legal
35. What is the “First Sale Doctrine”? Section 109 of the Copyright Act provides a purchaser of a copyrighted item the ability to sell or otherwise dispose of the item without the permission of the copyright holder. This is known as the “first-sale doctrine”. It stands for the proposition that read more »

What is Fair Use of a Copyright?

Friday, January 23rd, 2015 | Category: All Posts,Legal
34. How does a court determine if use of a copyright constitutes “Fair Use”? The most disputed affirmative defense to copyright infringement is likely the “fair use” of the copyrighted work. To constitute fair use, the use of the work generally must not be extensive and not cause a negative read more »

Defenses to a Claim of Copyright Infringement

Friday, January 23rd, 2015 | Category: All Posts,Legal
33. What defenses are available to a copyright infringement action? The following doctrines or laws provide a defense for an alleged copyright infringer: •    Invalidity – The defendant may show that the owner’s copyright is invalid. ⁃    Note: This generally arises in the context of the validity or scope of read more »

What is the Process for Enforcing a Copyright?

Friday, January 23rd, 2015 | Category: All Posts,Legal
32. What is infringement and how does one enforce a copyright against infringement? Copyright infringement occurs when a copyrighted work or some portion of the work is reproduced, distributed, performed, or displayed without authority. Authority must be obtained from the copyright holder. A copyright is enforceable through a federal court read more »

Process for Registering a Copyright

Friday, January 23rd, 2015 | Category: All Posts,Legal
30. What is the process for registering a copyright? Copyright registration is done through the US Copyright Office (USCO). It can be completed either electronically or through the mail. The process requires the completion of the specific forms applicable to the type or category of copyrightable work. These forms lay read more »

Time Period for Copyright Protection

Friday, January 23rd, 2015 | Category: All Posts,Legal
29. How long does a copyright last? The length of time of copyright protection depends upon three factors: •    When the copyright was created, •    The length of the author’s life, and •    Whether the creator was an individual or a firm. Generally, a work created after January 1, 1978 read more »

Elements of a Copyright

Friday, January 23rd, 2015 | Category: All Posts,Legal
28. What are the requirements for establishing copyrights? Federal law governs the creation of copyrights. Unlike some other forms of intellectual property, there is no need to file or register the copyright. Copyright protection arises when an expression meets the following requirements: •    Original Work – The expression must be read more »

Rights of Holder of a Copyright

Friday, January 23rd, 2015 | Category: All Posts,Legal
27. What are the rights of the holder of a copyright? Copyrights, as do other forms of intellectual property, allow the holder to exclude others from using or copying the protected work. A copyright holder has exclusive rights to the following: •    Reproduce – The holder of a copyright has read more »

Overview of Copyrights

Friday, January 23rd, 2015 | Category: All Posts,Legal
26. What is a “copyright”? Copyright is a form of intellectual property protection applicable to original expressions by the creator. The primary federal law governing copyrights is the Copyright Act of 1976. An “original expression”, for purposes of copyright law, is a very broad term. Section 102 of the Copyright read more »

Infringing Upon a Protected Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
25. How does a trademark holder demonstrate infringement of its trademark? Proving trademark infringement requires a showing that the plaintiff has valid trademark rights and that someone is using another mark that is confusingly similar to the public. That is, the business claiming infringement must show that the other business’s read more »

Enforcing Trademark Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
24. How does an individual enforce Trademark Rights? If a claimed trademark (that is in commercial use) conflicts with another, the method or ability to enforce the trademark will vary depending on the rights associated with the mark. •    State Law Rights – States that allow for trademark registration often read more »

What is Trademark Infringement

Friday, January 23rd, 2015 | Category: All Posts,Legal
23. What is trademark infringement? Trademark infringement involves the unauthorized use of the protected mark or a similar mark to represent a business, brand, goods, or services, other than those of the trademark holder. The use of the mark must create a strong likelihood of confusion for consumers as to read more »

Process for Filing a Federal Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
22. What is the process for filing a federal trademark protection? The application for federal trademark protection follows a standard process. The following information is required for every trademark application: •    Petitioner Information – Name of applicant; address for correspondence (may be name and address of agent). •    Mark – read more »

Reasons for Rejecting a Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
20. What are the primary reasons for denying claims of trademark rights? Whether pursuant to common law, state or federal registration, there are several common reasons for denying trademark protection of a prospective mark. Some of the more common reasons are as follows: •    the mark is the same or read more »

State Protection for Trademarks

Friday, January 23rd, 2015 | Category: All Posts,Legal
19. What is trademark protection under state law? States often pass statutes or provide administrative procedures allowing the public to file or register trademarks that are used in commerce within the state. These states will also provide statutory protections and causes of action against those who infringe upon an individual’s read more »

Federal Registration of a Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
18. What is Federal Registration of a Trademark (Lanham Act)? Federal registration of a trademark is the process for filing for federal protection of a mark representing a business or commercial activity. The federal statutes governing the registration of trademarks are found in 15 USC, sections 1051-1127. This group of read more »

Secondary Meaning for Descriptive Marks

Friday, January 23rd, 2015 | Category: All Posts,Legal
17. What is the process for determining whether a descriptive mark is sufficiently distinctive? A descriptive mark must acquire a secondary meaning in order to be sufficiently distinctive to be protected by trademark law. Arbitrary, fanciful, and suggestive terms do not require that the mark have a secondary meaning, as read more »

Distinctiveness Requirement for Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
16. What is the “distinctiveness” requirement for trademark rights? A proposed trademark must be “distinctive”. This means that the mark cannot be so similar to another mark that it causes consumers to confuse the brand or entity associated with that mark. If it is confusing to the consumer, the USPTO read more »

Capturing Trademark Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
15. What is required to secure trademark protection? Trademark law requires that a mark be “used in commerce” and “distinctive” from other marks. If a mark is used in commerce and sufficiently distinctive, there are two primary methods of securing trademark protection. The first method is “state-law protection”. State-law protection read more »

Types of Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
14. What are the types of trademarks? The term trademark is commonly used to refer to a broad range of protected marks, including: •    Trademark – Any mark, word, picture, or design that attaches to goods to indicate their source. •    Service Mark – A mark associated with a service. read more »

Overview of Trademarks

Friday, January 23rd, 2015 | Category: All Posts,Legal
13. What is a Trademark? A trademark is a form of intellectual property right dedicated to any word, phrase, sign, symbol, logo, color, sound, design, shape, decor, or other distinctive element (collectively known as a “mark”) that represents a business, brand, or commercial activity (sale of the product or services). read more »

Process for Enforcing Patent Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
12. What is the process for enforcing one’s patent rights? If anyone infringes upon a patent holder’s valid patent, the holder may bring a federal lawsuit to prevent further use and to seek recovery of damages suffered as a result of the infringement. The patent holder must file a legal read more »

What is a Provisional Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
11. What is a provisional patent application? A provisional patent is a utility patent filing that does not necessarily include any claims. Pursuant to patent law, the filer can file a complete provisional patent within one year of the first public use or offer for sale of the invention. This read more »

Process for filing for patent protection

Friday, January 23rd, 2015 | Category: All Posts,Legal
10. What is the process and information necessary for securing patent rights? Obtaining a patent requires submitting a patent application and filing fee to the USPTO. There are no common law or state patent protections. A patent attorney at the USPTO will review the application to make certain that the read more »

Patentable Subject Matter for a Utility Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
9. What are the specific requirements for a creation to receive utility patent protection? A utility patent protects how something functions or the method in which it is employed. The subject matter of a utility patent is any new and useful process, machine, manufacture, or composition of matter, or any read more »

Requirements for a Design Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
8. What are the specific requirements for a creation to receive design patent protection? Design patents apply to “the visual ornamental characteristics embodied in, or applied to, an article of manufacture.” So, the subject matter of a design patent application must be the ornamental characteristics applied to a physical item. read more »

Requirements of a Valid Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
7. What are the general requirements for an invention or discovery to be capable of patent protection? The subject of a claimed patent must be eligible for patent protection. Eligible subject matter varies slightly depending upon the type of patent. That is, a design patent must attach to some physical read more »

What are the types of patent?

Friday, January 23rd, 2015 | Category: All Posts,Legal
6. What are the primary types of patents? There are three categories of patent, as follows: •    Utility Patents – This generally covers the creation of a new composition of matter, function, or process. This includes machines, procedures, and chemical compounds. These creations must be a novel (new), non-obvious, and read more »

Overview of Patents

Friday, January 23rd, 2015 | Category: All Posts,Legal
5. What are patents or patent rights? A patent is a form of intellectual property protection that covers products, processes, designs, and other creations (collectively “invention”). A patent conveys a right to exclude others from making, using, selling, or importing the covered invention. Patent rights are basically rights to exclude read more »

What are Trade Secrets

Friday, January 23rd, 2015 | Category: All Posts,Legal
4. What are trade secrets? A trade secret is a form of intellectual property specific to individuals or businesses involved in a trade or industry. More specifically, it is any form of knowledge or information that: •    has economic value from not being generally known to, or readily ascertainable by read more »

Capturing or Securing Intellectual Property Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
3. What does an individual have to do to capture intellectual property rights? The requirements for securing intellectual property rights vary depending upon the type. For example, some types of intellectual property may require filing with a government agency. Failure to file or meet a filing deadline could forfeit one’s read more »

Justification for Intellectual Property Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
2. What is the purpose behind granting ownership rights in intellectual property? Like other forms of tangible property, the rights associated with intellectual property incentivize individual productivity. The exclusive right to use or control property also incentivizes creativity. This belief is captured in Article 1, Section 8 of the US read more »

Intellectual Property (Intro)

Friday, January 23rd, 2015 | Category: All Posts,Legal
Overview of Intellectual Property Intellectual property, as the name implies, is an intangible form of property right. It establishes rights that extend beyond the possession of a physical item and protects and individual’s ideas, plans, procedures, information, creations (function and design), etc. This chapter introduces the concept of intellectual property, read more »

Comprehensive Environmental Response Compensation and Liability Act ( CERCLA )

Thursday, January 22nd, 2015 | Category: All Posts,Legal
12. What is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)? In 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to address cleanup cost of unsafe hazardous waste dumps or spills. CERCLA allocates billions of dollars under a congressional authorization for environmental cleanup of dangerous read more »

Toxic Substance Control Act of 1976

Thursday, January 22nd, 2015 | Category: All Posts,Legal
11. What is the Toxic Substance Control Act of 1976? The Toxic Substance Control Act (TSCA) regulates the introduction of new and existing chemical substances into the market. The TSCA defines a chemical substance as “any organic or inorganic substance of a particular molecular identity, including any combination of these read more »

Solid Waste Disposal Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
10. What laws govern solid waste disposal? The Solid Waste Disposal Act (SWDA) was the first major federal law directed at waste disposal. It recognizes the potentially negative health and environmental consequences associated with certain waste disposal practices. The SWDA provides waste management standards for municipal and industrial waste, promotes read more »

Primary Federal Laws Governing Pesticides

Thursday, January 22nd, 2015 | Category: All Posts,Legal
9. What federal laws control pesticides? There are two primary federal pesticide acts: •    the Federal Insecticide, Fungicide, and Rodenticide Act of 1947, and •    the Federal Environmental Pesticide Control Act of 1972. Both of these acts require registration and labeling of agricultural pesticides. The EPA is directed to register read more »

Endangered Species Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
8. What is the Endangered Species Act of 1973? The Endangered Species Act (ESA) protects animals and plants that the Secretary of Interior or marine species that the Secretary of Commerce lists as “threatened” or “endangered”. The Fish and Wildlife Services (FWS) and National Marine Fisheries Services administer (NMFSA) administer read more »

Clean Water Act – Exceptions or Variances

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Clean Water Act – Variances The CWA allows for variances from its requirements when circumstances justify exemption. There are two main exemptions available to existing sources: •    Economic Justification – If a party cannot afford the BAT requirements, it must show that the technology employed to prevent discharge of pollution read more »

What is the Clean Water Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
7. What is The Clean Water Act? The Clean Water Act (CWA) is made up of several water pollution control acts including, the Federal Water Pollution Control Act, the Clean Water Act, and the Water Quality Act. The CWA protects society from the harmful effects of discharge of pollutants into read more »

Clean Air Act – Enforcement Provisions

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Clean Air Act – Enforcement The EPA can initiate or take part in enforcement actions for violations of the CAA. This includes seeking administrative orders, civil sanctions, or participating in criminal actions through the Justice Department. The CAA authorizes fines of up to $25,000 per day for emissions violations. Criminal read more »

Clean Air Act – Interstate Pollution

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Clean Air Act – Interstate Pollution The CAA statutes are poorly designed to address interstate externalities, as no programs require consideration of the effects in other states of the placement or number of new pollution sources. The EPA addresses this concern by conditioning SIP approval on a states’ plan not read more »

Clean Air Act – Non-Attainment Areas

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Non-Attainment -Clean Air Act Congress amended CAA in 1977 to add Part D for “non-attainment” areas. Under these new provisions, states unable to achieve NAAQS must comply with Part D. Part D imposes construction and operating permit requirements on new and modified sources of pollution in these areas. Before issuing read more »

Clean Air Act – Prevention of Significant Deterioration

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Prevention of Significant Deterioration (PSD) Amendments to the CAA in 1997 established a PSD structure which requires permits for areas that have achieved better air quality standards than required under NAAQS. These areas are known as “attainment areas”. The state administers this permitting process with EPA approval. This system includes read more »

Clean Air Act – New Source Performance Standards and New Source Review

Thursday, January 22nd, 2015 | Category: All Posts,Legal
New Source Performance Standards (NSPS) and New Source Review (NSR) This is a federal set of uniform technology-based standards for new and modified sources of air pollution. These rules envision a best available technology (BAT) for categories of stationary air pollution sources. Standards can vary within each category according to read more »

State Implementation Plan – Clean Air Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
The primary components of the CAA State Implementation Plans (SIPs)  – States bear the burden of implementing a plan to comply with national air quality standards (NAAQS). The NAAQS provide a maximum concentration level for certain pollutants in the air. A state has a great deal of latitude in developing read more »

What is the Clean Air Act?

