Articles Tagged with Business Law

It’s no secret that years of corporate research indicate that strategic debt can be beneficial for a business. Taking on corporate debt may confer certain tax benefits, and debt can be used to grow earnings and increase the value of the company. Companies may also be able to create higher returns on the borrowed money than the interest rate they are paying on the debt. However, too much debt or a poorly structured or executed financial strategy also negligently impact the marketability and value of a company, including Silicon Valley startups. In addition, both California startups and creditors alike must be mindful of the federal and state laws that apply to debtor/creditor relations.

Commercial Debt and The Fair Debt Collection Practices Act (“FDCPA”) 

The primary federal legislation governing debtor and creditor rights is the FDCPA; however, this legislation typically does not apply to business debts. It may apply to certain late payments of commercial debts. California’s version of the FDCPA, the California Fair Debt Collection Practices Act (“CFDCPA”), while broader than the FDCPA, also typically does not apply to business debts. As such, business debtors aren’t afforded the same protections as consumers but business and their creditors also have more latitude to negotiate and structure the financial arrangement they deem most appropriate. There are few, if any, state and federal laws that regulate business-to-business debt, but the FDCPA can provide some guidance for creditors. For example, creditors should generally not:

So, you’ve decided to incorporate your business in California and form a corporation. This corporate structure provides multiple benefits in California, including certain California tax benefits and legal protections. Every state has different requirements for forming a corporation, and California is no different. Whether you’re incorporating a new business, a small business converting to a corporation, or a multi-national corporation coming to the states, the experienced corporate attorneys at Structure Law Group, LLP can help. Contact our experienced business attorneys at 408-441-7500 or online to schedule your free corporate consultation.

Types of Corporate Entities in California 

There are multiple types of business entities in California. From a sole proprietorship to a general stock corporation, you must choose the entity that’s right for you. Once you elect to form a California corporation, you must choose which type of corporation best suits your business. California recognizes the following types of corporations:

When a shareholder of a corporation believes that he or she has been wronged, the shareholder generally has two options to file a lawsuit.  The shareholder may either bring a direct action or a derivative action, depending on the facts of the case.  In many instances, it is only appropriate for the shareholder to bring one of these two types of actions against the company.   Below is a general explanation of how a corporation is set up, and a discussion of the differences between the two types of shareholder actions.

General Corporate OrganizationFotolia_82979189_Subscription_Monthly_M-225x300

Let’s say that you decide to open a lemonade stand by yourself as a simple business.  In a simple business, you would own the lemonade stand.  If the lemonade stand did well, you would make more money, and if it did badly, you would not.  In addition to being the owner, you would also run the lemonade stand.  You would make day-to-day decisions about the lemonade stand, like how where to order to the lemons from, what equipment to use, and how much customers should pay for the lemonade.  To sum up, you alone would both own and run everything.

The United States Department of Labor recently announced a new rule on white collar overtime exemption regulations. This new rule will affect an estimated 4.2 million white collar workers who will no longer be exempt from Fair Standards Labor Act guidelines and must be paid for overtime work. The new rule will go into effect on December 1, 2016. The employment lawyers at Structure Law Group, LLP are experienced in ensuring that their clients follow all federal and California employment rules and regulations.

Old Rule vs. New RuleFotolia_107679428_Subscription_Monthly_M-300x300

Previously, qualifying employees with an annual salary of more than $23,660 (or $455 per week) were generally exempt from the federal requirement that employees are entitled to overtime if they work over forty hours in one week. Under the new law, the minimum salary threshold for exemption has been raised to $47,476 annually, or $913 per week. This amount will be automatically revised every three years by a formula that takes into account wages across the country.

Public policy in California dictates that businesses should be free to compete against each other in the marketplace. Competition among businesses greatly benefits consumers. At the same time, competition engenders higher quality goods and higher service quality at price points advantageous to the consumer. Toward that end, California’s antitrust law, known as the “Cartwright Act,” prohibits a wide variety of conduct designed to restrain competition in the marketplace.

Fotolia_102582869_Subscription_Monthly_M-300x200
The San Jose business lawyers at Structure Law Group, LLP dedicate their practice to helping business owners grow their company while insulating them from harm.  Unfair competition has a negative effect on consumers and businesses. Business entities should avoid structuring agreements which arguably cause unfair competition. Failure to do so could subject those businesses to lengthy and costly litigation and expose them to potential damages.

