The High-touch Legal Services® Blog…for Startups!

© 2009-2019 Dana H. Shultz, Attorney at Law

Stakeholders Matter, but Shareholders Still #1

Quora logo for post about corporate stakeholders based on a Quora answer

This post about corporate stakeholders is based largely on my answer to a Quora question. Please see How many companies do you think will adopt the Business Roundtable’s statement that the purpose of a corporation is to take into account ALL stakeholders

The Business Roundtable describes itself as an association of chief executive officers of America’s leading companies. On August 19, 2019, the Roundtable garnered headlines when it announced that it had redefined the purpose of a corporation to promote an economy that serves all Americans. In my opinion, that characterization is not accurate.

Roundtable Statement about Stakeholders

Here is what the relevant portion of the Roundtable’s Statement on the Purpose of a Corporation says:

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Which Personnel Records Can an Employee Inspect?

Image of magnifying glass for post about inspecting personnel records

This post describes California employees’ rights to inspect, and receive copies of, their personnel records.

The relevant statute is California Labor Code Section 1198.5(a), which states:

Every current and former employee, or his or her representative, has the right to inspect and receive a copy of the personnel records that the employer maintains relating to the employee’s performance or to any grievance concerning the employee.

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What is Dissociation?

"Goodbye Friends" sign for post about dissociation from a partnership or LLC

This post explains what dissociation is. This is part of Dana Shultz’s Canonical Questions on the Law® series of questions and answers about legal issues, concepts and terminology.

Definition of Dissociation

Dissociation is the process by which one:

  • Stops being a member of a limited liability company (LLC); or
  • Stops being a partner in a partnership.

Alternatively, this process sometimes is called withdrawal.

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What is Reincorporation?

Image of moving van, symbolizing reincorporationIn How Can I Move My Corporation to Another State?, I explained that there are three ways to move a corporation from one state to another. This post describes one of those ways: Reincorporation.

Three Ways to Move among States

That earlier post described those three ways to move a corporation to another state as follows: (more…)

How to Redomesticate when Your State Won’t Permit It

Great Seal of the State of California for post about how to redomesticate an entity

In How Can I Move My Corporation to Another State?, I discussed redomestication, i.e., how to move a legal entity from one state to another. In this post, I explain how to redomesticate an entity when the existing state’s law prohibits redomestication.

California Corporation Cannot Redomesticate

About a year ago, the CEO of a California corporation contacted me. He was relocating to Pennsylvania, so it made sense to move his corporation there, too. Unfortunately, California does not permit its corporations, in contrast to limited liability companies (LLCs), to redomesticate. (Please see the CA Secretary of State’s Conversion Information page.)

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Protect Your IP when You Hire a Freelancer

Upwork logo for post about freelancer work product and intellectual property

This post explains how to make sure that you own work product and intellectual property (IP) when you use a freelancer service. Most of the following first appeared on Quora. Please see How can I protect my source code and its Intellectual Property Right while working with a very large team of remote freelancers (Upwork and Fiverr etc)? Are freelancing platforms ensuring IP protection?

When you use a freelancing platform, you need to ensure that you have an agreement with each freelancer. And that agreement must assign to you all work product and all intellectual property rights.

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Fictitious Business Name Publication: Which Newspaper?

DBAstore.com logo for post about FBN publication

A fictitious business name (FBN) is California’s term for a DBA (“doing business as”). This post explains the State’s FBN publication requirement and describes how I have selected newspapers for this purpose.

Once you file your FBN statement with the clerk of the applicable county, you have 30 days to arrange for a “newspaper of general circulation” in that county to publish that statement once a week for four weeks. Business and Professions Code Section 17917(a)

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What are Non-voting Shares?

Photo of a ballot for post about non-voting shares

This post explains what non-voting shares are and why a corporation might want to authorize them. This is part of Dana Shultz’s Canonical Questions on the Law® series of questions and answers about legal issues, concepts and terminology.

In this post, I will focus on non-voting common shares. Preferred shares raise issues that go well beyond voting rights. (See What Is Preferred Stock?)

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Should We Authorize Preferred Shares when We Incorporate?

Certificate for preferred shares

This post discusses whether founders should authorize preferred shares, in addition to common shares, when they incorporate.

As I discussed in What is Preferred Stock?, corporations typically issue preferred shares to institutional investors, such as venture capitalists (VCs). The term “preferred” refers to preferences that those shares have relative to common shares.

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How Most States Chose “Shareholder” as Delaware Kept “Stockholder”

Cover page from Delaware Laws 1875 for post about terms shareholder and stockholder“Shareholder” and “stockholder” are synonyms. This post explains how most states came to use the former term in their laws, while Delaware consistently has used the latter.

Before Delaware had a general corporation law, Delaware’s legislature created each corporation. The Constitution of Delaware – 1831 so provided in Article II, Section 17, but made no mention of stockholders (or shareholders).

Following a constitutional amendment, Delaware adopted its first general corporation law in 1875. (See Laws of the State of Delaware, Vol. 15 – Part 1, beginning at page 181.) That law includes a few references to “stockholder”, none to “shareholder”. (more…)