Thursday, January 22nd, 2015 | Category: All Posts,Legal
6. What is the Clean Air Act? Clean Air Act (CAA), along with numerous amendments, was passed with the purpose of developing and achieving air quality standards throughout the US. It gave rise to the National Ambient Air Quality Standards (NAAQS), which limit the amount of certain air pollutants discharged read more »

Environmental Impact Statement – NEPA

Thursday, January 22nd, 2015 | Category: All Posts,Legal
5. What is an Environmental Impact Statement – National Environmental Policy Act? An environmental impact statement is a detailed document that estimates the environmental impact of the proposed action. NEPA requires that an impact statement include the following: •    environmental impact (direct and indirect; beneficial and detrimental), •    any adverse read more »

National Environmental Protection Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
5. What is the National Environmental Policy Act of 1970? The National Environmental Policy Act of 1970 (NEPA) was first major federal environmental statute. It lays out broad goals and steps for federal agencies to incorporate environmental considerations into decision-making. NEPA has been held to not be a substantive act; read more »

Enforcement of Environmental Protection Law

Thursday, January 22nd, 2015 | Category: All Posts,Legal
4. How are the environmental laws enforced? The EPA is charged with enforcement of federal environmental law, while state administrative agencies are similarly charged with enforcing violations of state environmental law. These agencies may cross-enforce the other’s law in conjunction with enforcing their own provisions. Enforcement actions may be administrative, read more »

Environmental Protection Agency

Thursday, January 22nd, 2015 | Category: All Posts,Legal
3. What is the Environmental Protection Agency? The Environmental Protection Agency (EPA) is a federal agency created to protect the environment by policing activities that have a negative impact upon the environment. Specifically, the EPA is charged with enforcement of the various federal environmental statutes, writing regulations, conducting environmental assessments, read more »

What is the Structure of Environmental Protection Laws

Thursday, January 22nd, 2015 | Category: All Posts,Legal
2. What is the structure of environmental protection law? The Federal Government has promulgated numerous laws that provide a national framework for environmental protection and management. Under these frameworks, states have the ability (and sometimes requirement) to pass state standards for environmental protection. These regulations govern public and private conduct read more »

What are Environmental Laws

Thursday, January 22nd, 2015 | Category: All Posts,Legal
1. What are “environmental laws”? Environmental law is a combination of state and federal laws aimed at protecting individuals from the negative consequences of environmental degradation. More specifically, environment law addresses pollution, natural resource management (including forests, minerals, and wildlife), and the environmental impact of human activity. •    Discussion: How read more »

Environmental Law (Intro)

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Overview of Environmental Law Environmental laws include federal and state statutes and regulations that govern the conduct of individuals and businesses that have an impact on the natural habitat or resources. This chapter introduces the concept and purpose of environmental law. It introduces the major federal environmental laws and the read more »

Discharge of Debtor in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
18. To what extent does the bankruptcy process relieve a debtor’s debts? Unless otherwise stated, confirmation of the debtor in possession’s (DIP’s) plan of reorganization discharges the debtor from any debt that arose before the date of the plan’s final confirmation. The plan will specifically identify any post-petition debts that read more »

Cramdown of Chapter 11 Bankruptcy Plan

Wednesday, January 21st, 2015 | Category: All Posts,Legal
17. What is “cramdown” of a reorganization plan? The plan of reorganization must be approved by at least one class of impaired creditor, excluding votes cast by corporate insiders. If any class of impaired creditor has not accepted the plan, the court, on request of the proponent of the plan, read more »

Bankruptcy Plan of Reorganization

Wednesday, January 21st, 2015 | Category: All Posts,Legal
16. What is a plan of reorganization? The debtor in possession (DIB) has an exclusive 120-day period to file plan of reorganization. The court may enlarge or reduce the exclusivity period “for cause”. The DIB has exclusive control over the case early on and may take a first stab at read more »

Appointment of Trustee or Examiner in Chapter 11 Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
15. What is appointment of a trustee or examiner? In certain circumstances, the bankruptcy court will appoint a bankruptcy trustee to supervise the actions or conduct of the debtor in possession (DIP). Generally, however, there is a strong presumption against appointment of a trustee. To overcome this presumption, creditors must read more »

Authority of Debtor in Possession to Secure Post Petition Financing

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Post-Petition Financing – The DIP may establish unsecured credit (incur debts) in the ordinary course of business following the filing of bankruptcy. This practice creates new obligations for the bankruptcy estate that are often superior or have priority over payment read more »

Authority of Debtor in Possession to Use Business Assets

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Use of Business Assets – The DIP may use assets of the business in on-going operations. This includes the use of business cash in the “ordinary course of business”. This authority also includes using, selling, or leasing the business’s assets. read more »

Automatic Stay of Proceedings in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Stay of Proceedings – The DIP may enforce or employ the Section 362 stay of proceeding provisions against existing debtors. This broad authority gives the DIP power to continue operations with existing creditors without being subjected to debt-collection practices that read more »

Avoiding Powers of Debtor in Possession

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Avoiding Powers – The DIP exercises the avoiding powers of a bankruptcy trustee. This is known as the “strong-arm” powers. The strong-arm authority allows the DIP to: ⁃    Avoid Preferential Conveyances – The DIP may seek to undo any preferential read more »

Debtor in Possession Authority to Accept or Reject Contracts

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? The authority of the debtor in possession (DIP) is similar to that of a bankruptcy trustee. The objective of the DIP is to guard the interests of creditors by reshaping the bankruptcy estate to allow the business to continue operations. read more »

Chapter 11 Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
13. What is the Chapter 11 bankruptcy process? Chapter 11 bankruptcy (Chapter 11) seeks to reorganize or restructure the debts of the debtor without liquidating all of the debtor’s assets (as under Chapter 7). The objective is to allow the business to continue operations in an attempt to maximize the read more »

Chapter 7 Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
12. What is the “Chapter 7” bankruptcy process? The Chapter 7 bankruptcy process is fairly straightforward. It involves the following steps: •    Filing – The debtor files a voluntary petition or is the subject of an involuntary petition. •   Bankruptcy Estate – Initiating the bankruptcy process creates the bankruptcy read more »

Voluntary and Involuntary Bankruptcy Requirements

Wednesday, January 21st, 2015 | Category: All Posts,Legal
11. What is voluntary and involuntary bankruptcy? A bankruptcy case begins when either a debtor voluntarily files for bankruptcy or creditors petition to subject a business debtor to bankruptcy. •    Voluntary Bankruptcy – Any business may voluntarily file for a liquidation or reorganization bankruptcy at any time. While a liquidation read more »

Proof of Claims in Bankruptcy Case

Wednesday, January 21st, 2015 | Category: All Posts,Legal
10. What is a claim by creditors of the bankruptcy estate? A claim is a notice to the trustee of the debtor’s estate that the debtor owes a fixed amount to the claimant. Claimants are creditors of the estate. For liquidation bankruptcies and personal reorganization bankruptcies, creditors of the estate read more »

Section 362 Automatic Stay in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
9. What is the automatic stay in bankruptcy? The automatic stay under Section 362 of the Bankruptcy Code protects debtors from ongoing collection efforts (during the pendency of the bankruptcy case) against property included in the bankruptcy estate. Specifically, creditors are prohibited from the following conduct: •    efforts to collect, read more »

What Assets are Included in the Bankruptcy Estate

Wednesday, January 21st, 2015 | Category: All Posts,Legal
8. What assets of the debtor are included in the bankruptcy estate? The assets of the bankruptcy estate include all legal and equitable interests of the debtor in property at the commencement of the bankruptcy case. A legal interest means any legal right to the exclusive use and enjoyment of read more »

Role of Trustee in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
7. What is the authority of the trustee (debtor in possession) in bankruptcy? As previously discussed, the trustee in bankruptcy plays an important role in the administration of a bankruptcy case. The general authority of the trustee includes: •    affirming or disaffirm contracts with the debtor which are yet to read more »

What is the Authority of the Bankruptcy Court

Wednesday, January 21st, 2015 | Category: All Posts,Legal
6. What is the authority of the bankruptcy court? The bankruptcy court has authority to hear any case arising under the bankruptcy system. Generally, the role of the court is simply to approve a plan of liquidation or reorganization. The court’s role expands when there is some level of dispute read more »

Key Concepts to Understand Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
4. What key concepts are necessary to understand the bankruptcy process? Below are some key concepts and definitions to understand prior to continuing with this chapter. •    Filing for Bankruptcy – Filing for bankruptcy means submitting a bankruptcy petition along with all supporting documents to the bankruptcy court. For individuals, read more »

Primary Participants in Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
3. Who are the primary participants in the bankruptcy process? The primary participants in the bankruptcy process are as follows: •   Debtor – The debtor is the individual or business entity seeking or filing for bankruptcy protection. •    Creditor – A creditor is any individual owed a debt or obligation read more »

Types of Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
2. What are the types of business bankruptcy? The primary classifications for bankruptcy are as follows: •    Liquidation – Liquidation bankruptcy is the process by which the assets of an individual or business are liquidated or sold in an effort to generate funds to pay creditors. Any debts owed to read more »

What is Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
1. What is “bankruptcy”? Bankruptcy is both a status and system of laws aimed at protecting individuals and businesses (collectively, “individual”). An individual is bankrupt when she is insolvent or the value of her debts exceeds the value of her assets. The bankruptcy system is a body of laws that read more »

Bankruptcy Law (Intro)

Wednesday, January 21st, 2015 | Category: All Posts,Legal
Overview of Bankruptcy Bankruptcy is a federal body of law concerning the relationship between a debtor and creditors. Specifically, bankruptcy law provides several methods for a debtor to recover from financial situations that are overwhelming to the individual’s continued well-being or existence. The bankruptcy process differs for individuals and businesses. read more »

Warranty Liability Negotiable Instrument – Time Limitations

Tuesday, January 20th, 2015 | Category: All Posts,Legal
41. Is there a time limitation for exercising warranties on negotiable instruments? The holder of an instrument must make a warranty claim to a warrantor within 30 days of notice of dishonor of the instrument. Failure to give this notice within 30 days may relieve the warrantor from liability for read more »

Warrantor Liability on Negotiable Instrument – Damages

Tuesday, January 20th, 2015 | Category: All Posts,Legal
40. To what extent is a warrantor liable for damages suffered by a holder of a dishonored note or draft? An individual presenting a draft or note for payment that is dishonored may recover damages from a prior warrantor of the instrument. That is, a person receiving an instrument in read more »

Presentment Warranty of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
39. What is “presentment warranty” of a negotiable instrument? Presentment warranty applies when a person entitled to payment of an instrument presents it to a maker or drawee for payment. The presenter warrants to a good faith payor the following: •    Enforceability – She is entitled to enforce the instrument, read more »

Indorser Liability for Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
38. What is “indorser warranty” of a negotiable instrument? An indorser of an instrument makes warranties to the maker or drawer of an instrument and to subsequent holders of the instrument. Assurances to the marker or drawer include: •    Good Title – She has good title to the instrument, •   read more »

Transfer Warranty of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
37. What is “transferor warranty” of a negotiable instrument? A transferor of a negotiable instrument warrants the following to the recipient of the instrument: •    Good Title – The transferor has good title to the instrument; •    Enforceability – The transferor is entitled to enforce the instrument; •    Authorization – read more »

Drawer or Maker Liability to Pay Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
36. What is “drawer or maker liability” for a negotiable instrument? A drawer of a draft orders that at third-party drawee pay a specific amount to a payee who presents the instrument. The drawer, as creator of the instrument, is liable if the drawee dishonors (refused to pay) the draft. read more »

Liability for Warranties of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
LIABILITY AND WARRANTIES FOR NEGOTIABLE INSTRUMENTS There are two main types of liability on a negotiable instrument – primary and secondary liability. The maker of a note and drawee of a draft are primarily liable to pay the instrument. Parties who later sign, transfer, or present an instrument may be read more »

Negotiable Instrument Accord and Satisfaction

Tuesday, January 20th, 2015 | Category: All Posts,Legal
35. What is an “accord and satisfaction”? An accord and satisfaction is a resolution of a contested debt. For example, the payor and holder of a negotiable instrument may have a dispute as to the amount and duty of payment of the instrument. Often a payor of the debt will read more »

Guarantor or Surety of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
34. What is the role of a guarantor or surety of a negotiable instrument? A guarantor (also known as a surety or co-signor) serves to add certainty of payment of a negotiable instrument. A guarantor of a note or draft is an “accommodation party” who signs the instrument as an read more »

Stolen Negotiable Instrument and Holder Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
33. What is the result if a negotiable instrument is stolen? A negotiable instrument made out to a specific individual is order paper. If the instrument is stolen, the thief can only transfer it by altering or forging the payee’s signature. As such, a transferee of stolen, forged order paper read more »

Forged Negotiable Instrument and Holder Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
32. What is the result if a negotiable instrument is forged? A forged negotiable instrument is not enforceable against the party whose name was forged. The forged instrument is, however, enforceable against the forger. Basically, the instrument is treated as though the forger signed her own signature. Also, a forged read more »

Holder in Due Course – Consumer Transactions

Tuesday, January 20th, 2015 | Category: All Posts,Legal
31. What are the rights of a holder in due course if the underlying transaction is a consumer transaction? There is a broad exception to the heightened rights afforded a holder in due course if the instrument is issued pursuant to a consumer transaction. This situation generally arises when a read more »

Claim in Recoupment Applicable to Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
30. What is a “claim in recoupment”? A claim in recoupment is similar to a personal defense. It allows a payor to offset any claim that she has against the claimant or the original issuee. •    Note: A claim in recoupment applies against a holder, but not a holder in read more »

Personal Defenses to Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
29. Does a payor have any defenses to paying an instrument that is presented for payment by a holder in due course? A holder in due course (HDC) has greater rights to enforce an instrument against the payor than does a mere holder of the instrument. The HDC is shielded read more »

Real Defenses to Payment of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
29. Does a payor have any defenses to paying an instrument that is presented for payment by a holder in due course? Real Defenses – Real defenses apply against any holder, including a holder in due course. Common real defenses are as follows: •    Forgery – The forger of an read more »

Limit Holder in Due Course Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
28. Can you limit holder in due course status? In some situations, it is possible for the issuer of a note to limit the ability of anyone to whom the note is transferred to become a holder in due course. The Federal Trade Commission allows such a limitation for notes read more »

Shelter Principle and Negotiable Instruments

Tuesday, January 20th, 2015 | Category: All Posts,Legal
27. What is the “Shelter Rule”? Status as a holder in due course (HDC) may strengthen the rights of a holder to receive payment on a negotiable instrument. When a holder may not qualify as a HDC, the “shelter rule” is a separate principle that may protect her rights. Pursuant read more »

Holder in Due Course Discharge of Underlying Obligation

Tuesday, January 20th, 2015 | Category: All Posts,Legal
26. How does discharge of the underlying obligation affect a holder in due course? Negotiable instruments are generally created as consideration in a contract between two parties. That is, there is a contractual relationship (known as the underlying agreement) between the original creator (issuer) and recipient (issuee and holder) of read more »

Holder in Due Course Notice of Valid Defense

Tuesday, January 20th, 2015 | Category: All Posts,Legal
25. What does it mean to receive an instrument without notice of a valid defense to enforcement? A recipient of a negotiable instrument cannot become a holder in due course if she is aware (or has “reason to know”) that there are some valid defenses that the payor may assert read more »

Holder in Due Course Receive Instrument in Good Faith

Tuesday, January 20th, 2015 | Category: All Posts,Legal
24. What does it mean to receive an instrument in good faith? Receiving an instrument in good faith means acting in accordance with reasonable commercial standards and honesty in fact (no fraudulent intent in receiving the instrument). A holder must meet two tests to determine if good faith is present: read more »

Holder in Due Course Receive Instrument for Value

Tuesday, January 20th, 2015 | Category: All Posts,Legal
23. What does it mean to receive an instrument for value? The holder must provide some form of value, such as assets, services, or money in exchange for the instrument. Receiving the instrument as a gift is not “for value”. Value may also mean taking the instrument as payment of read more »

Requirements for Holder in Due Course Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
22. What are the requirements for a holder of an instrument to become a holder in due course? To qualify as a HDC, the holder of the commercial paper must meet the following requirements: •    Value – The holder must take the instrument for value. This means that the holder read more »

