Dilution is a natural part of the corporate investment process, whether one invests in a startup or a public company that is growing. This article will provide a brief introduction to what dilution is, what causes it, and what effect it has on shareholders. What is dilution? Dilution refers to…
Because of the inherent risk of fraudulent activity, the sale of stock is a highly regulated transaction by both state and federal authorities. Unfortunately, many corporate shareholders erroneously believe that privately held corporations do not have to worry about securities regulations because of the limited number of people involved and…
Starting a new company with business partners requires a careful understanding of each partner’s expectations and goals. Lengthy and detailed discussions amongst the prospective partners are common. Unfortunately, these expectations and goals aren’t always adequately memorialized in writing. Too often, partners rely on oral agreements – sometimes with respect to…
Whether or not to sell shares in a privately held corporation is often hotly debated among shareholders. In most cases, the shareholders are seeking a necessary cash infusion either because initial funding has run out before the company could reach its full potential or because the shareholders desire expansion. The…
One of the first decisions new partners face in pursuing a new business venture is what type of business entity to form. Options include forming formal business entities such as a corporation or limited liability company (LLC) which are registered with the State of California or forming a partnership. While…
When forming a California limited liability company (LLC) or corporation, it is important that the owners determine whether any of the ownership interests in the company will be treated as a security. Under federal and state law, if one or more co-owners of a corporation (shareholders) or an LLC (members)…
Continued from “Starting a New Business In California – Hiring Employees”. To conclude our series on starting your own California business, we turn to examining the legal health of your company as it moves forward. In essence, a legal check-up is a business risk assessment. New and growing businesses may…
A limited liability company is a type of legal entity that possesses many of the same characteristics as a standard corporation. A limited liability company, or LLC, is attractive to many business owners because it combines the limited liability feature of a corporation with the flexibility of a partnership. A…
Generally, corporate officers and directors have a fiduciary obligation to the corporation and its shareholders that requires them to act in good faith, use their best judgment, and do their best to promote the corporation’s interests. Collectively, this set of obligations is known as an officer or director’s fiduciary duty…
The professional corporation or the professional limited liability company are similar to their traditional counterparts, but are organized for the purpose of providing professional services, such as medical, legal, or accounting services. Unlike other states however, California does not provide for the formation of a “professional limited liability company”. California…