Since I started practicing law in 1997, the manner in which closings of corporate deals are conducted has been completely transformed. In the old days, a typical closing would be conducted in a conference room in a law office, and the various documents that needed to be executed would be organized in manila file folders arrayed in a scary-looking retractable metal contraption that kept the folders separated. All attorneys and principals would be in the room, except that junior attorneys and paralegals would occasionally go scurrying off to make copies.
Over the New Year, I saw the new Leonardo DiCaprio/Martin Scorsese film, “The Wolf of Wall Street,” which told the apparently mostly-not-embellished true story of boiler room scammer Jordan Belfort. In addition to setting a record for use of the f-word in a film, this movie was the most relevant to what I do for a living since “The Social Network” improbably addressed the issue of dilution of startup founders.
Continuing its implementation of rules mandated by the JOBS Act, the SEC has proposed rules for the expansion of offerings under Regulation A. Here is the SEC’s handy press release and fact sheet. Commentators have dubbed the new rules “Regulation A+” because of the greatly increased maximum offering amount under the new rules (and not as a reference to the average grade at Harvard). As with the recent crowdfunding proposal, these rules are not effective until after the SEC issues final rules following a comment period. [Read more…]
I don’t often get emotional one way or the other about corporate laws, but one requirement that truly irritates me is New York’s “publication” requirement for limited liability companies. LLCs that are formed in New York, or LLCs formed elsewhere that are qualifying to do business in New York, are required to publish an advertisement in the county where the LLC is located for a period of time. Depending on the county, this can be an expensive undertaking, and it exceeds the state filing fees associated with the formation itself. The requirement does not apply to corporations.
Attorneys are often mocked for what seems to outsiders as excessive caution in making definitive statements. A typical legal opinion rendered by a corporate attorney is approximately 10% opinion and 90% caveats, exclusions and limitations. The one caveat I think I have provided to every single one of my clients at one time or another is “but I’m not a tax attorney and am not providing tax advice.” Even though I took courses in basic income tax and corporate tax in law school, this area of the law is uniquely complex, and I’ve always been careful to defer to the experts. My uncle got an LLM degree in tax law and practiced in the areas of tax, corporate, real estate and trusts and estates. That sort of generalization isn’t really possible anymore, as all of those areas are exponentially more complex today, so most corporate lawyers today are like me very reticent about making grand pronouncements about tax matters.