What is a Holder in Due Course

Tuesday, January 20th, 2015 | Category: All Posts,Legal
21. What is a “holder in due course” and what are the benefits? If certain conditions are met, a holder of a negotiable instrument may further elevate her rights to enforcement (receive payment) of the negotiable instrument. That is, the holder of a negotiable instrument is elevated to a higher read more »

Negotiable Instrument Effect on Underlying Contract

Tuesday, January 20th, 2015 | Category: All Posts,Legal
20. What effect does a negotiable instrument have on the underlying obligation? Most negotiable instruments arise pursuant to an underlying agreement, contract, or obligation. A maker or drawer creates the instrument and issues it to the holder in satisfaction of her obligation under an underlying agreement. For “ordinary instruments” the read more »

Overdue Payment of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
19. When is payment on a negotiable instrument overdue? An instrument is overdue when the obligation to pay arises (upon presentment), but it has not been paid. An overdue instrument may give rise to a cause of action against a maker or drawee for failure to pay; also, it may read more »

Lost Negotiable Instruments

Tuesday, January 20th, 2015 | Category: All Posts,Legal
18. What rules apply if a holder of a negotiable instrument loses the instrument? An obligor is generally only obligated to pay the instrument upon presentment. If an instrument is lost and has not been presented to the obligor for payment, the obligor may pay the instrument when the party read more »

Liability for Negotiable Instrument Signed by Agent

Tuesday, January 20th, 2015 | Category: All Posts,Legal
17. When is an individual (including businesses) liable for a representative signing a negotiable instrument? If a representative (an agent) signs a commercial instrument on behalf of a the represented person or business (the principal), the principal is bound and made liable by the representative signing either the principal’s name read more »

Liability to Pay a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
16. Who is potentially liable on (obligated to pay) a negotiable instrument? The maker of a note or drawee of a draft is “primarily obligated” to pay the instrument. If the maker or drawee pays the note or draft, it is satisfied. If, however, the maker or drawee fails to read more »

Presenting a Negotiable Instrument for Payment

Tuesday, January 20th, 2015 | Category: All Posts,Legal
15. How does a holder of commercial paper receive payment of the instrument? A negotiable instrument may be traded for value up until the time of payment. If there is no specified payment time, there is no limit on how long or how many times it can be negotiated to read more »

Types of Indorsement of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
14. What are the various types of indorsement of a negotiable instrument? Indorsement is the signature of an individual on the commercial instrument. There are several common types of endorsement, each of which has a different effect upon the instrument: •    Blank Indorsement – This means signing the instrument without read more »

Indorsement of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
13. What is “indorsement” of a negotiable instrument? Indorsement of an instrument means signing it. The indorsement signifies that the individual signing the instrument certifies certain things about it to the primary parties liable on the instrument (maker or drawer) and to any subsequent holder of the document. •    Note: read more »

Transfer of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
12. What is the “transfer” of commercial paper? An instrument is transferred when it is delivered by a person (other than its issuer) with the purpose of bestowing the right to enforce the instrument pursuant to its terms. Transfer vests in the transferee the rights of the transferor to enforce read more »

How is Negotiable Instrument Negotiated

Tuesday, January 20th, 2015 | Category: All Posts,Legal
11. How is commercial paper negotiated to a holder? “Negotiation” means that an instrument has been transferred (either voluntarily or involuntarily) to the holder by someone other than the issuer. If an individual acquires paper by a method other than negotiation, she is a “transferee” and not a “holder” of read more »

Negotiable Instrument – General Rules of Interpretation

Tuesday, January 20th, 2015 | Category: All Posts,Legal
10. What rules does the court apply when determining negotiability? The UCC favors negotiability of commercial instruments. It contains a number of rules to resolve any uncertainty as to the terms of the instrument and to supply missing terms. The following rules apply to situations where terms in a negotiable read more »

Negotiable Instrument – How is Payee Identified

Tuesday, January 20th, 2015 | Category: All Posts,Legal
9. How is a payee identified on the negotiable instrument? A negotiable instrument is payable to the holder of the instrument. A holder may either be an individual named in the instrument (order paper) or an individual in possession of the instrument (bearer paper). An instrument that names a payee read more »

Negotiable Instruments – Order or Bearer Paper

Tuesday, January 20th, 2015 | Category: All Posts,Legal
8. What is “order paper” and “bearer paper”? To constitute a negotiable instrument (both notes and drafts), an instrument must be either order paper or bearer paper. •    Order Paper – Order paper must include the words “pay to the order of (identified person)” or “to (identified person) or order”. read more »

Negotiable Instruments – Payable On Time or On Demand

Tuesday, January 20th, 2015 | Category: All Posts,Legal
7. What is “payable on demand” paper and “payable on time” paper? A negotiable instrument must either be payable on demand or payment on time. An on-time instrument is payable at a specific time and date. The date must be able to be determined at the time the instrument is read more »

Unconditional Promise to Pay

Tuesday, January 20th, 2015 | Category: All Posts,Legal
6. When does commercial paper contain an “unconditional promise to pay”? Any condition placed on the payment makes the instrument non-negotiable. A condition is any requirement that a circumstance come to fruition or that the holder undertake any additional actions in order to receive payment upon presentation of the instrument. read more »

Requirements for Commercial Paper to be Negotiable

Tuesday, January 20th, 2015 | Category: All Posts,Legal
5. What is required for commercial paper to be “negotiable”? An instrument is negotiable if it meets the following qualifications: •    Writing – The instrument must be in writing, ⁃    Note: The writing must be permanent in nature and must be moveable. ⁃    Example: Drawing the terms of an instrument read more »

Negotiability of a Commercial Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
4. What is “negotiability” and why is it important? Negotiation is the transfer of negotiable paper from one holder to another. To be a substitute for money, commercial paper must be freely transferable in the marketplace. That is, the paper must be “negotiable”. Negotiability concerns the rights of the holder read more »

Who is a Holder of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
3. Who is a “holder” of commercial paper? A holder is one who has possession of and is entitled to enforce the instrument. So, a person who is named as payee and possesses an instrument is a holder. If the commercial paper is not payable to a particular person (i.e., read more »

Types of Commercial Paper

Tuesday, January 20th, 2015 | Category: All Posts,Legal
2. What are common types of commercial paper? When examining the attributes of commercial paper, it is important to differentiate between the most common types of instrument. The types of commercial instrument include: •    Note – This is a promise to pay money. It involves two parties. The maker of the read more »

What is Commercial Paper

Tuesday, January 20th, 2015 | Category: All Posts,Legal
1. What is “Commercial Paper”? Commercial paper is a broad categorization of financial instruments (also referred to as an “instrument”) promising to pay or ordering payment to a person legally entitled to enforce the instrument. Because it has value for the individual in possession or holding the instrument, it is read more »

Commercial Paper (Intro)

Tuesday, January 20th, 2015 | Category: All Posts,Legal
Overview of Commercial Paper Commercial paper is a document that promises to pay a sum of money to the holder or possessor of the instrument. It is very common to use commercial paper as consideration in a business transactions rather than cash. This chapter introduces commercial paper. It identifies the read more »

Priority of Fixture Filer vs Mortgage Holder

Monday, January 19th, 2015 | Category: All Posts,Legal
39. What is the scope of fixture priority rules? The following rules govern the priority as between secured parties with security interests in fixtures and persons who claim in interest in real property to which the fixture attaches. Purchase-Money Priority in Fixtures – The UCC provides for priority for purchase read more »

Priority of Security Interest in Fixtures

Monday, January 19th, 2015 | Category: All Posts,Legal
38. What is the priority of security interests in fixtures? A fixture is a piece of personal property that is installed on and made one with real estate. The primary characteristic of a fixture is that it is not readily moveable. It has assumed a state of semi-permanence on the read more »

Priority of Multiple Purchase Money Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
37. What is the priority of conflicting purchase-money security interests? Often a debtor will acquire property subject to multiple purchase-money security interests. This happens when multiple parties lend money for the purchase (enabling loans) and the seller of the good finances part of the purchase. In such a situation, the read more »

Purchase Money Security Interest in Inventory

Monday, January 19th, 2015 | Category: All Posts,Legal
36. What is the priority of a purchase-money security interest in inventory? Special rules apply to purchase money security interests in inventory. In order to qualify for PMSI priority in inventory, the secured transaction must meet the following requirements: •    Perfection at Time of Possession – The PMSI must have read more »

Priority of Purchase Money Security Interest in Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
35. What is the priority of a purchase-money security interest in goods (other than inventory and livestock)? A purchase-money security interest (PMSI) is a security interest in collateral purchased with the value extended by the creditor. A seller or lender may also acquire a PMSI in goods sold if it read more »

Secured Party Priority in Future Advances to Debtor

Monday, January 19th, 2015 | Category: All Posts,Legal
34. What is a secured party’s priority in “future advances” of funds to the debtor? Future advances of funds are funds provided to a debtor based upon an existing lending agreement. This is common when a debtor establishes a line of credit with a lender. The lender will advance funds read more »

Special Priority Rules for Proceeds from Sale of Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
33. Who has “priority in proceeds” from the sale of collateral? A secured party who perfects her security interest in collateral may have a continued security interest in the proceeds from the sale of that collateral. Thus, a secured party with priority in collateral will also maintain priority in the read more »

Priority Rules for Conflicting Security Interests

Monday, January 19th, 2015 | Category: All Posts,Legal
32. What are the general “priority rules” for security interests? The following are the general priority rules for security interests: •    Perfected vs Unperfected Security Interests – A perfected security interest has priority over an unperfected security interest. This is true even if the unperfected security interest was established well read more »

The Shelter Principle and Buyers of Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
31. What is the “Shelter Principle” – Section 2-403(1)? The shelter principle offers additional protections for buyers of collateral from other consumers. Basically, this equitable principle states that a good faith purchaser of property acquires all of the rights that the transferor of that property. The shelter rule will provide read more »

Security Interests in Goods purchased from one consumer by another

Monday, January 19th, 2015 | Category: All Posts,Legal
30. What statutory provision protects individuals purchasing goods from a buyer in the ordinary course? The buyer-in-the-ordinary course protection does not apply to subsequent purchases from a buyer in the ordinary course because the seller is not a seller of goods of the kind. So, if a BYOC subsequently sells read more »

Protections of a Buyer in the Ordinary Course of Business

Monday, January 19th, 2015 | Category: All Posts,Legal
29. What is required to be a buyer in the “ordinary course of business”? A buyer in the ordinary course of business must meet the following characteristics: •    Good Faith – The purchaser of the collateral must buy it in good faith and without the intent to defraud or deceive; read more »

Priority of a Secured Party vs a Buyer of Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
28. What is the “priority of buyers of collateral” that is subject to a security interest? Generally, a buyer of collateral subject to a security interest takes the property subject to that security interest. That is, if a debtor sells collateral that is subject to a security interest, the security read more »

Priority of Parties Holding Statutory and Common Law Liens

Monday, January 19th, 2015 | Category: All Posts,Legal
27. What is the priority of parties secured by “common law and statutory liens”? Possessory Liens – A possessory lien is a common law or statutory interest in an asset that: •    secures a payment for services or material furnished in the ordinary course of business; •    is create pursuant read more »

Priority Regarding Conflicts in Security Interests

Monday, January 19th, 2015 | Category: All Posts,Legal
26. What are the common types of conflicts regarding the priority of security interests? The following types of security interest are often in conflict: •    Lien Creditors vs. Security Interest – A lien creditor who establishes an interest in a debtor’s property prior to perfection by another secured party has read more »

Perfection and Priority of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
25. What role does perfection play in establishing the priority of a secured party? A secured creditor must perfect her security interest to establish the priority of her security interest with relation to all other creditors. The first secure party to perfect a security interest in the collateral generally gives read more »

What is Priority of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
24. What is “priority” of a security interest? The priority of a secured party regards the party’s right to payment in the event of default by a debtor. If a debtor defaults, a secured party with a security interest in collateral will have a claim of ownership in the collateral. read more »

Appropriate Office to File a Financing Statement

Monday, January 19th, 2015 | Category: All Posts,Legal
23. Where is the appropriate office to file a financing statement? Financing statements covering goods are generally filed or processed through the state secretary of state’s office. Some states, however, require that the financing statement be physically filed at the local courthouse where the debtor is located. If the debtor read more »

Authorization Required to File Financing Statement

Monday, January 19th, 2015 | Category: All Posts,Legal
22. What authorization is required to file a financing statement? A secured party must be authorized to file a financing statement against the assets of the debtor. If the debtor is bound by a security agreement, authorization to file a financing statement is implied. If the debtor is not bound read more »

Perfection of Security Interest by Filing Financing Statement

Monday, January 19th, 2015 | Category: All Posts,Legal
21. What information is required in a “financing statement” filing? Generally, to perfect a security interest, a secured party may file a security agreement in the appropriate government office. To be enforceable under the UCC, a financing statement must contain the following information: •    Debtor’s Name – Generally this requires read more »

Perfection of a Security Interest by Control

Monday, January 19th, 2015 | Category: All Posts,Legal
20. How does one perfect a security interest by “control” of the collateral? Article 9 allows for perfection of a security interest in certain types of collateral by control. These types of assets include deposit accounts, investment properties, letter-of-credit rights, and electronic chattel paper. Control is related to possession and read more »

Perfection of a Security Interest by Possession

Monday, January 19th, 2015 | Category: All Posts,Legal
19. How does one perfect a security interest by “possession “of the collateral? Article 9 allows a secured party to perfect a security interest in goods, instruments, negotiable documents or tangible chattel paper by securing possession of the collateral. Securing possession can mean personal possession or possession by an agent. read more »

Security Interest in Assignment of Accounts Receivable or Contract Rights

Monday, January 19th, 2015 | Category: All Posts,Legal
18. How is a security interest created through the “assignment of accounts receivable” and “contract rights”? Generally, the sale or assignment of rights in accounts, payment intangibles, or promissory notes (account) creates a security interest for the individual to whom the account is assigned. This attaches the security interest to read more »

Temporary Automatic Perfection in Proceeds from Sale of Goods

Monday, January 19th, 2015 | Category: All Posts,Legal
17. What is “temporary automatic perfection” in “proceeds” from the sale of goods? Proceeds is the money, assets, or value received in exchange for selling or transferring something. A perfected security interest in collateral automatically extends to the proceeds from the sale of that collateral (with certain exceptions) for 20 read more »

Permanent Perfection of Purchase Money Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
16. How does one continue perfection of or permanently perfect a purchase money security interest in non-consumer goods? A secured party who takes a PMSI in non-consumer goods has a grace period to file her financing statement. To establish permanent perfection beyond the temporary grace period, she must file the read more »

Purchase Money Grace Period for Secured Parties

Monday, January 19th, 2015 | Category: All Posts,Legal
15. What is a “purchase-money grace period” for a purchase-money security interest in non-consumer goods? Sellers of non-consumer goods receive temporary automatic perfection of an attached PMSI in the collateral sold. As the name applies, the security interest is temporary in nature. The seller has a 20-day grace period for read more »

Purchase Money Security Interest in Consumer Goods

Monday, January 19th, 2015 | Category: All Posts,Legal
14. What is a “purchase money security interest” (PMSI) in consumer goods? A purchase money security interest (PMSI) arises in situations where the secured party provides the funds necessary to purchase the subject collateral. This can arise through a loan for identified collateral or when the secured party sells and read more »

