Corporate Insights
Analysis and practical guides on corporate.
174 articles, checklists, and guides on corporate law, written by the attorneys at MC Law. Every piece is general information, not legal advice—for a specific matter, contact the firm.
Resolving Shareholder and Member Disputes in Closely Held Companies
Disputes among the owners of a closely held business follow a recognizable arc, and the outcome usually turns on decisions made in the first sixty days rather than on the merits. This guide covers the whole progression. It starts with the patterns that generate these cases, the early warning signs, and the documents that should be read before anything is said, then explains the crucial distinction between direct and derivative claims and why getting it wrong can end a case. It covers the books and records demand that is almost always the right first move, the substantive claims available including oppression and reasonable expectations doctrines that vary enormously by state, and the remedies courts actually grant. Later sections address valuation and the discount fight that usually determines the money, judicial dissolution and court-ordered buyouts, settlement structures, and how to conduct the dispute without destroying the business that both sides are fighting over.
Startup Formation Legal Checklist: A Practical Guide
A startup is, legally speaking, a stack of documents, and the companies that raise smoothly and exit well are the ones that did the boring formation paperwork correctly from day one. This checklist walks through choosing and forming the entity, completing the organizational housekeeping that makes the company operational, pinning down founder ownership with vesting stock and the unforgiving 30-day Section 83(b) election, assigning the intellectual property the company is built on, and standing up the equity machinery of a cap table, an option plan, and a 409A valuation. Each phase pairs the steps with the governing authority—the DGCL, Sections 83, 409A, and 1202 of the Internal Revenue Code, and the Copyright Act's work-made-for-hire rule—and flags the costly mistakes founders make. It is general information, not legal advice; tax rules and several areas discussed are fast-moving.
Winding Down a Business: Dissolution, Creditors, and Final Filings
Closing a business is a sequence with a required order, and the most expensive mistakes are made by owners who distribute assets before resolving liabilities. Doing it correctly protects the owners and directors from personal liability, cuts off claims after a defined date, and ends the filing obligations that otherwise generate penalties for years. This guide walks the sequence: deciding whether to wind down or pursue an alternative, obtaining the authorizations, planning the wind-down and its cash requirements, meeting the employee obligations that arrive first and carry personal exposure, terminating contracts and leases, running the statutory creditor claims procedure that bars later claims, liquidating assets, filing final tax returns and obtaining clearances, cancelling licenses and registrations, distributing what remains, and filing dissolution in every state where the entity is registered. Throughout, the organizing rule is that liabilities come before distributions, because every personal liability described here flows from money leaving the company too early.
Chapter 11 Reorganization: How a Business Restructures and What Creditors Should Expect
Chapter 11 is not a going-out-of-business sale; it is a court-supervised negotiation in which a company keeps operating while it restructures obligations it cannot pay. This article explains the process from both sides of the table. It walks the filing and the automatic stay, the first-day motions that determine whether the business survives its first month, cash collateral and debtor-in-possession financing, and the treatment of executory contracts and leases under Section 365 that decides whether a counterparty is paid in full or holds a rejection claim worth pennies. It then covers claims administration and the priority waterfall, Section 363 asset sales and credit bidding, and the plan process itself, including disclosure, voting, cramdown, and the absolute priority rule. Sections on avoidance actions, subchapter V for small businesses, and what a creditor should actually do in the first two weeks follow, along with a worked example, an FAQ, and related reading.
Negotiating a Series A Term Sheet: Economics, Control, and the Terms That Matter
A Series A term sheet is two pages of economics and four pages of control, and founders reliably negotiate the wrong ones. Valuation absorbs the attention while the option pool placement, the liquidation preference structure, the protective provisions, and the board composition quietly determine both what the founders keep in an exit and who decides whether the exit happens at all. This guide works through the term sheet in the order it is usually written: the economic terms including the option pool shuffle and how preferences actually distribute proceeds, the control terms including board seats and the veto list, the shareholder terms that govern transfers and future rounds, and the founder-specific provisions that get inserted without discussion. It explains which terms are genuinely market, which are negotiable, and what each is worth.
Regulation D Private Placement Checklist: A Practical Checklist
A private placement exemption is not a form you file; it is a set of conditions you must satisfy before the first offer goes out, and most failures happen in the first week of an offering rather than at closing. This checklist walks the decision that governs everything else, which is whether the offering will use general solicitation, and then the requirements that follow from it: accredited investor status and the verification standard that applies under Rule 506(c), the bad actor inquiry, integration analysis, and the disclosure obligations that exist whether or not a private placement memorandum is required. Later phases cover the closing mechanics, the Form D and state notice filings, transfer restrictions and legends, and the ongoing obligations that continue long after the money arrives. Used before the first conversation with an investor, it prevents the two failures that cannot be cured after the fact: an inadvertent general solicitation and a verification file that was never built.
