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Dana Howard Shultz

Dana Shultz’s Answers

4,063 total

  • Is "an incentive to not compete" versus a traditional non-compete legal in California?

    I work for a privately-held firm in California from a privately held firm with corporate HQs in NC. I am a shareholder. If I were to leave, there is a 5-year payout on the liquidated shares. As part of the master contract that all shareholders mus...

    Dana’s Answer

    This is the first time I have seen a non-compete question of this sort.

    I find it fascinating, and I expect that a business lawyer will need to do significant research to provide an answer for you - and, even then, then answer may not be definitive if CA courts have not rendered any decisions on this issue.

    I believe there is a reasonable argument that (a) this is a shareholder non-compete provision rather than a post-employment non-compete provision (neither is it a sale-of-a-business non-compete provision), and (b) shareholder non-compete provisions in closely-held corporations do not violate public policy. However, as noted above, one would need to research whether this argument is consistent with CA law.

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  • I am a owner of a private California corporation. I am trying to sell certain number of company stock..

    Shall I file with Office of State Secretary about this shareholder change? What is normal attorney fee for this shareholder change agreement?

    Dana’s Answer

    The Secretary of State does not care about who the shareholders are.

    However, there may be a need to file a Limited Offering Exemption Notice with the Department of Business Oversight (please see the post at the link provided below), and there may be other securities-law issues to be addressed.

    A business lawyer would need to analyze the corporation's current paperwork and the intended transaction to determine the work that must be done and, thus, the fee for the required services.

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  • If a person is a manager of a LLC can he give management rights to someone else without the agreement of the other members of

    LLC? What papers need to be signed for the manager to give management powers to someone else?

    Dana’s Answer

    As stated in Corporations Code Section 17703.01 (link below), the starting point is that (generally) the manager may take any action in the ordinary course of the LLC's business. Such action might include delegating management authority.

    However, the situation becomes more complicated if the manager attempts to take any actions that contravene provisions of the Operating Agreement. Accordingly, as my colleagues have noted, a lawyer would need to examine the OA to determine, in a given situation, whether and how the manager may delegate management responsibilities.

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  • If I have an LLC register in Florida ( active) and I haven't start the business yet can I just open a new LLC in another state?

    I currently have a company register in Florida but I haven't open for business yet. i would like to start my business in California instead. Should I just deactivate the company in Florida and open an new LLC in California? or should I Form an LL...

    Dana’s Answer

    I agree with Attorney Doland that you should (a) work with an accountant / tax advisor to determine which approach makes the most sense from the financial and tax perspectives, then (b) work with an experienced business lawyer to help ensure that the recommended approach is implemented properly.

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  • Do I have to file a separate 25102(f) notice for each of the two founders who will be purchasing stock?

    My wife and I are the founders (s-corp) and will each be purchasing 1,000,000 shares of the 10,000,000 total for the initial transaction. Par value is$ 0.001.

    Dana’s Answer

    The Notice is filed by the corporation (only once) with respect to all shares that are part of the same offering.

    So you (on the corporation's behalf) will file only one Notice that reflects the total number of shares issued to the two shareholders and the total value of the consideration paid for those shares (par value is irrelevant).

    The fact that you have asked this question suggests that you should retain an experienced business lawyer to help ensure that you have wrapped up the corporate formation process completely and properly.

    You might find the blog post at the link provided below informative.

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  • A friend from France needs an itin number to get his e-2 visa and open a business USA. What would he "mark" on w-7 as a reason?

    No additional information.

    Dana’s Answer

    The amount of misinformation and misunderstanding concerning ITINs is astonishing.

    *** Your friend almost certainly does not need an ITIN! ***

    Even though your friend is French and, thus, (presumably) lacks a social security number, any business entity he forms in the U.S. can obtain an Employer Identification Number (federal tax ID). I have blogged about this several times because I have helped dozens of international client with this process.

    I recommend that you and your friend start with the post at the link provided below, then follow links from there.

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  • I am a foreigner and would like to own a business in the US. Do I need a social security number?

    I am starting a company in america but don't have a green card. I will hire other people to run the business. Do I need to have a social security number to register and own the business?

    Dana’s Answer

    No, you do not need a social security number (or an ITIN, despite what some people might tell you).

    You can form a legal entity (corporation or LLC). Obtaining an Employer Identification Number (federal tax ID) for that entity takes more work without an SSN, but it is entirely doable. I know that is the case, because I have obtained EINs for dozens of foreign clients in similar situations.

    I have written several blog posts about this topic. i recommend that you start with the post at the link provided below, then follow links from there.

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  • Can Corporation be transferred from another state to California?

    I have 2 years old Nevada corporation (s-corp) and wish to know how I can change this into a California Corporation and if it's possible.

    Dana’s Answer

    What you want to do is called "conversion" (of a corporation in one state to a corporation in another state). The blog post at the first link provided below describes the conversion process.

    You are in luck: NV allows a corporation to convert out to another state (second link below) and CA allows a foreign corporation to convert in (third link below).

    You should retain an experienced business lawyer to help ensure that the conversion process is carried out properly.

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  • Can I cancel shares in a S Corp because shareholders never paid for those shares?

    I set up a S Corp with 3 friends last year. Each of us were "issued" 250/1000 shares. However, none of us paid for these shares. My friends decided to pull out from this business and I will take over everything. In terms of the shares, how sho...

    Dana’s Answer

    The facts that you have presented and applicable law appear not to be meshing properly.

    The process by which corporate shares are issued is described in the post at the link provided below. Simplifying for the purposes of this answer:
    - The board authorizes issuance of shares for specified consideration.
    - The consideration is paid.
    - The shares are issued.

    Based on the facts provided, I suspect that none of the foregoing steps was taken - i.e., the shares were never issued, thus there is nothing to cancel.

    You probably can issue shares, now, at a lower per-share price, but a lawyer would need to examine the corporation's formation-related documents to answer with certainty.

    You should retain an experienced business lawyer to help you do things correctly this time.

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  • Hello I have a question about paypal and them holding my funds for 180 days.

    Recently I've been making a bit of money selling items on ebay only to see a week later that paypal has limitied my account and is asking for more personal info such as my ssn and a picture of my passport and many other things. If I don't provide ...

    Dana’s Answer

    It appears that eBay has seen some suspicious activity in your account.

    I suspect that eBay's terms of service permit it to take the actions it is taking, and I doubt that eBay is taking such action merely to abuse you.

    If you want to keep your account, you should cooperate; if you don't cooperate, you will lose your account.

    I don't see that there is much you can do to change the foregoing.

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