Automatic Perfection of a Security Interest in Goods

Monday, January 19th, 2015 | Category: All Posts,Legal
13. What is “automatic perfection” of a security interest? In certain types of transactions, a secured party’s interest in collateral is automatically perfected without filing a financing statement and without taking possession or control of the collateral. This is known as “automatic perfection”. Depending upon the nature of the collateral, read more »

Establishing a Security Interest in Real Property (Land)

Monday, January 19th, 2015 | Category: All Posts,Legal
12. How does a secured party establish a security interest in real property (land)? Secured parties must perfect a security interests in land by publicly filing notice of the security in accordance with state recording statutes. Generally, mortgages and deeds of trust must be publicly registered in a government office read more »

Methods of Perfecting a Security Interest in Personal Property

Monday, January 19th, 2015 | Category: All Posts,Legal
11. What methods exist for perfecting a security interest in personal property? Establishing or making one’s security interest effective as against third parties is known as “perfection” of the security interest. Perfection takes place when the security interest has attached and the creditor has taken all proper steps required by read more »

Perfection of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
10. What is “perfection” of a security interest? “Perfection” is the process of putting the entire world on notice that the secured party claims a security interest in the debtor’s collateral. Recall, a security interest is enforceable against the debtor at the time that it attaches. That is, the attached read more »

Attachment of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
9. How does one establish a security interest in personal property? A security interest in property begins when personal property is identified as collateral for a loan. This is known as “attachment” or “attaching” the property. Attachment takes place when the following conditions are met: •    Security Agreement – The read more »

Secured Transactions – Defined

Monday, January 19th, 2015 | Category: All Posts,Legal
8. What is a security interest in personal property? A security interest in personal property involves using any form of personal property or fixture to secure a debt. A borrower signs a promissory note that identifies the personal property that will serve as collateral to secure the loan. Personal property read more »

Land Sale Contracts – Explained

Monday, January 19th, 2015 | Category: All Posts,Legal
7. What is a “land sale contract”? A land-sale contract is a situation where the owner of land sells it subject to the condition that the seller retain title to the land until the buyer pays the full purchase price. Basically, it is a seller-financing scenario, where the seller retains read more »

Deeds of Trust and Security Deeds

Monday, January 19th, 2015 | Category: All Posts,Legal
6. What is a “deed of trust” or “security deed”? A “deed of trust”, or “security deed”, as it is known is some jurisdictions, is a form of mortgage. A borrower of money signs a promissory note demonstrating the debt owed to the lender. The promissory note will generally recite read more »

Mortgage Lender and Benefit of Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
5. How does a security interest protect the mortgage holder? If the borrower fails to repay the loan pursuant to the terms of the loan agreement, the mortgage holder may “foreclose” upon the property securing the mortgage loan. •    Foreclosure – Foreclosure is the process by which the mortgage holder read more »

What is a Mortgage

Monday, January 19th, 2015 | Category: All Posts,Legal
4. What is a “mortgage”? A mortgage is a loan that is secured by real property. A borrower acquires a loan and provides a security interest in the real property owned by the borrower to be purchased with the borrowed funds. This is a common method of using “equity” or read more »

Benefits of a Security Interest in Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
2. What are the benefits of a security interest to creditors? Taking a security interest in collateral to secure a debt reduces the risk to the creditor. It dissuades the creditor from defaulting on the loan for fear of losing the collateral. Also, it provides the secured creditor the ability read more »

Security Interest – Defined

Monday, January 19th, 2015 | Category: All Posts,Legal
1. What is a “Security Interest”? A security interest is a form of property interest in real or personal property. It is given by the owner of the property to provide assurance to a third party that the property owner will perform an obligation or pay a debt. Generally a read more »

Security Interests (Intro)

Monday, January 19th, 2015 | Category: All Posts,Legal
Overview Security interests are a cornerstone of finance and lending. Secured lending relates directly with the amount of risk a lender faces when extending credit to a borrower. A secured transaction is one in which a lender or seller acquires an interest in the property sold or purchased with the read more »

Sanctions Under Antitrust Law

Sunday, January 18th, 2015 | Category: All Posts,Legal
18. What sanctions are available under the antitrust laws? Together the Sherman Act, Clayton Act, and FTC Act allows for four legal sanctions: •    Injunctions of Activity – Injunctions order a party not to violate or continue violating antitrust provisions. These can be administrative or judicial. •    Treble (triple) Damages read more »

Federal Trade Commission Act Antitrust Deceptive Practices

Sunday, January 18th, 2015 | Category: All Posts,Legal
17. What is the “Federal Trade Commission Act “and how does it regulate unfair competition? The FTC Act §5 proscribes “unfair or deceptive acts or practices” and “unfair methods of competition.” Violations for the Sherman Act and Clayton Act will also violate the FTC Act, so most challenges are raised read more »

Clayton Act Mergers and Acquisitions

Sunday, January 18th, 2015 | Category: All Posts,Legal
16. How does the Clayton Act regulate “mergers and acquisitions”? The Clayton Act § 7 makes certain mergers and acquisitions illegal. Basically, one company cannot acquire another company’s stock or assets (or otherwise combine with another entity) if the combination is reasonably likely to substantially lessen competition or tend to read more »

Clayton Act Reciprocal Dealing Arrangements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Clayton Act – Reciprocal Dealing Contracts This is an agreement where a buyer offers to buy a seller’s goods under the condition that the seller buy other goods from the original buyer. These agreement are only illegal if there is a distinct anticompetitive objective with a substantial effect on the read more »

Clayton Act Tying Arrangements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Clayton Act – Tying Contract A tying contract is one in which a product is sold or leased only on the condition that the buyer purchase a different product or service from the seller or lessor. A common type of tying, known as “full-line forcing”, is where a seller compels read more »

Clayton Act Section 3 – Exclusive Dealing

Sunday, January 18th, 2015 | Category: All Posts,Legal
15. What are “special arrangements” prohibited by the Clayton Act? Section 3 of the Clayton Act limits the use of certain types of contracts involving goods when the impact of these contracts may substantially lessen competition or tend to create a monopoly. These contracts may be per se illegal if read more »

Clayton Act Price Discrimination

Sunday, January 18th, 2015 | Category: All Posts,Legal
14. What is “Price Discrimination”? Price discrimination under the Clayton Act means charging a different price for a commodity based upon something other than quality, quantity, or cost of selling. The Robinson-Patman Act, an amendment to the Clayton Act § 2, addressed the issue of a seller charging purchasers of read more »

Sherman Act Monopolization

Sunday, January 18th, 2015 | Category: All Posts,Legal
13. What is “monopolization” under the Sherman Act? The Sherman Act § 2 makes illegal the willful acquisition or maintenance of monopoly power in a relevant market when such power is the result of something other than pure competition. Simply possessing monopoly power is fine if such power results from read more »

Sherman Act Vertical Territorial Agreements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Vertical Territorial Agreements A vertical territorial agreement is an agreement between a manufacturer and a distributor of a product that grants an exclusive territory in which to distribute the product. The manufacturer agrees not to sell to other distributors in that territory in exchange for the dealer read more »

Sherman Act Product Tying

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Tying Under the Sherman Act § 1, as well as § 3 of the Clayton Act, tying the purchase of one product to the purchase of another competitor’s product may be anticompetitive and a restraint of trade. Tying, in its most basic form, is when a seller read more »

Sherman Act Exclusive Dealing Arrangements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Exclusive Dealing Under the Sherman Act § 1, as well as § 3 of the Clayton Act, exclusive dealing agreements between suppliers and manufacturers can be anticompetitive vertical restraints on trade. In a typical exclusive dealing arrangement, a seller requires that a buyer of a product only read more »

Sherman Act Vertical Price Fixing and Maintenance

Sunday, January 18th, 2015 | Category: All Posts,Legal
12. What are the commonly recognized types of “vertical restraint”? Vertical restraint is an arrangement or agreement between members of a supply chain (such as manufacturers, wholesalers, distributors, or retailers) to fix the price or supply of goods. The following are common types of vertical restraint: •    Resale Restraint (Vertical read more »

Sherman Act Horizontal Price Fixing

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Horizontal Price Fixing Under the Sherman Act § 1, an agreement among competitors to establish a fixed price among all producers or sellers of goods or services is a horizontal restraint of trade. This type of naked restraint on trade is a purely anticompetitive and is per read more »

Sherman Act Territorial Agreement

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Horizontal Territorial Agreements Under the Sherman Act § 1, a territorial agreement that allocates geographical areas among competitors may be a horizontal restraint of trade. In a horizontal territorial agreement, competing businesses enter into an agreement not to compete with or infringe upon another competitor within an read more »

Sherman Act Refusal to Deal

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Refusal to Deal Under the Sherman Act § 1, refusals to deal with or boycotts of market participants can be illegal as horizontal restraints of trade. This may be the case when the refusal has anti-competitive aspects but no pro-competitive justification. If the refusal to deal is read more »

Sherman Act Horizontal Restraint of Trade

Sunday, January 18th, 2015 | Category: All Posts,Legal
11. What are the commonly recognized types of “horizontal restraint”? While there are several established types of horizontal restraint, any situation that meets the following elements may be illegal. •    Agreement – Was there an agreement between or among market participants? •    Restraint – Was there an identifiable restraint of read more »

Exemptions from Antitrust Regulation

Sunday, January 18th, 2015 | Category: All Posts,Legal
10. What businesses are exempt from the provisions of the Sherman Act? Businesses in certain industries may be exempt from some of the antitrust provisions of the Sherman Act. These businesses do not receive a blanket exemption; rather, they receive specific exemptions for certain practices or activities. Examples of exempted read more »

Sherman Act Monopoly

Sunday, January 18th, 2015 | Category: All Posts,Legal
9. What is a “Monopoly”? Section 2 of the Sherman Act regulates monopolies or conspiracies or attempts to monopolize any part of interstate or foreign commerce. It is directed at single firms and does not purport to cover shared monopolies or oligopolies. •    Monopoly – In US v. Grinnel Corp, read more »

Antitrust Rule of Reason and Per Se Illegality

Sunday, January 18th, 2015 | Category: All Posts,Legal
8. What is “per se illegality” and the “rule of reason”? Section 1 of the Sherman Act broadly prohibits actions that in some way restrain trade. If an action is determined to be a restraint of trade, the following standards apply to determine whether the arrangement is illegal: •    Per read more »

Contract Combination Conspiracy in Restraint of Trade

Sunday, January 18th, 2015 | Category: All Posts,Legal
THE SHERMAN ACT The Sherman Act prevents certain contracts, combinations, or conspiracies in restraint of trade or commerce, and industry monopolies and attempts to monopolize. The following are the basic concepts behind the Sherman Act. 7. What is a “contract, combination, or conspiracy” in restraint of trade? Section 1 of read more »

What is the Federal Trade Commission Act

Sunday, January 18th, 2015 | Category: All Posts,Legal
6. What is the “Federal Trade Commission Act of 1914”? In 1914, the same year that the Clayton Act passed, Congress passed the Federal Trade Commission Act (FTC Act). This act created the Federal Trade Commission, which is an independent administrative agency charged with consumer protection. The FTC bears primary read more »

What is the Clayton Act

Sunday, January 18th, 2015 | Category: All Posts,Legal
5. What is the “Clayton Act of 1914”? The Clayton Act is an antitrust law passed to protect consumers by providing a means of preventing early-stage anticompetitive practices. It has a specific focus on the sale of commodities. The Clayton Act is more specific in identifying anticompetitive conduct than is read more »

What is the Sherman Act

Sunday, January 18th, 2015 | Category: All Posts,Legal
4. What is the “Sherman Act of 1890”? The Sherman Act was the first major federal law passed with the purpose of ensuring competition across and within industries. At the time of its passage, several large companies had nearly complete control over certain industries (steel, oil, and railway) very important read more »

Federal Trade Commission Enforcing Antitrust Laws

Sunday, January 18th, 2015 | Category: All Posts,Legal
3. What entities are charged with carrying out the federal antitrust laws? The Federal Trade Commission (FTC) is an independent federal agency primarily charged with developing regulations and preventing violations of the federal antitrust laws. The objective of the FTC is to protect consumers by preventing anticompetitive business practices. In read more »

What is Antitrust Law

Sunday, January 18th, 2015 | Category: All Posts,Legal
1. What is “antitrust law”? “Antitrust laws” are a combination of federal and state laws that seek to promote competition among businesses (both large and small). Competition among businesses benefits consumers, as businesses compete by providing better or more goods and services at lower prices. In pursuit of growth and read more »

Antitrust Law (Intro)

Sunday, January 18th, 2015 | Category: All Posts,Legal
Overview of Antitrust Antitrust law concerns the regulation of certain business practices that result in lower levels of competition among businesses in the market. A lower level of competition in a given market is generally understood to be detrimental to consumer interests. It can cause higher prices and shortages in read more »

State Consumer Protection Laws

Saturday, January 17th, 2015 | Category: All Posts,Legal
22. What role do states play in consumer protection? States pass and enforce any number of consumer protection laws. These laws sometimes offer protections in addition to those offered by federal law. State laws protecting consumers are generally known as Unfair and Deceptive Practices (UDAP) statutes. Common areas regulated by read more »

Children’s Online Privacy Protection Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
21. What is the “Children’s Online Privacy Protection Act of 1986” (COPPA)? COPPA was passed to protect against the online collection of personal information of children under the age of 13 years. Enforcement of COPPA is charged to the FTC, which issues regulations for its enforcement. The rules regulate commercial read more »

Electronic Communication Privacy Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
20. What is the “Electronic Communication Privacy Act of 1986” (ECPA)? The ECPA protects individuals against unlawful interception of electronic communications by the Federal Government or individuals. Specifically, it restricts the ability to undertake wire taps, computer transmissions, stored electronic communications, and tracing of telephone communications, etc. It is a read more »

Right to Financial Privacy Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
19. What is the “Right to Financial Privacy Act of 1978” (RFPA)? The RFPA places limitations on the ability of the Federal Government to seek financial records about an individual from banks or other financial institutions. The RFPA applies only to the Federal Government. It does not govern requests for read more »

Privacy Act of 1974

Saturday, January 17th, 2015 | Category: All Posts,Legal
18. What is the “Privacy Act of 1974” (Privacy Act)? The Privacy Act restricts the ability of the Federal Government to collect information about individual US citizens. Specifically, it regulates the use, maintenance, and dissemination of collected personally-identifiable information. “Personally-identifiable information” either contains the name or other information that allows read more »

Magnuson Moss Warranty Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
17. What is the “Magnuson-Moss Warranty Act”? The Magnuson-Moss Warranty Act (MMWA) was passed to protect consumers by regulating the use of warranty and disclaimer provisions by merchants. Generally, warranties are the subject of state contract law. The MMWA is a federal law administered by FTC; but it does not read more »

Federal Food Drug and Cosmetics Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
16. What is the Federal Food, Drug, and Cosmetic Act? The Federal Food Drug and Cosmetic Act (FFDCA) was passed for the purpose of ensuring the safety of food, drugs (some medical devices), and cosmetics. The act gave authority to the Food and Drug Administration (FDA) to administer the provisions read more »