Business Dissolution and Wind-Down Checklist: A Practical Checklist
Closing a business is a sequence with a required order, and the rule that governs the whole exercise is that liabilities come before distributions. Owners who reverse it acquire personal liability for unlawful distributions, fraudulent transfers, trust fund taxes, and in several states wage claims, and they forfeit the statutory creditor claims procedure that would have barred later claims for the cost of a newspaper notice. This checklist runs the sequence: authorization and the wind-down budget, the employee obligations that arrive first and carry the most personal exposure, contracts and leases and asset liquidation, the known and unknown claims procedures, final tax filings and the clearance certificate that gates the dissolution filing, license cancellations and foreign withdrawals, distributions with documented solvency, and the tail coverage and records retention that outlast the entity. It assumes a solvent wind-down; where the company cannot pay its debts in full, the correct vehicle is an assignment for the benefit of creditors or a bankruptcy, and the analysis changes entirely.
Business Succession Planning Toolkit
Every owner exits, and the only variable is whether the exit is planned. A succession plan has to solve three problems at once that pull against each other: control must pass to someone who can run the business, the estate must have liquidity without selling the business to raise it, and the transfer should minimize transfer tax while preserving the income tax basis step-up where that matters more. This toolkit covers the whole field: the exit options and how to compare them honestly, getting a defensible valuation, designing and funding the buy-sell agreement including what the Supreme Court's decision in Connelly changed, the liquidity tools available to an illiquid estate, the lifetime transfer techniques, the governance and management depth without which nothing else works, and aligning the entity documents with the plan. It closes with the timeline—what to do ten years out, five years out, and today—and with the observation that the buy-sell agreement and the insurance should be current regardless, because the unplanned event has no timeline.
Business Formation and Entity Maintenance Toolkit
Choosing an entity takes an afternoon; living inside one takes years, and the failures that cost real money are almost all maintenance failures rather than formation ones. This toolkit covers both halves. It starts with the decision framework for entity type and state of formation, then walks the formation mechanics that create a functioning company rather than a filed one: governing documents that reflect the deal the founders actually made, equity issued with vesting and the tax elections that follow, and the accounts and registrations that make the entity real. The second half is the part nobody plans for—annual filings, foreign qualification as the business crosses state lines, the records that support limited liability, the buy-sell and deadlock provisions that decide what happens when founders disagree, and the wind-down sequence that protects owners from claims after the business ends.
Sales and Use Tax Nexus After Wayfair: Where a Business Owes Tax and How to Fix Exposure
Sales tax is the liability most likely to appear unannounced in a diligence report and most likely to be personal to the owner. This article explains the modern rules. It begins with what changed when the Supreme Court overruled the physical presence requirement, and how economic nexus thresholds now work state by state, then covers marketplace facilitator laws that shifted collection responsibility for platform sales. It works through the four questions every seller must answer for every transaction: whether nexus exists, whether the item is taxable in that state, where the sale is sourced, and whether an exemption applies with documentation to support it. Later sections address the taxability of software and digital products, drop shipments and the exemption certificate problem they create, and the personal liability that attaches to trust fund taxes. A long section covers remediation, including voluntary disclosure agreements, and what to do when an audit notice arrives, with a worked example, a compliance checklist, and an FAQ.
Breaking a Deadlock in a Two-Owner Company: A Practical Guide
A fifty-fifty company works until it does not, and when it stops working there is no mechanism inside the company to restart it. Every decision requiring a majority fails, the board cannot act, the annual meeting cannot elect directors, and the business keeps operating on inertia while the owners stop speaking. This guide covers what to do when that has already happened and how to prevent it in the first place. It works through the contractual deadlock-breaking devices and their failure modes, the statutory remedies including judicial dissolution, custodians, and provisional directors, the practical mechanics of a negotiated buyout from valuation through the release of personal guaranties, and the drafting that would have avoided the problem. It closes with candid advice about timing and cost.
Corporate Governance for Closely Held Companies: Boards, Minutes, and Decisions That Hold Up
Governance in a closely held company is not about complying with public company rules that do not apply. It is about making decisions in a way that is defensible if challenged, and about creating a record that shows how they were made. This guide covers what a board of a private company should actually do. It explains the fiduciary duties directors and officers owe and the business judgment rule that protects a sound process, then works through the mechanics that produce that protection: meetings and notice, minutes that record reasoning rather than outcomes, written consents, and the delegation of authority. It then addresses the transactions that generate most private company litigation, including interested director dealings, corporate opportunities, and compensation decisions, and the oversight duty that boards increasingly face. Later sections cover shareholder agreements and control arrangements, books and records demands, derivative litigation and special committees, indemnification and insurance, and a practical annual calendar.