General Partnerships, The Way To Go . . . Financially Under
Though the majority of businesses in the United States are sole proprietorships, those of you who read an earlier post know that I recommend, for a myriad of good reasons, that an entity of some kind be placed between a person doing business and the rest of the world. Find an experienced business attorney to help establish your business entity.
In this post, I address briefly the general partnership form of business entity, the only form I consider more dangerous to the financial health of an individual than the sole proprietorship. Why, you ask? Because with the sole proprietorship, the sole proprietor is personally liable for the acts of the sole proprietor, the business and the business employees. In the general partnership, the partners are personally liable for the acts of the business, the employees and each other. What partners do can be fairly unpredictable, like contracting to purchase or lease things that cannot possibly be paid for out of the profits of the business, or like contracting to do that which cannot possibly be done profitably.
Continue reading “General Partnerships, The Way To Go . . . Financially Under”
Can an advisor be held liable for the false statements in a prospectus made by another?
United States Supreme Court
Previously we blogged about a pending case before the Supreme Court that had the possibility to significantly increase the liability of persons for assisting in the preparation of a “prospectus.” As of June 13, 2011, the Supreme Court handed down an opinion in that case, styled as Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525 (S. Ct.).
The determination of this case is relevant to accountants and business lawyers who assist in the preparation of documents for the purpose of raising money for investment. The Janus Capital Group, Inc. case presented the question of who may be deemed to have “made” an untrue statement for the purposes of Rule 10b-5, and specifically whether someone who assisted in the preparation of a prospectus could “make” a statement through such assistance. As the result of a 5-4 decision, accountants and business attorneys may breathe a little easier. Continue reading “Can an advisor be held liable for the false statements in a prospectus made by another?”
Update for Limited Liability Companies: What happens to Membership Interest when a Member Dies?
We blogged about the Virginia Supreme Court case of Ott v. Monroe. In that case, the Court ruled that when a father, in his will, assigned his majority interest in a limited liability company to his daughter, he only assigned a profit interest, not a control interest. Consequently, his daughter did not have the authority to “run” the company, absent the consent of the remaining LLC members.
In its 2013 session, the General Assembly modified the relevant LLC statutes in an attempt to overturn the Virginia Supreme Court’s decision. This blog post examines the new statute, and how it may impact your limited liability company.