Product Labeling Laws

Saturday, January 17th, 2015 | Category: All Posts,Legal
15. What are the applicable labeling laws regulating consumer products? Labeling laws are administered by a combination of federal and state agencies. Federal agencies heavily involved in product labeling laws include the CPSC, FTC, and FDA. Collectively, federal and state laws require manufacturers to place informative labels and warnings on read more »

Consumer Product Safety Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
14. What is the “Consumer Product Safety Act”? The Consumer Product Safety Act (CPSA) was passed for the purpose of protecting consumers against dangerous products. The CPSA encompasses several consumer protection acts, such as the Poison Prevention Packaging Act (PPPA) and the Consumer Product Safety Improvement Act (CPSIA). The CPSA read more »

Electronic Funds Transfer Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
13. What is the “Electronic Funds Transfer Act”? The Electronic Funds Transfer Act (EFTA) was passed with the purpose of regulating the practice of transferring funds electronically. More specifically, the EFTA applies to electronic transfers of money between two separate institutions. It does not apply to automatic account transfers within read more »

Fair Credit Billing Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
12. What is the “Fair Credit Billing Act”? The Fair Credit Billing Act (FCBA) was passed as an amendment to TILA with the purpose of protecting consumers against unfair billing practices. The FCBA is administered by FTC and applies within the consumer’s home state or 100 miles of home. These read more »

Fair Debt Collection Practices Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
11. What is the “Fair Debt Collection Practices Act”? The Fair Debt Collection Practices Act (FDCPA) was passed to protect consumers from abusive practices by debt collectors. It establishes limitations on debt collection practices, provides a method for disputing uncertain debts, and prescribes remedies for violation of the Act. The read more »

Truth in Lending Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
10. What is the “Truth in Lending Act”? The Truth in Lending Act (TILA) was passed with the purpose of protecting individuals from entering into deceptive or confusing credit relationships. The group of regulations implementing the provisions of TILA is known as “Regulation Z”. These regulations contain the bulk of read more »

Fair Credit Reporting Act – Furnishers of Information

Saturday, January 17th, 2015 | Category: All Posts,Legal
Furnishers of Credit Information The FCRA places obligations upon creditors who furnish a consumer’s credit information to a reporting agency. This may include lenders, retailers, collection agencies, etc., that deal with customer credit and report that information to a reporting agency. The FCRA requires that these creditors: •    provide complete read more »

Fair Credit Reporting Act – Reporting Agencies

Saturday, January 17th, 2015 | Category: All Posts,Legal
Consumer Reporting Agencies   A credit reporting agency is any business that collects information about consumers for the purpose of disseminating that information in connection with credit applications, employment, or other evaluations of the individual’s credit. The largest personal credit reporting agencies in the United States are Transunion, Experian, and read more »

Fair Credit Reporting Act – Users of Information

Saturday, January 17th, 2015 | Category: All Posts,Legal
Requirements on Users of Credit Reports A “credit report” is a collection of a consumer’s credit history. It includes such information as: past payment history, current credit accountings, late payments, credit limits, any debt or bill collection activity, liens, judgments, bankruptcies, etc. A “user” of a credit report is anyone read more »

Fair Credit Reporting Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
9. What is the “Fair Credit Reporting Act”? The Fair Credit Reporting Act protects consumers (not businesses) by regulating the accuracy, fairness, and privacy of consumer information reported to or held by consumer reporting agencies. It protects consumers from the negative consequences associated with inaccurate information in their personal credit read more »

Equal Credit Opportunity Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
8. What is the “Equal Credit Opportunity Act”? The Equal Credit Opportunity Act (ECOA) protects individuals from discrimination in lending money or the extension of credit. It covers financial institutions, retail establishments, credit-card issuers, and other credit-granting firms. The ECOA extended the protections from discrimination under Title VII beyond the read more »

Consumer Financial Protection Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
7. What is the “Consumer Financial Protection Act”? The Consumer Financial Protection Act was passed in 2010 as part of the Dodd-Frank Act with the purpose of establishing the Consumer Financial Protection Bureau (CFPB).The  CFPB and FTC overlap in authority to administer consumer laws. The CFPB has broad authority to read more »

Commercial Practices Prohibited by FTC

Saturday, January 17th, 2015 | Category: All Posts,Legal
6. What type of commercial practices does the FTC prohibit in an effort to protect customers? The FTC prohibits commercial practices that are deceptive to customers. This generally concerns the practices of merchants who market or otherwise represent the quality or characteristics of goods or services to customers. In determining read more »

FTC Remedies for Consumer Protection Violations

Saturday, January 17th, 2015 | Category: All Posts,Legal
5. What administrative penalties and remedies may the FTC seek for violation of FTC regulations? The FTC, through the negotiation of consent orders, has broad powers to fashion appropriate remedies to protect consumers in trade regulation cases, including: •    rescission of contracts (each party must return what has been obtained read more »

FTC Regulatory Enforcement Procedures

Saturday, January 17th, 2015 | Category: All Posts,Legal
4. What are the enforcement procedures of the FTC? Within the FTC, attorneys working in the bureau of consumer protection enforce the federal laws related to consumer affairs and rules promulgated by the FTC. The FTC enforces these rules and laws through the following methods: •    Advisory Opinions & Industry read more »

Federal Trade Commission

Saturday, January 17th, 2015 | Category: All Posts,Legal
3. What is the “Federal Trade Commission”? The Federal Trade Commission (FTC) is the primary federal agency with the mission of protecting consumers. Authorized under the Fair Trade Commission Act, the FTC is an “independent” regulatory agency charged with keeping competition free and fair and with protecting consumers. The President read more »

Consumer Protection Law

Saturday, January 17th, 2015 | Category: All Posts,Legal
1. What is “consumer protection law”? Consumer protection laws are state and federal laws that serve to protect individual consumers from deception or fraud in the marketplace. A consumer is someone who buys something for personal, family, or household use. These laws promote the accurate disclosure of information, facilitate market read more »

Employment Discrimination Under State Law

Friday, January 16th, 2015 | Category: All Posts,Legal
21. What is the role of state governments with regard to anti-discrimination laws? All states have statutes and regulations administered by state agencies to protect employees from employment discrimination. Often, these state laws will provide additional protections for employees beyond those provided by federal statutes. The EEOC generally works in read more »

Affirmative Action Explained

Friday, January 16th, 2015 | Category: All Posts,Legal
20. What is “affirmative action”? Affirmative action is a federal executive order prescribed to protect federal employees and employees of certain federal contractors. To be covered by this executive order, contractors must have 50 or more employees and hold federal contracts of $50,000 or more. Affirmative action principles require covered read more »

Sexual Orientation Discrimination

Friday, January 16th, 2015 | Category: All Posts,Legal
19. What federal protections exist from discrimination based upon sexual orientation or identity? Sexual orientation or identity discrimination in the employment context means any form of employment discrimination based upon the real or perceived sexual orientation (gay, lesbian, bisexual, or heterosexual) or identity (transgender association) of an employee. There are read more »

Uniform Servicemembers Employment and Reemployment Rights Act

Friday, January 16th, 2015 | Category: All Posts,Legal
18. What anti-discrimination protections exist for employees who are also military service members? The Uniform Services Employment and Reemployment Rights Act (USERRA) protects the rights of service members in the military reserves or state national guards from discrimination based upon their military service obligations. Specifically, the law protects the rights read more »

The Affordable Care Act

Friday, January 16th, 2015 | Category: All Posts,Legal
The Affordable Care Act of 2014 •    Requirements of Individuals & Government – The Affordable Care Act in 2014 (ACA) changes the insurance landscape considerably. The ACA requires that all US citizens purchase health insurance either privately or through their employers. Individuals who fail to purchase health insurance are fined read more »

Health Insurance Portability and Accountability Act

Friday, January 16th, 2015 | Category: All Posts,Legal
17. What laws protect employees from discrimination in receiving health insurance coverage? The Health Insurance Portability Accountability Act of 1996 The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a primary law protecting the rights of employees with regard to obtaining and continuing health insurance coverage. Specifically, HIPAA read more »

Genetic Information NonDiscrimination Act

Friday, January 16th, 2015 | Category: All Posts,Legal
16. What is the “Genetic Information and Non-Discrimination Act”? The Genetic Information Nondiscrimination Act (GINA) prohibits employers (those covered by Title VII) from discriminating (hiring, firing, refusing to hire, or otherwise discriminating) based upon an employee or perspective employee’s genetic information. Genetic information includes any information acquired through an individual’s read more »

The Rehabilitation Act

Friday, January 16th, 2015 | Category: All Posts
15. What is the “Rehabilitation Act”? The Rehabilitation Act aims to “promote and expand employment opportunities in the public and private sectors for handicapped individuals.” The Rehabilitation Act prohibits the Federal Government and certain federal contractors from discriminating against employees and contractors based upon a medical disability. The Rehabilitation Act read more »

Americans with Disabilities Act

Friday, January 16th, 2015 | Category: All Posts,Legal
14. What is the “Americans with Disabilities Act”? The Americans with Disabilities Act (ADA) is the primary law protecting individuals with disabilities from various forms of discrimination. The ADA specifically prohibits employers from discriminating against job applicants or employees based upon: •    having a disability, •    having a disability in read more »

Age Discrimination in Employment Act

Friday, January 16th, 2015 | Category: All Posts,Legal
13. What is the “Age Discrimination in Employment Act”? The Age Discrimination in Employment Act of 1967 (ADEA) was passed to address discrimination in employment based upon Age. The Civil Rights Act of 1964 and the Equal Employment Opportunity Act do not protect against discrimination based on age, which makes read more »

Civil Rights Act of 1866 (1981 Action)

Friday, January 16th, 2015 | Category: All Posts,Legal
12. What is the “Civil Rights Act of 1866”? The Civil Rights Act of 1866, commonly known as the 1981 Act, was passed at the end of the Civil War in an effort to protect minorities against race-based discrimination. The pertinent provisions of the Act reads, “All persons shall have read more »

Pregnancy Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
11. What are the protections under Title VII against discrimination based upon pregnancy? Title VII protects women against discrimination based upon pregnancy or intent to become pregnant. The Pregnancy Discrimination Act of 1978 amended title VII to provide the following specific protections: •    Pregnancy – An employer cannot discriminate against read more »

Equal Pay Act of 1963

Friday, January 16th, 2015 | Category: All Posts,Legal
Equal Pay Act of 1963 The Equal Pay Act of 1963 (Equal Pay Act) was an amendment to the Fair Labor Standards Act and a pre-cursor to the Civil Rights Act. The Equal Pay Act works in conjunction with the Civil Rights Act to prohibit sex-based discrimination in employment compensation. read more »

Sex Discrimination – Sexual Harassment and Hostile Work Environment

Friday, January 16th, 2015 | Category: All Posts,Legal
10. What is “sexual harassment” and “hostile work environment”? Two types of intentional discriminatory conduct based upon the actions or inactions of the employer (or its agents) are “sexual harassment” and “hostile work environment”. ⁃    Note: These types of conduct is that they are not subject to a bona fide read more »

Sex Discrimination – Discriminatory Treatment and Discriminatory Impact

Friday, January 16th, 2015 | Category: All Posts,Legal
9. What is discrimination on the basis of sex under Title VII? Discriminatory Treatment Discrimination based upon sex is slightly more complicated than discrimination based upon other protected classes. Understandably, Title VII prohibits intentional discrimination by an employer, such as hiring, firing, differentiating benefits of work conditions, based upon sex. read more »

Religious Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
8. What is discrimination on the basis of religion under Title VII? Religious discrimination is intentional conduct or policies that treat or affect individuals differently based upon their religious beliefs or affiliations. This includes any of the intentional discrimination, such as failing to hire, firing, or allowing different benefits. An read more »

National Origin Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
7. What is discrimination on the basis of national origin under Title VII? National origin discrimination is any form of intentional conduct or policy that favors one or more national origins over others. National origin includes the origin or birthplace of the employee or the employee’s ancestors. Examples discriminatory treatment read more »

Race Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
6. What is discrimination on the basis of race or color under Title VII? Discrimination on the basis of race or color may be intentional or as a result of policies with a disparate impact. Failing to hire, firing, or compensating individuals differently based upon race are obvious examples of read more »

Retaliation Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
Retaliation Under Title VII Title VII protects employees who report or bear witness to discriminatory conduct. More specifically, employers cannot retaliate by taking disciplinary action against employees for making discrimination charges, making a statement to the EEOC or administrative agency, or giving testimony in a discrimination case. Pursuant to this read more »

Disparate Impact

Friday, January 16th, 2015 | Category: All Posts,Legal
Disparate Impact Disparate impact is a form of discrimination that involves a policy or practice that is not primarily motivated by a discriminatory purpose but has a discriminatory impact on a protected class of individual. Restated, unlike discriminatory treatment actions, the employee does not have to demonstrate an intent to read more »

Disparate Treatment

Friday, January 16th, 2015 | Category: All Posts,Legal
5. What must a plaintiff demonstrate to the court to win a lawsuit under Title VII? To make an actionable claim under Title VII, the effected employee must demonstrate that the employer is covered by Title VII and that actions taken (or inaction) by the employer likely had a discriminatory read more »

Enforcing Title VII Actions through EEOC

Friday, January 16th, 2015 | Category: All Posts,Legal
4. How are employment discrimination actions under the Title VII enforced? The Civil Rights Act of 1964 established the Equal Employment Opportunity Commission (EEOC). The EEOC is charged with interpreting and enforcing the provisions of Title VII and numerous other employment laws (including the ADA, ADEA, Equal Payment Act, and read more »

Employment Discrimination Under Title VII of the Civil Rights Act

Friday, January 16th, 2015 | Category: All Posts,Legal
3. What are the protections against employment discrimination provided by the “Title VII” of the Civil Rights Act of 1964? Title VII makes it unlawful for an employer to “fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his read more »

Overview of Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
CIVIL RIGHTS ACT OF 1964 The Civil Rights Act of 1964 is the most comprehensive statute dedicated to protecting the civil rights of individuals. For purposes of this chapter, Title VII of the Civil Rights Act (Title VII) is wholly dedicated to eliminating discriminatory employment practices. The Act has been read more »

What is Employment Discrimination

Friday, January 16th, 2015 | Category: All Posts,Legal
1. What is “employment discrimination”? Employment discrimination is a specific area of employment law that is based upon fundamental rights granted or protections afforded under the US Constitution. Employment discrimination laws prohibit certain types of discrimination by employers against employees or prospective employees based upon their protected characteristics. Various federal read more »

Employment Discrimination (Intro)

Friday, January 16th, 2015 | Category: All Posts,Legal
Overview of Employment Discrimination Employment discrimination is a specific area of employment law. Numerous federal or state statutes provide for “protected classes” of individuals based upon innate characteristics. Employment discrimination law protects employees  who fit into these classes from discrimination by their employer based upon these characteristics. This chapter defines read more »

Labor Management Reporting and Disclosure Act

Thursday, January 15th, 2015 | Category: All Posts,Legal
20. What is the “Labor Management Reporting and Disclosure Act”? The Labor Management Reporting and Disclosure Act of 1959 (LMRDA), also known as the Landrum-Griffin Act, was passed to provide greater protections to individual union members. The prominent provisions of the LMRDA are as follows: •   Section 101(a)(1) – This read more »

Labor Management Relations Act ( Taft Hartley Act )

Thursday, January 15th, 2015 | Category: All Posts,Legal
19. What is the “Taft-Hartley Act”? The Taft-Hartley Act of 1947 is a group of amendments to the NLRA. Since the passage of these amendments, the NLRA is commonly known as the Labor Management Relations Act (LMRA). Though the name is modified, the provisions of the NLRA make up the read more »

National Labor Relations Act of 1935

Thursday, January 15th, 2015 | Category: All Posts,Legal
18. What is the “National Labor Relations Act”? The National Labor Relations Act of 1935 (NLRA), also known as the Wagner Act, was passed in 1935 to strengthen the protections afforded private-sector employees to organize or bargain collectively. The fundamental premise behind the Norris-LaGuardia Act was to allow employers and read more »

Labor Union Laws ( Norris – LaGuardia Act)

Thursday, January 15th, 2015 | Category: All Posts,Legal
17. What is the “Norris-LaGuardia Act”? The Norris-LaGuardia Act of 1932 was the earliest federal law broadly protecting the rights of employees to organize and bargain collectively. Section 2 states the Act’s purpose is to protect the individual worker’s right to organize. More specifically, the Act prohibits certain practices by read more »

What are the Major Labor Laws?

