Articles Tagged with “san francisco business attorney”

Governor Brown signed the new Uniform Voidable Transactions Act into law on July 2, 2015. The bill received unanimous support in both the Senate and the Assembly and was recommended by the Commercial Transactions Committee. This law renames and amends the pre-existing Uniform Fraudulent Transfer Act. This new law will impact both debtors and creditors.

What is the Uniform Voidable Transfer Act?

California’s pre-existing Uniform Fraudulent Transfer Act is based in part on the model Uniform Fraudulent Transfer Act, which has been adopted at least in part by various states including Georgia, Idaho, Kentucky, Minnesota, New Mexico, North Carolina, and North Dakota. It establishes the conditions under which a transfer made or obligation incurred by a debtor is fraudulent as to the creditor. It also sets remedies a creditor can obtain with respect to a fraudulent transfer or obligation. One potential remedy is the voiding of the transfer. This new law renames the law the Uniform Voidable Transaction Act. It also adopts certain changes promulgated by the Uniform Law Commission. It specifies a burden of proof in making and defending a claim for relief under this law. It specifies the basis for determining the governing law for a claim for relief under the act. It modifies definitions applicable to the act. It removes a definition of insolvency and adds new definitions including definitions for “record” and “sign.” It replaces the term “fraudulent” with the term “voidable.” These modifications are only applicable if the right of action accrued, the transfer was made, or the obligation was incurred on or after the effective date of the bill. That date is January 1, 2016.

When consulting with startup business owners and entrepreneurs, common issues arise regarding key elements of the business and its structure. These issues can expose the business, and the owners, to unnecessary litigation and other legal expenses. Below are three common mistakes that startup businesses make and how you can avoid them.

Failing to Use and Maintain Proper Employment Documentation

We’ve all heard the stories about businesses getting started in a parent’s garage and suddenly becoming a multi-million dollar success. However, as the business grows, there has to be a protocol in place for hiring new employees and what employment status they have with the business. Unfortunately, many startups encounter problems when they fail to maintain proper employment documentation exposing the founders to lawsuits if an employee feels they get short-changed in terms of pay, benefits, title, equity, etc.

Appeals handled by the Consumer Financial Protection Bureau (CFPB) present issues one should be concerned with whether one works in real estate or business. Back in March of this year CFPB Director Cordray presided over the oral arguments in the first appeal hearing of an administrative action. In the case heard on appeal two companies were alleged to have given and received millions of dollars in payments through a “captive” mortgage reinsurance agreement. The argument was that these payments constituted kickbacks that violated the Real Estate Settlement Procedures Act. The facts of the case itself are not that important for those not involved in the case. Rather, what is important is the way the appeal is handled.

CFPB’s Rules of Practice for Adjudication Proceedings

The rules for these appeals are laid out in the CFPB’s Rules of Practice for Adjudication Proceedings. Specifically the appeals in question are appeals of an administrative law judge’s recommended decision to the CFPB director. A party who wants to appeal a recommendation must go through this process if it wants judicial review even though the recommendation does not become final until after the director approves it. The rules also provide for strict and short timelines in this appeals process. This may seem like a positive aspect as many parties wish the legal process did not typically take so long. However, it is possible that these short turnaround times will ultimately favor the agency over other parties. Other rules also appear to favor the agency fairly heavily. This is mainly because they grant the CFPB director broad discretion in reaching a ruling.

The Consumer Financial Protection Bureau (CFPB) issued its first appellate decision. Because the CFPB supervises banks, credit unions, and financial companies its operations can have an impact on both the corporate and the real estate worlds. This case in particular has broad implications for those affected by the Real Estate Settlement Procedures Act (RESPA).

What is RESPA?

RESPA is a law designed to make sure consumers are provided with certain information about the cost of mortgage settlement and that they are protected from overly high settlement charges that can in some circumstances be considered the result of abusive practices. The law was created because decades ago companies involved with the buying and selling of real estate were engaging in undisclosed kickbacks to one another. This increased the costs of real estate transactions and negatively impacted competition. The law used to be enforced by the Department of Housing and Urban Development, but a few years ago the government transferred the enforcement authority to the CFPB.

The California General Corporation Law governs how notice of stockholder meetings must be given. This information is of vital importance to all California corporations. It is important to note that while email notice is allowed, it is not allowed under all circumstances.

What Does California Law Say About Email Notice?

California law does allow email notice under certain circumstances. Section 601(b) provides that, ¨Notice of a shareholders’ meeting or any report shall be given personally, by electronic transmission by the corporation . . . .¨ This law also says that notice is deemed to have been given when it has been sent through an electronic transmission by the corporation. However, this law is also clear that in order for electronic notice to be good enough, it must also comply with Section 20 of the Corporations code.

