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Kaiser Wahab

Kaiser Wahab’s Answers

647 total


  • I own 51% of an S corp and my partner would like to give up his ownership rights/shares to me. What is the process?

    The firm is a 51% women owned business. My partner would like to move on to starting another business and stay on as a silent partner with a small ownership of 5-10%, Would that be advisable or should he just sell me all the stock.

    Kaiser’s Answer

    The answer to this question is entirely dependent on the specific circumstances of your business. Numerous factors come into play in determining what the best course of action is. While both options are potentially viable (i.e., the partner divests all the stock to you, or the partner retains some stock), you will want consult with a business attorney and tax advisor to guide you through that process. Some factors to consider are:

    1-the tax implications for any sale or transfer of the shares;

    2-the actual purchaser of the shares (should it be the company or you personally?)(;

    3-the value and viability of having the divesting partner maintain a nominal shareholder presence (will he stay on as an officer or director (likely not since you mentioned "silent partner"?);

    4-any minority shareholder implications if the shareholder stays on;

    5-the actual contractual mechanics to get the deal done (i.e., share transfer and assignment agreement, the revision of any existing shareholder's agreements, the creation of a minority/majority shareholder's agreement if the shareholder stays on, personal guarantees, etc.);

    6-the due diligence to make sure that any assets/obligations that are held in the departing partner's name personally are properly transferred over to the corporation;

    7-etc.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • Definition of reasonable and dilligent efforts to liquidate assets of LLC

    Retiring from a two-person LLC. Other person opted to liquidate rather than purchase my interest. Wants to close business (doesn't need to) while persuing sale of assets. Business is worth 50K less closed than if operating. Other person can af...

    Kaiser’s Answer

    You do not make clear whether there is a written operating agreement in place or not. That should be the first place you look for an answer.

    However, in the absence of a operating agreement with clear exit mechanics, in most states the members are then only left with the state law rules. Those rules rarely provide more than: forced buyout/sale/dissolution (and then usually without clear principles on alternatives). And those options are also rare and require a showing of particular facts that are often not present. That being said, there is likely no "pre-packaged" exit route and the particular facts of your situation (e.g., wrongdoing, minority shareholder status, etc.) will need to be evaluated by a local attorney familiar with state statutory and case law on "business divorce." (And this often requires actual litigation) You may also want to read the link below that talks about similar situations under NY law to get a further sense of what I am talking about.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • What are the implications of signing the Asset Purchase Agreement as a formed Limited Liability Company when they weren't.

    I recently sold a business to a buyer who misrepresented they were a formed LLC, on Sept 25th when they signed the Purcahse Asset Agreement, but in actuality they were not a formed LLC until two days later, the day of the Official CLOSING. What a...

    Kaiser’s Answer

    The implications are more dire for them then they are for you. I am assuming that there is a problem with the transaction for you to post a question here (e.g., lack of payment). if they fraudulently entered into the agreement under the LLC, I would argue strongly that they are personally liable for the said LLC's obligations, including payment of any monies. as an alternative, if the parties are still amicable, then the LLC can be formed immediately and the obligations of the agreement transferred by an assignment to the new LLC.

    In any event, you will need a local attorney to review the actual parameters of the deal, the operative contracts, as well as local law to see what your options are.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • Two businesses under one LLC- how best to link the entities so they have the limited liability protection of the LLC?

    Hello-I live in California and I'm in the process of forming a new LLC which we can call "My xxxx Group LLC". I operate two websites that I'd like to put "under" this LLC as entities: "Website x" and "Website y". "Website x" is currently an LLC by...

    Kaiser’s Answer

    As indicated before, there is no bright line rule per se for the separation or segregation of a website operation under a DBA or separate entity (e.g., LLC). However, as I often advise my clients, the question should not be "does my website need a separate dba, etc.?," but rather, "why doesn't it require a separate dba, etc.?" The reason being is that, the limited liability protection of the initial entity (e.g., LLC, etc.) will only extend to the operation that it can clearly be associated with. And secondly, the other websites may have unique liabilities and revenue streams that should not be commingled under one entity's roof.