Thursday, January 15th, 2015 | Category: All Posts,Legal
16. What are the major federal labor laws? •    Norris-LaGuardia Act – This law prevents courts from issuing injunctions (stop orders) to individuals or groups of striking employees. •    National Labor Relations Act (or Wagner Act) – This law takes affirmative steps to allow unionization of employees. •    Taft- Hartley read more »

Workplace Privacy Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
14. What “worker privacy laws” apply to the workplace? Two primary federal acts provide for rights of privacy of employees with regard to their personal communications. •    Electronic Communication Privacy Act (ECPA) – The ECPA prohibits the recording or monitoring of employee’s private conversations without the employee’s knowledge. That is, read more »

Employment Verification Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
13. What are the “employee verification laws”? The primary employment law concerning employee verification is the Immigration Reform and Control Act of 1986 (IRCA). The IRCA requires that all employers complete and retain Form I-9 Employment Eligibility Verification forms for each individual they hire in the US. These forms seek read more »

Worker’s Compensation Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
12. What are “Worker’s Compensation” laws? Worker’s Compensation laws are either state or federal statutes designed to protect employees and their families from the risks of accidental injury, death, or disease resulting from their employment. It is a form of insurance for the employee that is paid for by the read more »

Health Insurance Portability and Accountability Act ( HIPAA)

Thursday, January 15th, 2015 | Category: All Posts,Legal
11. What is the “Health Insurance Portability and Accountability Act”? The Health Insurance Portability and Accountability Act (HIPAA) is the primary law governing the protection of health information by employers and healthcare providers. Notably, it prevents providers of health insurance or group health plans from discriminating against individuals who transfer read more »

Consolidated Omnibus Budget Reconciliation Act ( COBRA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
10. What is the Consolidated Omnibus Budget Reconciliation Act? Consolidated Omnibus Budget Reconciliation Act (COBRA) was passed to protect employees from the loss of healthcare coverage in certain situations. Specifically, it allows an employee or an employee’s dependent who is a beneficiary under an employee’s healthcare plan to maintain health read more »

Employee Retirement Income Security Act ( ERISA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
9. What is the “Employee Retirement Income Security Act”? The Employee Retirement Income Security Act (ERISA) was passed to protect employees’ rights with regard to pension, retirement, and other benefit plans offered or provided by employers. Portions of the plan are administered by the Department of Labor, the Internal Revenue read more »

Occupational Safety and Health Act

Thursday, January 15th, 2015 | Category: All Posts,Legal
8. What is the “Occupational Safety and Health Act”? The Occupational Safety and Health Act (OSHA) was passed to regulate safety conditions for employees in the work places of private employers with 20 or more employees. The Occupational Safety and Health Administration is the federal agency charged with overseeing OSHA read more »

Worker Adjustment and Retraining Act

Thursday, January 15th, 2015 | Category: All Posts,Legal
7. What is the “Worker Adjustment and Retraining Act”? The Worker Adjustment and Retraining Act (WARN Act) was passed to protect employee rights and interests in the event of large-scale layoffs as a result of operational closures by businesses (such as plant closure). The law provides that covered employers must read more »

Family Medical Leave Act ( FMLA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
6. What is the “Family Medical Leave Act”? The Family Medical Leave Act (FMLA) was passed to provide covered employees (both male and female) with time away from work in the event of medical necessity. Specifically, covered employees can take up to 12 weeks of unpaid leave from work during read more »

Fair Labor Standards Act ( FLSA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
5. What is the “Fair Labor Standards Act”? The Fair Labor Standards Act (FLSA) is a law administered by the Wage and Hour Division of the Department of Labor. The FLSA places limitations and requirements on the rate and method of pay for public and private employees who are covered read more »

Employer Withholding Requirements

Thursday, January 15th, 2015 | Category: All Posts,Legal
4. What tax and other compensation withholding requirements do the state and federal governments place on employers with regard to employees? Employers are obligated to comply with statutes and IRS regulations regarding the withholding of: •    Income Taxes – Employers have an obligation to withhold income taxes from employee compensation read more »

Major Federal Employment Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
  3. What are the major employment laws? There are many federal and state employment laws. Federal laws controlling a particular type of employer conduct set minimum standards for conduct. States may pass laws that place additional requirements on employers, so long as these laws do not conflict with or read more »

At Will Employment – State Employment Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
2. What are the legal obligations regarding the terms of employment between an employer and employee? The terms of an employment relationship will either be determined by the employment agreement between employer and employee or pursuant to the legal duties established under state law. All states in the US, except read more »

Employment Law (Intro)

Thursday, January 15th, 2015 | Category: All Posts,Legal
Overview of Employment Laws Employment laws concern the federal and state statutes governing the practices of employers and the rights of employees. Labor laws, a subset of employment laws, concern the ability of employees to organize and collective bargain for employment rights and benefits. This chapter identifies the primary employment read more »

Coordinated Registration Under State Securities Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
52. What types of coordinated registration are available under state laws? There are two primary options for registration by coordination that ease the process of complying with state securities requirements. •    Coordinated Review-Equity – This type of review is designed for use during an IPO that is seeking registration (not read more »

Registration Requirements Under State Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
51. What are the registration requirements under state law? Registration pursuant to federal law focuses on disclosure of information to offerees and purchasers. States adopt this approach, but also may impose a test to make certain the security being issued meets certain quality standards. This is known as a “merit read more »

Securities Issuances Regulated by State Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
50. Are all issuers of securities required to comply with state blue sky laws? Generally, no. In 1996, Congress passed the National Securities Markets Improvement Act (NSMIA) with the purpose of simplifying the registration process for issuers of securities. The NSMIA preempted any state regulation of certain “covered securities”. Covered read more »

Criminal Liability – Securities Exchange Act of 1934

Wednesday, January 14th, 2015 | Category: All Posts,Legal
49. What is criminal liability under the 1934 Act? The ’34 Act provides for criminal sanctions for willful violations of its statutes or corresponding regulations. More specifically, it imposes liability for false, material misstatement in applications, reports, documents, and registration statements. Individuals face up to a 25-year sentence and business read more »

Securities Enforcement Remedies Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
48. What is liability pursuant to the “Securities Enforcement Remedies Act”? The Securities Enforcement Remedies Act provides for additional civil liability for defendants found to have violated the securities laws. A judge may impose fines of up to $500,000 per institution and $100,000 per individual. This can also lead to read more »

Liability Under Section 18 of 1934 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
47. What is liability under “Section 18” of the 1934 Act? Section 18 of the ’34 imposes liability on any person “who shall make or cause to be made any false and misleading statement of material fact in any application, report, or document filed under the act”. Section 18 is read more »

Insider Trading Under Section 16 of 1934 Act

Wednesday, January 14th, 2015 | Category: All Posts
46. What is liability under “Section 16” of the 1934 Act? Section 16 of the ’34 Act governs the sale or transfer of securities by “insiders” of the corporation. An insider is an officer, director, or large shareholder (holding 10% or more of outstanding securities). Insiders must generally register with read more »

Insider Trading Under Section 14 of the 1934 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
45. What is “insider trading” under Section 14 of the 1934 Act? Rule 10(b)(5) is not the only securities law to target trading of securities by individuals with inside information. Rule 14(e)(3) is an insider tradition provision that applies specifically to corporate buyouts or takeovers. This provision prohibits anyone from read more »

Damages Available in Rule 10b5 Action

Wednesday, January 14th, 2015 | Category: All Posts,Legal
44. What damages are available to a plaintiff under Section 10(b) and Rule 10(b)(5)? While both the SEC and a private plaintiff may enforce the antifraud provisions of Section 10 and Rule 10(b)(5), only purchasers or sellers of securities may bring a private action for damages under Rule 10(b)(5). A read more »

Liability for Insider Trading Under Rule 10b5

Wednesday, January 14th, 2015 | Category: All Posts,Legal
43. What is “insider trading” under Rule 10(b)(5)? Insider trading is the sale or purchase of securities by individuals privy to non-public, material information of a firm based upon her special relationship with the firm. Generally, anyone who has material, non-public information must either disclose that information prior to trading read more »

Liability Under Section 10 and Rule 10b5

Wednesday, January 14th, 2015 | Category: All Posts,Legal
42. What is liability under “Section 10(b)” and “Rule 10(b)(5)” of the 1934 Act? Section 10(b) prohibits fraud in connection with the purchase and sale of any security. This provision applies whether or not the security is registered under the ’34 Act. The SEC adopted Rule 10(b)(5) to implement section read more »

Reporting and Disclosure Requirements Under 1934 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
41. What disclosures are required of registered companies under the ’34 Act? A reporting company must make routine disclosures to the public by filing reports with the SEC. The information required to be disclosed is substantially as follows: •    Reporting Company Initial Statement – Similar to the registration statement required read more »

Requirement to Register Securities Under 1934 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
40. When must a company register with the Securities Exchange Commission pursuant to the ’34 Act? A company issuing securities must either register or perfect and exemption from registration. There are, however, other situations that subject a company to SEC public reporting requirements. The company becomes known as a “reporting read more »

Securities Exchange Act of 1934

Wednesday, January 14th, 2015 | Category: All Posts,Legal
THE SECURITIES EXCHANGE ACT OF 1934 Securities Exchange Act of 1934 (’34 Act) regulates transfers of securities after the initial sale. Basically, it picks up where the ’33 Act leaves off. More specifically, it deals with regulation of securities exchanges, brokers, and dealers in securities. It also created the Securities read more »

Criminal Liability Under 1933 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
39. What is the potential criminal liability for violations of ’33 Act? Section 24 of the ’33 Act allows the Department of Justice (DOJ) to bring a criminal action against anyone who knowingly and willfully violates the ’33 Act. This normally only arises in situations where an issuer commits fraud read more »

Liability Under Section 17 of the 1933 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
38. What is liability under “Section 17” of the ’33 Act? Section 17 of the ’33 Act is an anti-fraud provision applicable to the initial sale or issuance of securities. It makes it illegal to “employ any device, scheme, or artifice to defraud … obtain money or property … engage read more »

Defenses in Section 11 and 12 Securities Actions

Wednesday, January 14th, 2015 | Category: All Posts,Legal
37. What defenses exist for issuers with potential liability under Sections 11 and 12 of the 33’ Act? An issuer subject to claims by purchasers of securities under Sections 11 and 12 of the 33’ Act has several available defenses that may relieve her of civil liability. These defenses are read more »

Civil Liability Under Section 12 of the 1933 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
36. What is civil liability under “Section 12” of the ’33 Act? Section 12 of the ’33 Act provides for civil liability for issuers of securities in two situations. •    Section 12(a)(1) – This provision provides a civil cause of action for purchasers of securities against issuers who sell securities read more »

Civil Liability Under Section 11 of the 1933 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
35. What is civil liability under “Section 11” of the ’33 Act? Sections 11(a) and (b) of the ’33 Act provide for strict liability (tort liability) for issuers who make material misstatements or omissions in the issuance of securities. This provision primarily applies to omissions and errors in disclosure pursuant read more »

Liability Under the Securities Act of 1933

Wednesday, January 14th, 2015 | Category: All Posts,Legal
LIABILITY UNDER THE SECURITIES ACT OF 1933 The 1933 Act provides for both criminal and civil liability for individuals who violate its provisions in the issuance of securities. Civil liability generally arises when a purchaser of securities sues the issuer (or its agent) for failure to comply with the registration read more »

Crowdfunding and Securities Laws

Wednesday, January 14th, 2015 | Category: All Posts,Legal
34. What is “crowdfunding” and how is it affected by securities registration laws? The edition of Section 4(a)(6) to the ’33 Act introduced equity crowdfunding as a viable option for seeking investors in a new business. Crowdfunding is a sort of mini-public offering that allows the general public to purchase read more »

Result of Failure to Comply with Securities Registration

Wednesday, January 14th, 2015 | Category: All Posts,Legal
33. What is the effect of failing to register an offering under Section 5 and failing to perfect an exemption to the registration requirement? Violating Section 5 of the ’33 Act by failing to register an issuance or failing to carry out an issuance in accordance with an applicable exemption read more »

Regulation D Form D Filing Requirement

Wednesday, January 14th, 2015 | Category: All Posts,Legal
32. What is the requirement to file “Form D”? To claim an exemption from registering a securities issuance, the issuer must provide notice to the SEC of the issuance and claimed exemption. The entrepreneur provides notice by filing Form D with the SEC. Form D is currently filed in electronic read more »

Disclosure Requirements of Regulation D

Wednesday, January 14th, 2015 | Category: All Posts,Legal
31. What are the general information disclosure requirements for companies seeking an exemption from registration? The perfection of an exemption does not completely relieve an issuer’s disclosure requirements. The disclosure document that is generally used by businesses perfecting a registration exemption is the “private placement memorandum” (PPM). The issuer must read more »

Restricted Securities and Rule 144

Wednesday, January 14th, 2015 | Category: All Posts,Legal
30. What is a “Rule 502(d)” and “Rule 144 Safe Harbor”? Rule 502(d) requires that issuers of securities pursuant to an exemption under Regulation D take the following three steps to make certain the shares are not resold during the restricted period: •    reasonable inquiry to determine if each purchaser read more »

Rule 506c Securities Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
29. What is a “Rule 506” exemption? Rule 506 of Regulation D allows for two exemptions of securities issuances. The statutory authority for a Rule 506 is pursuant to Section 4(a)(2) of the ’33 Act. Rule 506 exemptions are the most commonly employed exemptions to securities registration. Rule 506(c) – read more »

Rule 506b Securities Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
29. What is a “Rule 506” exemption? Rule 506 of Regulation D allows for two exemptions of securities issuances. The statutory authority for a Rule 506 is pursuant to Section 4(a)(2) of the ’33 Act. Rule 506 exemptions are the most commonly employed exemptions to securities registration. Rule 506(b) Safe read more »

