Blog – Emerging Companies Insider

https://emergingcompanies.foxrothschild.com/

The Emerging Companies Insider Blog focuses on recent and developing areas of the law affecting startup and emerging growth companies and their investors, including choice of entity, shareholders’ agreements, issuance of equity to employees, preparing for and executing a capital raise, exit strategies and the JOBS Act and its impact on how companies can and should raise capital from investors.

Recent Blog Posts

  • Wait a Minute… Do You Have a Minute Book? Once you have made the decision to incorporate your business, and gone through the formation process, it can feel like your company is ready to take on the world. However, there is one important item that cannot be neglected: the minute book. A minute book is the living official record of a business and contains all of the important documents to reflect the business’ history. Copyright: mexrix / 123RF Stock Photo Maintaining organized records in a minute book is critical for any... More
  • Tribe and Matz Examine Technology and the Supreme Court at Wired Andrew Halbert writes: Copyright: mesutdogan / 123RF Stock Photo In a recent opinion column for Wired, Laurence H. Tribe and Joshua Matz took an interesting look at the Supreme Court’s views on emerging technology. Tribe, a professor of constitutional law at Harvard University, and Matz, a practicing attorney and former law clerk for Justice Kennedy, examined how those views have led to surprising alliances on particular cases that cannot be explained by the more traditional dichotomy of originalists versus those that view... More
  • Changes to Pennsylvania Business Entity Laws Pennsylvania legislation known as Act 170 (the “Act”), which went into effect earlier this week, represents a comprehensive revision to the existing laws of partnerships and limited liability companies.  The Act amends Pennsylvania law on corporations and unincorporated associations and adopts the Uniform Partnership Act, Uniform Limited Partnership Act and Uniform Limited Liability Company Act and is effective in two stages: On February 21, 2017 for all entities that file on or after February 21, 2017; and On April 1, 2017 for... More
  • Boilerplate Isn’t Always Boilerplate Early stage companies are typically urged, and appropriately so, to ensure that their “charter documents,” specifically their certificate of incorporation and bylaws, are consistent with statutory requirements in their jurisdiction of organization, and reflect the short term and identifiable long-term objectives of the founding shareholders.  Many founders will search for “boilerplate” documents on the internet or other public sources, and as their enterprises grow, seek to modify those forms to cover such items as super-majority voting provisions, director removal provisions,... More
  • Amendments Make International Entrepreneur Rule More Startup-Friendly: Rule’s Future Remains Unclear The U.S. Citizenship and Immigration Services recently published the International Entrepreneur Rule (the “Rule”), which finalizes regulations intended to increase and enhance entrepreneurship, innovation and job creation in the U.S.  The Rule becomes effective on July 17, 2017.  In a prior blog, we analyzed the Rule when it was first proposed in August 2016.  Since then, the Rule has been through a period of public comment.  The resulting amendments generally make it easier for foreign entrepreneurs to establish startup companies... More
  • So You’re Looking to Exit – Why Must You Represent and Warrant? The goal of many entrepreneurs is to seek venture capital financing or ultimately sell their company in an “exit” merger or acquisition. In each case, the company’s historical operations come under onerous pressure through the representations and warranties the seller is asked to make, and the related due diligence the seller must produce. To a small business, this can be extremely uncomfortable and/or challenging. To a big business, it may be more comfortable but nonetheless more demanding. So why are they... More
  • What Changes Can We Expect at the FDA Due to the 21st Century Cures Act? Patient-Focused Drug Development Additional information focusing on the patient’s experience while using an investigative drug will be included in 505b submissions.   Input on the experience will be derived from any person, including patients, family members and caregivers of patients, patient advocacy organizations, disease research foundations, researchers, and drug manufacturers. Methodologies to collect such information will be issued in a guidance from the FDA.   Clearly, the FDA will be seeking more input regarding the experience of the patients, other than the manufacturer... More
  • One Step Closer: US House Passes “HALOS Act” Legislation Clarifying VC Pitch Events are not “General Solicitation” On January 10, 2017, the U.S. House of Representatives passed a bill commonly known at the “HALOS Act”, which directs the Securities and Exchange Commission (SEC) to revise Regulation D.  Prior to the proposed amendment, Regulation D exempts certain offerings from SEC registration requirements but prohibits “general solicitation” with respect to such offerings.  The proposed amendment states that the prohibition shall not apply to events with specified kinds of sponsors — including “angel investor groups” unconnected to broker-dealers or investment advisers... More
  • Winners and Losers Under the 21st Century Cures Act This week, the Senate passed an expansive health bill known as the “21st Century Cures Act” after the bill received approval from the House earlier this year.  Due to its far-reaching effects in the healthcare and life science industries, among others, the bill was one of the more lobbied pieces of legislation in recent history.  President Obama is expected to sign the bill into law by the end of the year. Highlights of the bill include significant amounts earmarked for improving... More
  • Accelerating Start-ups by Deferring Taxes A recently passed House bill would permit certain start-up employees to defer taxes on stock options and restricted stock units (RSUs).  The proposed legislation aims to help emerging companies attract and retain talent by offering equity compensation on more attractive terms. Copyright: yupiramos / 123RF Stock Photo Cash-strapped start-ups often grant an ownership stake to employees to compensate for below-market wages.  This strategy also aligns incentives by giving employees a share of the company’s growth. However, current tax law makes such equity compensation... More