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Snehal B Patil
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Snehal Patil’s Answers

207 total


  • Does assigning Director position in startup make them a partner in LLC

    I have a startup set as LLC in CA, US. We are building a platform for Indian market. I am working with someone in India who will be handling operations and marketing. I am not paying them for this work, all the profits they generate from provi...

    Snehal’s Answer

    Having done several such U.S.-India deals, I quite understand why you are being asked to create/appoint a director. Although, for most part, it is illogical and definitely fraught with serious consequences, particularly if your plan involves going the VC route later on or eventually selling the company. It is best to consult a business attorney ASAP to discuss and understand all of the issues involved. Good luck!

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  • How does an Indian citizen and USA citizen form a company in the U.S. to sell software in USA while developing it in India?

    Out of all four friends two of us are in India who is taking care for development ( we have a company there) and product is almost ready. where two of us are living in USA (citizens). Now we want to start a company in US to sell service here while...

    Snehal’s Answer

    Hello Sanjeev,

    You may want to look at setting up a California C corp, although you may consider Delaware as well. U.S.-India transactions involves a range of other issues and variables that could affect the structure or other legal matters, so it is best to reach out to attorneys conversant with both jurisdictions. I suggest you search some attorney profiles who fit the bill and reach them directly. We are not allowed to advertise our services on Avvo. Good luck!

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  • Can I "cash out" on the total acquisition ($10MM) right away or only on the $2MM? When/How can I take advantage $5MM stock opt?

    I have 10% equity in a startup that I'm working for (Nonstatutory Stock Option) and I'm about 75% vested. The startup is about to get acquired and the offer on the table is: $10MM total transaction: $2MM in cash; $3MM earn-outs over 2 years; $...

    Snehal’s Answer

    It is likely that your options will accelerate and vest 100% at acquisition. The relevant terms will be mentioned in your plan documents as well as the acquisition documents. Presuming you exercise your options or you are forced to do so at acquisition, you should be able to cash out your portion of $2MM. Earn-outs will likely be cashed out in same proportion as they are earned. Balance $5MM will be cashed out only if there is an exit event for the acquirer; until then it is paper stock unless the acquirer is publicly traded.

    Please consult a corporate attorney to understand your specific options. The above response is only a high-level summary of the likely scenario.

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  • Are the directors of a corporation's board required to vote with their shares on all resolutions?

    When the board of directors of a corporation is asked to adopt a resolution by a majority of the authorized number of directors, are the directors required to vote with their shares or can resolutions be taken where each director has one vote reg...

    Snehal’s Answer

    Directors typically have one person, one vote, although you should review the Bylaws and other applicable corporate documents to determine if that is not the case.

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  • I want to start my own company to Export/Import Consumer goods. What are legal formalities/legal procedures? Licensing etc.

    Hello, I am a USA Green card holder. I want to start my own company to Export/Import Consumer goods. Can I start as One Single Owner? Can my parents join me as partners? What are legal formalities/legal procedures? Licensing etc.

    Snehal’s Answer

    • Selected as best answer

    Your immigration status permits you to start a single-person company. Your parents may be able to join as overseas partners so long as they are not actually working from within the U.S. -- their temporary business visits from India are ok. That said, there are several issues to consider when setting up U.S.-India business activities, including corporate, tax and licensing/regulatory issues. You should consult a knowledgeable business attorney specializing in international/U.S.-India transactions. Please review attorney profiles on Avvo and reach out those you think will be a good fit for you. Good luck!

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  • I want to start my own company to Export/Import Consumer goods. What are legal formalities/legal procedures? Licensing etc.

    Hello, I am a USA Green card holder. I want to start my own company to Export/Import Consumer goods. Can I start as One Single Owner? Can my parents join me as partners? They hold Indian Citizenship. What are legal formalities/legal pro...

    Snehal’s Answer

    Your immigration status permits you to start a single-person company. Your parents may be able to join as overseas partners so long as they are not actually working from within the U.S. -- their temporary business visits from India are ok. That said, there are several issues to consider when setting up U.S.-India business activities, including corporate, tax and licensing/regulatory issues. You should consult a knowledgeable business attorney specializing in international/U.S.-India transactions. Please review attorney profiles on Avvo and reach out those you think will be a good fit for you. Good luck!

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  • I have a Delaware Corporation and we haven't started any business yet, but have filed the tax. Can we start an overseas office?

    1. I am planning to start an overseas office. 2. But in 2015, I have Incorporated a Delaware Corporation. 3. There is no business operations till date. 4. I have filed the first year Tax. 5. Now I am planning to open an overseas office, either...

    Snehal’s Answer

    Yes, but please consult a business attorney to find out whether or not you should even set up an overseas entity. There may be other options depending on your business plans since as you have no business operations and it does not make sense to increase your operating costs and other liabilities at this stage.

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  • What happens to deferred legal fees if a start up goes under and is unable to pay the firm back?

    I am a co-founder of a start up. I met with several firms in my area and was offered deferred payments up to 'X' amount to be paid back either at our first financing round of $X or greater or by a specified date. Since the firm represents the comp...

    Snehal’s Answer

    Among the large law firms in the Bay Area that offer these types of fee arrangements, most will typically obtain a right to the startup's IP should there be any unpaid deferred fees. As a founder, you may not have personal liability, but you will most likely assign over your startup's assets and IP. In other cases, the law firms will simply write-off their time as a failed investment. That said, it is open to negotiation and you should carefully review the fee agreement/engagement letter for details.

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  • H1B start and own a business in USA?

    Can H1b holder start a IT consulting firm in USA and run by a GC holder or citizen?

    Snehal’s Answer

    Yes, so long as the H-1B holder does not work for the IT consulting company, whether paid or unpaid. In other words, passive shareholding is fine. Please note that, depending on the quantum of your shareholding, you may face problems at GC stage, particularly if the consulting company is filing/will eventually file your GC. A full consultation is required to provide more specific answers.

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  • How to register a StartUp in USA?

    I want to register my StartUp in USA. My company will operate in multiple domains like Software development, 3D Printing, Robotics, Low volume manufacturing and Industrial Automation. The company is currently registered as LLP in India, and I...

    Snehal’s Answer

    The type of entity you should set up will depend on your business plan, management structure, as well as several legal and tax issues. When you set up a U.S. entity that is owned and/or controlled partly by Indian entities/individuals, you will have to consider (in addition to corporate legal issues), tax, immigration, forex (including inward and outward remittances) and other practical considerations that arise in U.S.-India transactions. It is difficult to provide an informed answer without discussing all relevant facts. You should certainly consult a U.S. attorney specializing in international transactions, preferably focused on U.S.-India transactions. This is not a DIY project, so please reach out to a few attorneys and then finalize your U.S. legal structure.

    Attorneys are not allowed to solicit clients on Avvo, so you will have to independently reach out to those who you think would be a good fit for your needs. Good luck!

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