Rule 505 Securities Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
28. What is a Rule 505 “small offerings” exemption? Rule 505 of Regulation D provides a transactional exemption from registration of a securities issuance. •    Issuer Protections – The exemption is generally available to all types of issuers (individuals, non-corporate businesses, corporations, as well as those reporting under the ’34 read more »

Rule 504 Securities Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
27. What is a Rule 504 “small offerings exemption”? Rule 504 is a transactional exemption from registration under Regulation D for small securities offerings. The statutory authority for the rule is pursuant to Section 3(b) of the ’33 Act. The general requirements and limitations on the exemption are as follows: read more »

Regulation D Securities Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
26. What are “Regulation D exemptions”? Regulation D is the most commonly used set of exemptions for private placement. It consists of Rules 501-508 of the ’33 Act. In addition to several statutory exemptions from registration, the SEC adopted Regulation D to provide “safe harbors” for issuers of securities. These read more »

Regulation A Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
25. What is a “Regulation A” exemption? Regulation A is a “conditional small issues” exemption from registration available for issuances that meet certain characteristics. Like Section 3(11), Regulation A provides for an exemption of the actual securities issued under the exemption. As such, the securities are not restricted from later read more »

What is a Section 4a5 Securities Registration Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
24. What is a “Section 4” exemption from registration under the ’33 Act? Section 4 provides for two statutory exemptions from registration of securities by an issuer. The exemptions available under Section 4 of the ’33 Act provide for transactional exemptions for the securities, rather than a blanket exemption for read more »

What is a Section 4 Securities Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
24. What is a “Section 4” exemption from registration under the ’33 Act? Section 4 provides for two statutory exemptions from registration of securities by an issuer. The exemptions available under Section 4 of the ’33 Act provide for transactional exemptions for the securities, rather than a blanket exemption for read more »

Rule 147 and Section 3 Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
23. What is “Rule 147” and how does it relate to a Section 3 exemption? Rule 147 of the ’33 Act is a safe harbor for section 3(a)(11). It lays out the strict requirements that the issuer must meet to remain within the confines of the statutory exemption. To qualify read more »

Securities Registration Exemption – Section 3b

Wednesday, January 14th, 2015 | Category: All Posts,Legal
What is a Section 3(b) Registration Exemption? •    Section 3(b)(1) Exemption – Section 3(b)(1) of the ’33 Act is an exemption from registration of securities. It gives the SEC authority to define the types of exempt transactions where the value of securities issued does not exceed $5 million (“small issues” read more »

What is a Section 3A Securities Registration Exemption

Wednesday, January 14th, 2015 | Category: All Posts,Legal
22. What is a “Section 3 exemption” from registration under the ’33 Act? Section 3(a) Exemption – Section 3(a)(11) is an “intrastate offering exemption” designed to allow businesses to seek local funding. The issuer may offer securities for sale to residents of the state in which the business primarily does read more »

What are Restricted Securities

Wednesday, January 14th, 2015 | Category: All Posts,Legal
21. What are “restricted securities”? Restricted securities, as the name implies, are subject to restrictions on when they can be sold or transferred following their issuance. Rule 144 of the ’33 Act lays out the rules for restricted securities. •    Holder Restrictions – Restricted securities in public companies are those read more »

Exempt Securities and Exempt Transactions

Wednesday, January 14th, 2015 | Category: All Posts,Legal
20. What are “exempt securities” and “exempt transactions”? Certain types of securities and certain transactions are deemed by the SEC to be exempt from registration requirements. •    Exempt Security – Common types of exempt securities are government securities, bank securities, high-quality debt instruments, non-profit securities, and insurance contracts. Most important read more »

Rules Governing Disclosure during Registration Process

Wednesday, January 14th, 2015 | Category: All Posts,Legal
19. What laws govern the mechanics of disclosure of information in a securities offering? Regulation S-K is an SEC promulgated regulation that applies to new issuances under the ’33 Act and subsequent sale or transfer of securities under the ’34 Act. This regulates the specific types of information that an read more »

Types of Information Disclosed in Securities Issuance

Wednesday, January 14th, 2015 | Category: All Posts,Legal
18. What type of information must an issuer disclose? Securities laws intend to protect individuals from financial loss due to a lack of understanding of the risk associated with an investment or intentional fraudulent activity by an issuer. As such, the SEC requires that anyone offering to sell securities disclose read more »

What is an Emerging Growth Company

Wednesday, January 14th, 2015 | Category: All Posts,Legal
17. What is an “Emerging Growth Company” and why is it important? An emerging growth company (EGC) is any company that meets the following requirements: •    the company has less that $1billion or more of total gross revenue in a consecutive 12-month period; •    is within 5 years of its read more »

Securities Issuance Post-filing Waiting Period

Wednesday, January 14th, 2015 | Category: All Posts,Legal
15. What are the limitations on an issuer during the “Post-Filing Waiting Period”? During the post-registration, waiting period, special rules apply to the general dissemination of information about the issuance. Generally, oral discussions or offers to buy the securities are unregulated. This allows investment banks to carry on a “road read more »

Securities Issuance Prefiling Period

Wednesday, January 14th, 2015 | Category: All Posts,Legal
14. What is an issuer allowed to do during the “Pre-Filing Period” (and the exceptions)? During the pre-filing period, no offers to sell or offers to buy securities are permitted. There is a limited exception to this rule under SEC Rule 135, which allows for the announcement of an upcoming read more »

Classification of Issuance of Securities

Wednesday, January 14th, 2015 | Category: All Posts,Legal
13. How are issuers of securities classified for purposes of the registration and offering process? The rules applicable to an issuing company during the above time periods depend upon the issuer’s classification. The classifications are as follows: •    Non-reporting Issuer – This refers to a company that is not subject read more »

Limitations During Securities Issuance Process

Wednesday, January 14th, 2015 | Category: All Posts,Legal
12. What is an issuer allowed to do during each stage of the registration process? A company offering its shares for sales to public for the first time (an initial public offerings) must register with the SEC or perfect an exemption from registration. If the company must register, the ability read more »

Disclosure Documents in a Securities Issuance

Wednesday, January 14th, 2015 | Category: All Posts,Legal
  11. What are the primary disclosure documents required in a offer to sell securities? The ’33 Act requires that an issuer of securities register with the SEC by filing a registration statement prior to any offer or sale of securities. Further, the issuer (or individual offering to sell securities) read more »

Who is Regulated in a Securities Issuance

Wednesday, January 14th, 2015 | Category: All Posts,Legal
10. Who are the parties regulated in an offer to sell securities? The ’33 Act regulates offers to sell securities by a number of individuals, including the issuer, underwriter, controlling party, or sales representative. The “issuer” is the individual or business organization offering a security for sale to the public. read more »

What is an Offer to Sell Securities

Wednesday, January 14th, 2015 | Category: All Posts,Legal
9. What is an “offer” to sell securities? The ’33 Act specifically regulates any offer to sell securities. The term “offer” is defined very broadly under the ’33 Act as any attempt to solicit interest in buying shares. The definition of an offer to sell securities goes far beyond actually read more »

Securities Act of 1933

Wednesday, January 14th, 2015 | Category: All Posts,Legal
THE SECURITIES ACT OF 1933 The ’33 Act is a federal disclosure law covering the initial sale of securities to the public. Specifically, the ’33 Act makes it illegal to use the mail or any other means of interstate communication or transportation to sell securities without disclosing certain financial information read more »

What is a Direct Public Offering

Wednesday, January 14th, 2015 | Category: All Posts,Legal
  8. What is a “direct public offering”? A direct public offering is the process by which a company offers its shares for sale directly to the public without employing the services of an underwriter. The underwriter has the ability to reach out to large institutional investors and guarantee the read more »

What is an Initial Public Offering

Wednesday, January 14th, 2015 | Category: All Posts,Legal
7. What is an “initial public offering”? An initial public offering is the process by which a company first sells an equity interest in the company to the public at large. The primary purpose of the IPO is to generate operating capital for the company. Equity shares in a company read more »

What is the Securities and Exchange Commission

Wednesday, January 14th, 2015 | Category: All Posts,Legal
6. What is the “Securities and Exchange Commission” (SEC)? The Securities and Exchange Commission (SEC) is a semi-independent, administrative agency created in 1934 (as part of the ’34 Act) to regulate the sale or exchange of securities. The commissioners are appointed by the President under the advisement of Congress. The read more »

Regulatory Goals of the Security Laws

Wednesday, January 14th, 2015 | Category: All Posts,Legal
5. What are the regulatory goals of security laws? The regulatory goals or purpose of the securities laws include: •    preventing manipulation of the securities market; •    full disclosure of “material information” to stakeholders; •    preventing fraud; and •    leveling the playing field between insiders of a company and investors. read more »

Major Federal Securities Laws

Wednesday, January 14th, 2015 | Category: All Posts,Legal
4. What are the primary security laws? Securities are subject to federal and state regulation. State securities laws are known as “Blue Sky laws” and are discussed at the end of this chapter. The two primary federal laws governing the trade or sale of securities are the Securities Act of read more »

What is an Investment Contract under Securities Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
3. What qualifies as an “investment contract”? The broadest category of a business interest constituting a security is an “investment contract”. Courts have developed a number of tests to determine what constitutes an investment contract. The most influential is the “Howey test”. The elements for determining whether a business interest read more »

What is a Security?

Wednesday, January 14th, 2015 | Category: All Posts,Legal
2. What is a “security”? Most people think of a security as simply stock or other ownership units of a business entity; however, the statutory definition of a security is far more extensive. The term “security” means any, “note, stock, treasury stock, bond, debenture, certificate of interest or participation in read more »

What are Securities Laws

Wednesday, January 14th, 2015 | Category: All Posts,Legal
1. What are “securities laws”? Securities laws are the federal and state statutes and regulations that control the sale or transfer of rights or ownership interests in a business entity (securities). Specifically, securities laws purport to protect the general public from deceptive practices in the sale or trade of securities. read more »

Securities Law (Intro)

Wednesday, January 14th, 2015 | Category: All Posts,Legal
Overview of Securities Law Securities is a broad term that basically refers to any form of ownership or beneficial interest in a business entity. Securities law concerns the sale or transfer of these business interests. This chapter introduces the security and the catch-all provision for “investment contracts” as securities. It read more »

Alignment of Benefits and Corporate Governance Issues

Tuesday, January 13th, 2015 | Category: All Posts,Legal
37. How does the alignment of benefits and interests cause corporate governance issues? Officers, directors, and shareholders often have competing interests as stakeholders of the corporation. Examples of such conflicts are as follows: •    Officer-Directors – The board of directors is charged with hiring the chief executive officer (and potentially read more »

Hostile Takeover Defenses White Knight and Pac Man

Tuesday, January 13th, 2015 | Category: All Posts,Legal
Hostile Takeover Defense – White Knight & Pac-Man Defenses ⁃    Alternative Acquisition Defenses – In some cases, a corporation may seek to acquire or be acquired in an alternative arrangement that thwarts the acquirer’s efforts. ⁃    White Knight Defense – In some cases the board may go so far as read more »

Hostile Takeover Defenses Asset or Liability Tactics

Tuesday, January 13th, 2015 | Category: All Posts,Legal
Defense to Hostile Takeover – Asset or Liability Tactics ⁃    Legal Lockups – The corporation may be able to halt or delay the acquisition by making it less lucrative to the acquirer or making it illegal under existing law. ⁃    Asset Restructuring – The corporation may be able to acquire read more »

Hostile Takeover Defenses Delay Tactics

Tuesday, January 13th, 2015 | Category: All Posts,Legal
Buying Off Acquirer Often the corporation will attempt to provide benefits to the acquirer that will incentivize it to give up its efforts. These efforts are generally not in the best interest of existing shareholders and can lead to litigation. ⁃    Target Share Repurchase Plans (Greenmail) – In some cases read more »

Hostile Takeover Defense Poison Pill

Tuesday, January 13th, 2015 | Category: All Posts,Legal
Poison Pills These provisions have the objective of raising the cost of acquisition to the acquirer in hopes of making the acquisition prohibitively expensive. ⁃    Preferred Share Issuances – The board may approve a preferred class of shares that grant extensive rights to existing shareholders. The preferred shareholder may generally read more »

Hostile Takeover Defense Shark Repellant

Tuesday, January 13th, 2015 | Category: All Posts,Legal
 Anti-takeover Measures  When an acquirer attempts a hostile takeover, boards of directors commonly institute measures to thwart the acquirer’s attempts to gain control of the corporation. Some common measures employed are as follows: ⁃    Shark Repellants – These provisions strengthen the board and make it increasingly difficult for the acquirer read more »

What is a Hostile Takeover

Tuesday, January 13th, 2015 | Category: All Posts,Legal
36. What is a “hostile takeover” and what effect does it have upon corporate governance? A hostile takeover is where a third-party acquirer seeks to purchase a controlling number of outstanding shares without the endorsement or approval of the target company’s board of directors. Prospective shareholders can carry out their read more »

Power Struggles and Corporate Governance Issues

Tuesday, January 13th, 2015 | Category: All Posts,Legal
35. How does competition for authority within the corporation give rise to issues in corporate governance? The corporate structure is designed to establish limited authority in shareholders, directors, and officers. While the general responsibilities of each are clearly established, the strength of influence on decision making is often distorted by read more »

Decision Making and Corporate Governance Issues

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  34. What corporate decision-making procedures give rise to issues in corporate governance? The structure and process for decision making within the corporation can lead to conflicts between officers and directors and shareholders. Below are common decisions or processes that give rise to conflict: •    Corporate Approvals – Certain approval read more »

Lack of Information and Corporate Governance Issues

Tuesday, January 13th, 2015 | Category: All Posts,Legal
33. How does shareholder access to information give rise to issues in corporate governance? Shareholders own the corporation and control the election of directors. While this structure should effectively check the decision making and actions of directors, the lack of shareholder information about the actions and decisions of directors prevents read more »

Corporate Governance and Ethics

Tuesday, January 13th, 2015 | Category: All Posts,Legal
31. What is the role of ethics within corporate governance? Corporate codes of ethics are internal measures aimed at ensuring fair and honest conduct by members of the corporation. The corporate law objective to promote openness of information is echoed in codes of ethics. The main problems with codes of read more »

Corporate Governance and Proxy Advisory Firms

Tuesday, January 13th, 2015 | Category: All Posts,Legal
30. What are “proxy advisory firms” and what is their effect on corporate governance? Recent changes to corporate governance laws allow shareholders increased ability to add information to corporate proxies. As a result, proxy advisory firms have assumed an important role in the shareholder proxy solicitation and notification process. These read more »

Corporate Governance and Industry Standards

Tuesday, January 13th, 2015 | Category: All Posts,Legal
29. What industry organizations place standards on corporate governance?     •    Public securities exchanges have extensive governance requirements for companies listing securities for sale with the exchange. Perhaps the most known US exchanges are the New York Stock Exchange (“NYSE”) and NASDAQ Stock Market (“NASDAQ”). Common exchange provisions require: ⁃   read more »