According to California business, trusts are unlawful and against public policy. California law defines a trust as a “combination of capital, skills, or acts by two or more persons” to:

A “fraudulent,” or more accurately “voidable” transfer, is a transfer by a party (the “debtor”) of some interest in property with the goal or effect of preventing a creditor or creditors from reaching the transferred interest to satisfy their claim or claims.

Signing contract
What Law Governs “Fraudulent” or “Voidable” Conveyances/Transfers?

Fraudulent conveyances are governed primarily by the Uniform Voidable Transactions Act (UVTA), which replaced the Uniform Fraudulent Transfer Act (UFTA) in California as of January 1, 2016.  The UVTA applies to transfers made or obligations incurred after January 1, 2016.  The UFTA will continue to apply to transfers made or obligations incurred prior to January 1, 2016.  One of the most noticeable changes made in the UVTA is the removal of the word “fraudulent” from the title and body of the act. This change emphasizes that a transfer may be, and often is, voidable even in the absence of any sort of improper intent by the debtor or the transferees.

When you enter a contract with a provider, a client, or another business setting forth the terms of your business deal, you expect the other party to abide by the terms of the contract. If the other party fails to adhere to the terms of your business agreement, it can cost you time and money and can be infuriating, especially if you have performed your obligations under the contract or the breach of contract costs you money or future business. Business owners harmed by another party’s breach of contract often want to immediately march into court and file a lawsuit against the breaching party. However, this is often not the best or most advantageous course of action and often may even constituted a breach of contract by you. If you believe that a contract has been breached, consider promptly consulting with a qualified attorney to evaluate the contract and assess rights and legal options.should-you-take-your-contract-dispute-to-court-300x200

Have Your Attorney Negotiate with the Other Party

Often, a party may not realize that they have violated or are not in compliance with the terms of a contract and may not understand the potential liability they face for having breached or being in non-compliance with the agreement. Many times these issues can be remedied, putting the aggrieved party in a much stronger legal and negotiating position. It may then make sense for your attorney to reach out to the other party to attempt to resolve the dispute prior to commencing a lawsuit.

California law requires employers to take reasonable steps to prevent and address alleged discriminatory and harassing conduct, to provide a government-issued brochure on sexual harassment to all employees, and to conduct sexual harassment prevention trainings if the employer has 50 or more employees.  As of April 1, 2016, the California Department of Fair Employment and Housing (DFEH) has enacted regulations that will require employers to develop written anti-discrimination and harassment policies with certain content requirements.

Under the new regulations, the anti-discrimination/harassment policy must be in writing, and must at a minimum:

Fotolia_64953493_Subscription_Monthly_M-300x200

  1. List all of the protected categories under California’s Fair Employment and Housing Act, which currently include race, creed, color, national origin, age, ancestry, physical and/or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military and/or veteran status,

A business will select a certain business entity at the time of formation for a variety of different reasons. One of the most important reasons businesses elect a certain type of business entity is to protect owners and investors from personal liability. Business entities such as corporations and limited liability companies (LLCs) remain attractive because they protect owners, investors, members, etc. from personal liability. On the other hand, entities such as a sole proprietorship or partnership leave owners open to personal liability for corporate debts.

Fotolia_106582014_Subscription_Monthly_M-300x225
Yet, while limited liability protections exist for corporations and limited liability companies, these protections are not impenetrable. Rather, personal liability may, in some circumstances, run through the company and attach to its owners and investors. This is called “piercing the corporate veil” and it is something of which all businesses, whether starting out or established, should be well aware.

How Can the Corporate Veil be Pierced?

Whether you are starting a company or already have an established business, you will likely need legal advice on many different issues. From business formation to dissolution, an attorney can assist you regarding contracts, employees, mergers, corporate disputes, and much more. Because you want to hire the right attorney for your legal case, the following are five questions you should consider.

What is the lawyer’s business law experience?Fotolia_93396178_Subscription_Monthly_M-300x200

Laws regarding businesses can be extremely complicated and difficult to decipher. Just because an attorney handles cases in court involving individuals does not mean they can skillfully interpret business law and apply the laws to your case. You should ensure that the attorneys at the law firm you hire have extensive experience specifically in business law.

Contact Information