When you are forming a business, you have many entities to choose from. One option is a limited partnership. These entities are governed in California by the California Uniform Limited Partnership Act of 2008 (CULPA). However, the law regarding limited partnerships may be about to change, so if you are considering forming one of these entities you should seek out business counseling.

What is a Limited Partnership?

When people think of partnerships they often think of business arrangements where two or more people share equal stakes in a company. A limited partnership is a different kind of partnership. While there will be one or more general partners, there are also one or more limited partners. This type of arrangement is very common amongst law firms, accounting firms, film production companies, and real estate investment projects.

Normally corporate bylaws are drafted during the business formation process. However, sometimes corporations amend their bylaws. The question then becomes one of whether amendments to the corporate bylaws can or should be applied retroactively. When these amendments would impair previously accrued claims, both California and Delaware courts agree that the answer to this question is “no.”

California Court Refuses to Apply Bylaws that would Impair an Accrued Claim Retroactively

A California court has refused to apply bylaws that would impair an accrued claim retroactively. The case is Cobb v. Ironwood Country Club. In this case Ironwood’s board of directors adopted a bylaw that required binding arbitration of disputes. Ironwood did not pass this bylaw until four months after past and current members of the country club had already filed a lawsuit dealing with an alleged breach of an agreement by Ironwood. Ironwood then argued that, because the members had agreed to follow the bylaws, including a provision in the bylaws that allowed their amendment, that the members and former members were bound by the new bylaw that mandated the arbitration. The trial court and the Court of Appeal disagreed with Ironwood’s assessment.

When foreign corporations do business in California they need to comply with California laws governing such corporations. However, California’s law is not the only law that applies to a foreign corporation. Such corporations also have to consider laws in their native states, as a recent case from Delaware demonstrates. This is why it is important for any such business to consult with an experienced business law attorney.

Delaware Rules its Courts Have Authority to Impose Specific Condition on Books and Records Inspection

In United Technologies Corp. v. Treppel, the Delaware Supreme Court held that a Delaware court has the authority to impose a specific condition on a books and records inspection under the Delaware General Corporation Law (DGCL). The condition in question in that case was one that would have said that “any claim, dispute, controversy or causes of action . . . arising out of, relating to, involving or in connection with” the inspection be brought in a Delaware court.

Business owners have many obligations. They have to consider their obligations to customers, to employees, to vendors, and sometimes even to law enforcement. One set of obligations that sometimes gets overlooked, however, is a business’s obligations to the public at large. One such obligation may come in to play when a business is considered a public forum. So the question becomes, when is a California business obligated to allow other members of the community to do things like solicit donations at their business? A recent court decision addressed that very question.

Shopping Center Policy on Solicitation

The Court’s decision was in a case called Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach. The realty group controls the Fig Garden Village shopping center, which is an outdoor shopping center with about sixty retailers. The shopping center has a policy that prohibits the solicitation of donations on shopping center property. Other forms of expressive activity, like collecting signatures for petitions, are allowed but only in a designated “public forum area.” One day, back in 2013, two solicitors for Nu Creation Outreach went to the shopping center and solicited donations for their organization on sidewalk areas adjacent to store entrances within the shopping center. The next day six to eight solicitors from the organization showed up and started soliciting donations. Shopping center representatives explained the policy and asked the solicitors to leave, but they refused. The shopping center then called the police, but the police refused to arrest the solicitors without a court order.

Starting your own business can be daunting. There can be a seemingly endless list of things you have to consider and decisions you have to make. One of those decisions is whether you are going to strike out with your own concept, or whether you are going to enter into a franchise agreement to become a part of a larger business that already has a proven track record. If you go the franchise route, you will have to sign a mostly binding franchise agreement–a sometimes long and sometimes quite complicated document that should be reviewed by an experienced lawyer. I say “mostly binding” because a California court held that one common part of these agreements is not enforceable in California.

Frango Grille USA Inc., v. Pepe’s Franchising Ltd.

The case in which the Court made this decision is Frango Grille USA Inc., v. Pepe’s Franchising Ltd. Pepe’s Franchising is a company from the United Kingdom that grants aspiring business people the right to operate and franchise Pepe’s restaurant. Last year, Pepe’s Franchising entered into such an agreement with Frango Grille which gave Frango Grille the right to operate Pepe’s restaurants in California. Then, this year Frango sent a letter to Pepe’s saying it wanted to end the agreement. Frango also sued Pepe’s in Los Angeles, making allegations that had to do with breaches of franchise law.

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