Corporate Governance and the Dodd Frank Act

Tuesday, January 13th, 2015 | Category: All Posts,Legal
28. What is the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (Dodd-Frank)? Dodd-Frank was passed in response to the financial downturn beginning in 2007. While Dodd-Frank imposed extensive controls on banks and other lending institutions, it also prescribed corporate governance procedures designed to protect shareholder interests. Notable provisions of read more »

Corporate Governance and the Sarbanes-Oxley Act (SOX)

Tuesday, January 13th, 2015 | Category: All Posts,Legal
27. What is the “Sarbanes-Oxley Act”? The Sarbanes-Oxely Act (SOX) is the primary federal law governing corporate governance and accountability across multiple aspects of corporate business practice. SOX specifically regulates markets, brokers, dealers, accounting and auditing, on-going government and shareholder disclosure by reporting companies, insider trading, anti-fraud, proxy regulation and read more »

Corporate Governance and the Foreign Corrupt Practices Act

Tuesday, January 13th, 2015 | Category: All Posts,Legal
26. What is the “Foreign Corrupt Practices Act” (FCPA) and how does it affect corporate governance? The Foreign Corrupt Practices Act (FCPA) places limitations on the ability of the corporation to pay incentives or bribes to foreign governments and corporate officials to secure business advantages.The regulations place specific requirements on read more »

Corporate Governance and Federal Securities Laws

Tuesday, January 13th, 2015 | Category: All Posts,Legal
25. What is the role of “securities laws” in corporate governance? Federal securities laws are generally concerned with corporate compliance. The primary federal securities laws are the Securities Act of 1933 (’33 Act) and the Securities Act of 1934 (’34 Act). State law also governs the sale or exchange of read more »

State Law and Corporate Governance

Tuesday, January 13th, 2015 | Category: All Posts,Legal
24. What is the role of state law in corporate governance? State corporate law is the primary law governing corporate governance and operations. Each state passes its own statutory corporate laws and develops its own common law surrounding those statutes. Shareholders seeking to bring actions to enforce their rights must read more »

State and Federal Corporate Governance Laws

Tuesday, January 13th, 2015 | Category: All Posts,Legal
23. What state and federal laws primarily contribute to corporate governance? Regulation of corporate governance practices is a mixture of state and federal law and organizational requirements. Below is a list of the primary state and federal laws and stock exchange rules contributing to corporate governance: •    state-specific corporate laws read more »

Standards Governing Actions of Corporate Officers

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  22. What standards govern the actions of corporate managers? Like the corporate directors, officers of the corporation owe fiduciary duties to the corporation. Officers must demonstrate loyalty and care in carrying out their responsibilities. The standard of care that an officer must observe in carrying out her duties varies read more »

Role of Managers of the Corporation

Tuesday, January 13th, 2015 | Category: All Posts,Legal
21. What is the role “managers” in the corporation? Managers control the daily operations of the corporation. The senior managers are the officers of the corporation. The most senior positions are often directly chosen by the board of directors. The board then defers to the judgment of these officers with read more »

Director and Officer Liability Insurance

Tuesday, January 13th, 2015 | Category: All Posts,Legal
20. What other protections exist for directors acting in their official capacity? Directors (and officers) of corporations often have a layer of protection from personal liability beyond the business judgment rule. Many corporations purchase “director and officer insurance” (D&O insurance) that provides the corporation (and possibly the director or officer) read more »

What is the Business Judgment Rule

Tuesday, January 13th, 2015 | Category: All Posts,Legal
19. What is the “business judgment rule”? The business judgment rule is a principle that applies to officers and directors acting within the scope of their positions. Directors of a corporation have a fiduciary duty to act in the best interest of their stockholders. This includes exercising due care and read more »

Standards Governing Actions of Corporate Directors

Tuesday, January 13th, 2015 | Category: All Posts,Legal
18. What standards govern the actions and decisions of the board of directors? Aside from requirements stated in the articles of incorporation, bylaws, and detailed governance provisions laid out in the previously-referenced laws, boards of directors owe fiduciary duties to the corporation. Fiduciary duties include a duty to act in read more »

Composition of Board of Directors

Tuesday, January 13th, 2015 | Category: All Posts,Legal
17. What is the composition of the “board of directors”? The size of the board and the process for electing directors are laid out in either the articles of incorporation or the bylaws. There are generally few requirements in these governing documents with regard to who can be a director read more »

Role of Directors in a Corporation

Tuesday, January 13th, 2015 | Category: All Posts,Legal
16. What is the role of “directors” of the corporation? Corporate governance procedures under state law and the Revised Model Business Corporation Act regulate the actions of boards of directors. The Organization for Economic Cooperation and Development, Principles of Corporate Governance (2004) describe the responsibilities of the board; some of read more »

Activist Shareholders and Institutional Investors

Tuesday, January 13th, 2015 | Category: All Posts,Legal
15. What is “shareholder activism” and what is the significance of “institutions as shareholders”? Shareholder activism refers to the situation where large shareholders of a company exert influence or control over the actions of the directors or officers of the corporation. Activist shareholders are generally concerned with improving returns on read more »

Corporate Proxies and Shareholder Votes

Tuesday, January 13th, 2015 | Category: All Posts,Legal
14. What are corporate vote “proxies” and how are they used? Shareholders may vote their shares through a “written consent” or by casting their vote at a shareholder meeting. Written consents avoid the need to call a meeting, but any matter voted upon must receive unanimous written consent to be read more »

Shareholder Derivative Action Process

Tuesday, January 13th, 2015 | Category: All Posts,Legal
13. What is the process for shareholders bringing a “derivative action”? A derivative action is a lawsuit against officers or directors brought by shareholders on behalf of the corporation. That is, the shareholders act as representative plaintiff for the corporation and sue the officers or directors for their actions resulting read more »

Shareholder Derivative Actions

Tuesday, January 13th, 2015 | Category: All Posts,Legal
12. How can shareholders enforce their rights? Shareholders may generally enforce their rights against the corporation (or its officers and directors) in one of two ways. •    Direct Actions – A shareholder may directly sue the corporation, an officer, or director if one of these individuals takes actions that result read more »

Shareholder Personal Liability for Corporate Obligations

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  11. To what extent are shareholders of the corporation personally liable for obligations of the corporation? Generally, corporate shareholders are not liable for the debts or obligations of the corporation, including legal liability for torts or contract actions. Under certain circumstances, however, a court will disregard the corporate protections read more »

Fiduciary Duties of Corporate Shareholders

Tuesday, January 13th, 2015 | Category: All Posts,Legal
10. What are the “fiduciary duties” owed by shareholders of the corporation? Generally, shareholders of a corporation do not owe fiduciary duties to other shareholders. This situation may change in closely-held corporations or in corporations where shareholders also serve as officers or director. State law varies as to the extent read more »

Characteristics of Corporate Ownership Interests

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  9. What are the many variations in characteristics of the “ownership structure” of the corporations? At the time of formation, a corporation authorizes shares to issue to shareholders in exchange for capital. •    Promoters and Stock Subscription Agreements – Often the “promoters” of the corporation will seek promises from read more »

Role of Shareholders of the Corporation

Tuesday, January 13th, 2015 | Category: All Posts,Legal
8. What is the role of “shareholders” of the corporation? Shareholders are the owners of the corporation. They have ownership rights in the shares of corporate stock. The role of the shareholder in the corporation is limited, however, as they have neither the right nor the obligation to manage the read more »

Stakeholder Theory of Corporate Governance

Tuesday, January 13th, 2015 | Category: All Posts,Legal
7. What is the “stakeholder theory” of corporate governance? The stakeholder theory of corporate governance focuses on the effect of corporate activity on all identifiable stakeholders of the corporation. This theory posits that corporate managers (officers and directors) should take into consideration the interests of each stakeholder in its governance read more »

Agency Theory and Stakeholder Theory

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  6. What is “agency theory” and why is it relevant for the business entity? Agency theory posits that corporations act as agents of its shareholders. That is, shareholders invest in corporate ownership and thereby entrust their resources to the management of the directors and officers of the corporation. In read more »

Role and Purpose of Corporate Entity Form

Tuesday, January 13th, 2015 | Category: All Posts,Legal
5. What is the role and purpose of the corporation? The concept of the corporation originated through governmental charter allowing individuals to carry on business collectively. Basically, the charter gave the corporate entity form legal status that was similar to personhood. The concept of the corporation as a legal person read more »

Distinction between Private and Public Company

Tuesday, January 13th, 2015 | Category: All Posts,Legal
4. What is the distinction between a “private company” and “public company”? A private company is a business whose ownership interest is not openly held or traded by the public at large. Company ownership is not sold in the public market. As such, all ownership interests are acquired via personal read more »

Closely Held Corporations

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  3. What is a “closely-held corporation”? A closely-held corporation is owned and controlled by a small group of owners or shareholders. These shareholders hold the shares of stock necessary to elect most or all of the directors. Often, shareholders in a closely-held corporation will elect themselves to serve as read more »

Members of a Corporation

Tuesday, January 13th, 2015 | Category: All Posts,Legal
2. Who are the members of a corporation? The corporation is made up of shareholders, directors, officers, and employees. Shareholders are the owners of the corporation. Directors undertake the high-level management and decision-making for the corporation. Officers (and their subordinate employees) run the daily operations of the corporation. Each member read more »

What is Business Governance

Tuesday, January 13th, 2015 | Category: All Posts,Legal
  1. What is “business governance”? Business governance concerns the actions and controls placed on those charged with managing a business entity. Business governance is the subject of extensive legislation and research, particularly as it pertains to the corporate entity form. Corporate governance generally concerns the internal control of a read more »

Corporate Governance (Intro)

Tuesday, January 13th, 2015 | Category: All Posts,Legal
Overview of Corporate Governance Corporate governance concerns the procedures and mechanisms associated with administering a business entity. Principles of corporate governance include legal and ethical principles controlling the governance procedures and the conduct of those administering the business. This chapter focus on the corporate entity form. It will examine the read more »

What are Requirements for an S Corporation

Monday, January 12th, 2015 | Category: All Posts,Legal
21. What are the requirements to qualify as an “S corporation”? To qualify for S-Corporation status, the business must be a corporation and meet the following requirements: •    Geography – Organized in the United States. •    Citizenship – All shareholders must be US Citizens or resident aliens. •    Number of read more »

C Corporations Explained

Monday, January 12th, 2015 | Category: All Posts,Legal
20. What are the main characteristics of a “corporation”? A corporation is one of the earliest forms of legally recognized business entity. Corporations exist under every state’s laws. The corporation is the most formalized and developed form of business entity. Its structure is developed to optimize the relationship between owners read more »

Limited Liability Companies Explained

Monday, January 12th, 2015 | Category: All Posts,Legal
19. What are the main characteristics of a “limited liability company”? A limited liability company (LLC) is a state recognized entity that blends the characteristics of a GP and a corporation. The LLC has quickly become the most popular business entity form in the United States for small businesses with read more »

What are the characteristics of a Limited Liability Partnership

Monday, January 12th, 2015 | Category: All Posts,Legal
18. What are the main characteristics of a “limited liability partnership”? A limited liability limited partnership (LLP) is a special, hybrid entity recognized in most states. The LLP has characteristics similar to a general partnership (GP), but has limited liability protections similar to that of a limited liability company (LLC). read more »

Limited Partnership Explained

Monday, January 12th, 2015 | Category: All Posts,Legal
17. What are the major characteristics of a “limited partnership”? The limited partnership is a specialized form of partnership. The purpose of the limited partnership is to allow individuals to organize into an entity form that allows the flexibility of a general partnership, while allowing for special rights, duties, and read more »

What are Joint Ventures

Monday, January 12th, 2015 | Category: All Posts,Legal
  16. What is a “joint venture”? Joint ventures operate similarly to general partnerships, but they are specifically formed for a limited purpose or a single project. Unlike a general partnership, the joint venture does not arise by default through the activity of the joint venturers; rather, it requires the read more »

General Partnership Explained

Monday, January 12th, 2015 | Category: All Posts,Legal
15. What are the major characteristics of a “general partnership”? A general partnership is the most basic form of business entity. The primary characteristics of the general partnership are as follows: •    Creation & Maintenance – A general partnership is an agreement between two or more persons to share a read more »

Sole Proprietorships Explained

Monday, January 12th, 2015 | Category: All Posts,Legal
14. What are the major characteristics of a “sole proprietorship”? The sole proprietorship is not a true form of business entity. This is because there is no boundary between the individual entrepreneur and business entity. The entrepreneur and the business activity are one in the same. The sole proprietorship, however, read more »

Self Employment and Payroll Taxes

Monday, January 12th, 2015 | Category: All Posts,Legal
Self-Employment and Payroll Taxes Employers and employees who receive any form of compensation as part of their employment are generally subject to payroll taxes. Payroll taxes were authorized under the Federal Insurance Contribution Act (FICA) and are made up of Social Security and Medicare taxes. Employers must withhold these taxes read more »

Sales and Use Tax

Monday, January 12th, 2015 | Category: All Posts,Legal
Sales Tax Businesses that sell any sort of good are subject to sales and use tax. Sales tax is the amount that the merchant must charge to customers who purchase goods for use (rather than resale). Sales tax is generally a fixed percentage of the value of the good. Other read more »

How are Businesses Taxed

Monday, January 12th, 2015 | Category: All Posts,Legal
  13. How are business entities “taxed”? Understanding basic taxation concepts as they apply to each entity type will give you sufficient background to understand the important tax considerations in a transaction by a given business entity. To understand taxation of business entities, it is important to understand personal taxation read more »

Taxation of Business Entities Explained

Monday, January 12th, 2015 | Category: All Posts
13. How are business entities “taxed”? Understanding basic taxation concepts as they apply to each entity type will give you sufficient background to understand the important tax considerations in a transaction by a given business entity. To understand taxation of business entities, it is important to understand personal taxation as read more »

Compensation within Business Entities

Monday, January 12th, 2015 | Category: All Posts,Legal
12. How is an owner of a business “compensated”? The owners of a corporation may be compensated in two primary manners. The acceptable method of compensation depends upon the type of business entity and the role that the owner plays in the business. Some business entities allow business profits to read more »

Limited Liability Business Entities

Monday, January 12th, 2015 | Category: All Posts,Legal
11. What is the potential “personal liability” of owners of a business entity? Generally, individuals are responsible for their own conduct. The rules of agency may make an individual vicariously responsible for the acts of an agent, if that agent is acting with authority or within the scope of her read more »

What is Control of a Business Entity

Monday, January 12th, 2015 | Category: All Posts,Legal
10. What is “control” over a business entity? This questions concerns who has control over operations or authority to act on behalf of the business. Each business entity type has a default control structure and level of authority vested in individuals in those roles. In many cases the owners and read more »

Ownership Structure of Business Entities

Monday, January 12th, 2015 | Category: All Posts,Legal
9. What is the “ownership structure” for a business entity? Ownership structure concerns the internal organization of a business entity and the rights and duties of the individuals holding a legal or equitable interest in that business. As owner of the business entity, it is important to understand how the read more »

Continuity of Business Entities

Monday, January 12th, 2015 | Category: All Posts,Legal
8. What is “continuity” of a business entity? The continuity of the business entity concerns the effect on the business of a major change in the ownership and organization structure. More specifically, this question addresses what types of conduct by business owners can cause the business to dissolve. Owners of read more »
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