Clifton Startup Attorneys & Lawyers

Updated November 18, 2020

What Are Legal Business Entities?

When you were a child, you probably got by with just setting up a lemonade stand and getting right down to business. As an adult, starting a company isn't quite as simple and one of your first decisions will be how to structure your business.  While a C corporation will probably be your best bet if you are forming a high growth, finance intensive start-up, there are seven primary business structures you generally should consider - each has its own advantages and disadvantages.

C Corporation

A

...

Updated October 28, 2020:

What is a Right of First Refusal?

A right of first refusal, also called a ROFR, the first right of refusal, or a last look provision, gives a person or company the opportunity to start a business transaction before anyone else can. It could provide the first chance to buy stocks or real estate at the same price and terms as another offer. If the holder of the right of first refusal declines, the owner of the asset can sell it to whomever they want.

There's even a ROFR in many child custody agreements. It requires that one parent offer the other parent the chance to watch the kids before using a family member or outside child care.

A Right of First Offer: What is it?

A right of first offer or ROFO requires owners to

...

Updated November 19, 2020:

What is an Operating Agreement?

An operating agreement is a written legal agreement among the members of your Limited Liability Company (LLC). The operating agreement explains how your company will be run, the rights and responsibilities of LLC members, the process adding and removing LLC members, and other important operating rules. While LLC operating agreements are not mandatory in all states, it's generally advisable for LLCs to have an operating agreement in place.

LLC operating agreements can be created either at the time of the LLC’s formation or at any time after formation.

Other names for

...

Rule 145: What is it?

Rule 145 is an SEC rule that allows companies to sell certain securities without first having to register the securities with the SEC.  This specifically refers to stocks that an investor has received because of a merger, acquisition, or reclassification.

When Registration Is Required Under Rule 145

In addition to allowing certain types of securities to go unregistered, Rule 145 also requires that the following transactions must be registered if security holders vote on such transactions:

• Reclassification of securities that will replace one security for a different one. 
• A merger, consolidation, or acquisition where the securities of one corporation or company are e

...

Updated June 19, 2020:

What Are SAFE Notes?

SAFE (simple agreement for future equity) notes are a simpler alternative to convertible notes. They were created in 2013 by Y Combinator, a Silicon Valley accelerator, and allow startups to structure seed investments without interest rates or maturity dates. SAFEs are short five-page documents. The valuation caps are the only negotiable detail.

A SAFE note is a convertible security that, like an option or warrant, allows the investor to buy shares in a future priced round. It addresses many of the drawbacks and challenges posed by convertible notes and can be an equitable option for investors and founders. Startups may prefer SAFE notes because, unlike convertible notes, they are not debt and therefore do not accrue inte

...