    Even if these other websites are not revenue generators, they may be liability generators (e.g., a free web forum that routinely deals with user generated content and third party copyright is prone to infringement claims), it might still make sense to house them separately. Finally, with regard to dba's and websites, my advice is to skip the DBA if you decide to segregate the website, and instead get an entity. The reason being is that a DBA is in many states only good for a particular county or set of counties, while the site is presumably accessible globally.

    You do not make clear if you already have an entity (perhaps you are referring to it with "ABC Company?"). However, if you do not already, I strongly suggest that you get the process in motion.

    And as a final bit of advice, it might make sense to have strongly drafted terms of service agreements for the sites, in addition to, or at least in lieu of, getting separate entities for each. These agreements can offset many of the above liabilities and also make clear to the user that he/she is dealing with a particular entity.

    You should consult with a local attorney familiar with these issues to guide you through the process. And I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • Co-signing on a loan

    I co-signed for a car loan, and actually found out the company put the loan in my name as signer, not co-signer. Is this legal to do without my consent? My signature was for cosigning not for signer(or buyer)

    Kaiser’s Answer

    • Selected as best answer

    Generally speaking, one contracting party cannot make a signature of the other party binding for one obligation as opposed to another after the contract has been signed. So the contract itself should be clear in its language for what the signatory is binding itself for. In your case, since you were signing to "backup" the obligations of the actual borrower, the contracts should have made that clear. And typically bank and commercial lease/loan documents/agreements are very clear as to what the co-signer's obligations are and aren't. You may want to consult with a local attorney to review these documents accordingly.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • Is the act of downloading digital media illegal or have a copy of it?

    I own a DVD that became scratched over the years. (my son decided spinning it round and round would be fun and left it almost unusable). I did not have a backup copy but still have the DVD. Can I legally obtain a copy (digital download) and pla...

    Kaiser’s Answer

    In your case, the law does not expressly help you, given the common use of DRM on DVD's and the fact we are talking about movies here. However, there is a right for the "little guy" when it comes to music and software. Backing up is technically legal under 17 U.S.C. 117 for software, and 17 U.S.C. 1008 for phonorecords and sound recordings, provided you are not bypassing any copy protection. You may also want to see the RIAA v. Diamond case. They key is to be proactive before the DVD is destroyed, not after.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • How do knock off movies (i.e transmorphers, the terminators) avoid copyright infringement

    I am currently working on a screenplay and i have used other forms of entertainment such as comic books or other movies to draw inspiration. how far am i aloud to go before it becomes a case of infringement. i can find lots of similarities between...

    Kaiser’s Answer

    I actually wrote an article on perhaps one of the greatest modern purveyors of kncok off movies. You can read it at the link below and I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • When I do an "Assignment of Contract" with a Seller, does my obligation or liability sign away when I find a buyer?

    When I do an "Assignment of Contract" with a Seller, does my obligation or liability sign away when I find a buyer?

    Kaiser’s Answer

    Unfortunately, no one can answer your question on a forum such as this without first analyzing the actual language of the subject contract as well as the context of the situation. In addition, the assignment should be facilitated with an agreement that releases you from all rights, duties, and obligations under the original contract. You should therefore consult with a local business attorney to guide you through the process.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • Is a contract still legal if the business changed their name?

    My daughter is in a sport that requires me to sign a contract for a 1yr term. The owners of the team just legally changed the team name because of IRS problems. Should I request a new contract with the new team name or is our old contract still bi...

    Kaiser’s Answer

    Generally speaking, an actual legal change of entity name will necessitate some kind of assignment (i.e., selling the old contract to the "new" entity) or novation of the original contract (switching the parties). In any event, I would not assume that nothing needs to be done and I would be proactive in discussing this issue with the team.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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  • Majority owner in LLC wants to transfer a 10-12 acres of property from LLC to personal. What are the tax consequences?

    Family held LLC. Owns approximately 300 acres of land. What are options for handling this transaction? Gift it from the LLC to the individual? Or can they reduce their ownership interest based on the transfer? What are the tax consequences?

    Kaiser’s Answer

    You will need to consult in person with a local real estate and possibly tax attorney. The basic answer to your question is that any migration of property out of the LLC will be a taxable event (both from a capital gains and possible transfer tax perspective.) Depending on the varying tax brackets and specific fiscal profile of the LLC and the transferees there will be a potential set of strategies designed to reduce the tax burden as much as possible. However, based on your description I would be surprised if you can avoid all manner of liability.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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