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Seminole Securities And Business Law Blog

Selecting a legal structure is an important step

Different businesses may be organized in different ways and how business owners elect to structure their enterprises can have major impacts on how those entities sell shares, establish internal leadership and pay taxes. This post will discuss some of the common ways that Florida business owners may choose to structure their new business entities, but readers are reminded that this post is not comprehensive nor does it offer any legal advice.

A business may be set up as a sole proprietorship, which means that a person is fully in charge of how their business is run but also personally liable for the financial failures of their entity. Naming an entity is one of the most important steps in establishing a sole proprietorship.

Cryptocurrency company gets approval to sell securities tokens

The world of cryptocurrency is an emerging financial and technological field that has pushed regulators and lawmakers to keep up with the ever-evolving and ever-growing online economy. For the most part, cryptocurrencies like Bitcoin have been offered as online money, given value by those who recognize it for purchases and online transactions. However, just recently one cryptocurrency company achieved a new status for its product.

Coinbase, a U.S. based entity, announced recently that it has been approved to sell tokenized securities through its cryptocurrency system. The Securities and Exchange Commission and the Financial Industry Regulator Authority approved the sale of the company's securities tokens though the entity will have to seek further approval to allow the sales under its current license.

What every company should include in a non-compete agreement

Losing a valuable employee is always tough for a business owner. You relied on your employee’s expertise, and now you must start over with someone new. If you are lucky, you had the foresight to have your employee sign a non-compete agreement. However, for many small business owners, this might not have been on your radar. Now you are wishing you had taken the time to create one.

Your company may never have used non-compete agreements. Or maybe you are unsure if an agreement you created is legal. Either way, here is some information you should consider including in your next employee’s non-compete agreement.

What characteristics must a financial instrument have to be a security?

Determining whether a financial instrument is to be included within the definition of the term "security" under state and federal law may require a complex analysis. The definition of a security is included in state and federal statutes, but the analysis may not stop there with the mere written words. In fact, a security can take on different forms, from the stocks offered by companies raising capital to the bonds offered by various local and state government entities. Securities include obscure instruments such as whiskey warehouse receipts, as well as common promissory notes.  Determining whether such instruments constitute a "security" may involve the use of judicially-created analysis/tests such as the "Howey test" or the "family resemblance test."

Many small, emerging growth companies utilize transaction exemptions from registration under state and federal law to raise capital for their companies through the issuance of securities.  Structuring securities offerings to comply with these transaction exemptions or otherwise going through the registration process is complex and can involve pitfalls for individuals lacking experience in such matters. Consultation with an experienced securities lawyer can be essential to understanding applicable securities laws and compliance therewith.

Helping you with the beginning of your business

For some, starting a business is a lifelong goal. It can take much time to save up the money to start such an endeavor; however, when the time finally comes to put this dream into motion, there are various legal steps to take to ensure it can go as smoothly as possible. This also helps ensure your rights are protected as well as your business.

When starting a business, it is vital to determine what type of business you want to form. Additionally, those seeking to start a business in Florida and any other state in the nation should take the time to make a business plan. While this might seem daunting and intimidating, it is possible to complete these important and necessary steps with legal assistance.

Structuring a private security placement

If your startup business has progressed to the point where an infusion of capital is required, one means of obtaining investment capital is to offer a private placement of securities. A private placement may involve an offering of stock, limited liability company membership interests or some other type of investment contract constituting an ownership interest in the company or it can be in the form of a debenture, which is corporate debt.

Many entrepreneurs seek to apply the same "can do" spirit to their offerings and attempt to structure them on their own. This well-intentioned effort can be very risky due to the highly complex nature of state and federal securities laws. Compliance with applicable laws, rules and regulations such as federal Regulation D and various states' blue sky laws, is not optional.  Having counsel who is experienced in assisting clients with securities offerings is essential to such regulatory compliance and the goal of presenting a professional image for your company.

SEC launches new online tool to help investors avoid fraud

When an investor is approached about buying securities, he or she does not always know what they need to about the person or entity who is trying to make the sale. This can be particularly troubling if an individual has failed to toe the line with respect to regulatory compliance or did something else to make them the subject of an enforcement action. Fortunately, the Securities and Exchange Commission (SEC) is about to make it easier for potential investors to perform due diligence.

Earlier this month the SEC announced the launch of the SEC Action Lookup for Individuals (SALI) tool. With SALI, a potential investor can search for an individual using his or her first and last name. The results will show individuals - both registered and unregistered - who are named parties to enforcement actions and who have had federal court judgments or SEC orders filed against them.

Why do companies pursue a reverse merger?

A reverse merger can be a relatively easy way for a company to transition from privately-owned to publicly-owned and providing liquidity to its shareholders.

This liquidity and public market access provides the private company’s shareholders with an “exit strategy” to sell their equity interests.

We help entrepreneurs launch their enterprises

Committing to starting a new business in Florida is a big decision. Perhaps, one struggled with finding just the right product, so that they would feel comfortable setting out on their own. Or, maybe they have always known what type of business they wanted to start and are now ready to get it going. On the other hand, one may have been suddenly inspired by an idea or an epiphany. Whatever it is that has motivated to start a business, they have already done much of the difficult ideation. Now, it is time to make it real.

This is where the assistance of an experienced, transactional business attorney can be a tremendous help. A seasoned lawyer can explain the different types of business entities available, such as corporations, partnerships and limited liability companies (LLCs). Choosing the entity that is a major decision.

Regulators turn their sights on virtual currencies

In the last few years, cryptocurrencies have been big news and big business in Florida. Although they have gone fairly unregulated thus far, private sector experts and government regulators have fueled speculation about how government and business will ultimately regard cryptocurrencies -- and how they may be regulated. In some instances, cryptocurrencies may be treated as a currency, and in others, they may be seen as securities and subjected to regulatory compliance.

In a New York Times interview, Gary Gensler -- a former Goldman Sachs partner and top financial regulator during the Obama administration -- voiced his own opinions about how he envisions blockchain technology and cryptocurrencies will be treated by government regulators. Gensler believes that Bitcoin and similar currencies will escape securities regulation. Other such virtual currencies include Litecoin and Monero.

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