January 31, 2013

Inside Business Law

Quarterly Update by the Private Equity and Venture Capital Committee

The Private Equity and Venture Capital Committee published its latest Preferred Returns newsletter in December 2012. The mission of the committee is to provide a unique and highly educational forum for private equity and venture capital practitioners of all experience levels to exchange views and information on current and emerging legal and practical issues, trends, and developments and practice considerations of specific interest or relevance to private equity and venture capital funds, and their investment transactions, portfolio companies, and investors. Although their newsletters are published on a quarterly basis, members may subscribe to the committee's listserve for ongoing discussions.

In the newsletter, the committee highlights several articles and topics from the listserve discussions, which include, among many others, articles and discussions on the JOBS Act and crowdfunding and fiduciary duties in the context of LLCs

  • Matthew S. Brown's article "Crowd Control: Optimizing the Crowdfunding Provisions of the JOBS Act" addresses the practical and legal concerns surrounding the JOBS Act. As of January 1, 2013, businesses may sell up to $1 million of securities online every 12 months to an unlimited number of purchasers. Although the looser regulatory requirements encourage investments in emerging companies, the method of funding may result in costly expenses related to the administration of reporting, disclosure, and solicitation of votes. Brown examines different solutions such as the use of voting agreements or voting trusts to overcome certain issues that may arise for businesses taking advantage of the JOBS Act.
  • Srinivas M. Raju and Robert L. Burns' article " Fiduciary Duties and LLCs: Like Oil or Like Water" reminds us that although the Court of Chancery consistently concludes that default fiduciary duties apply in the context of an LLC, the Supreme Court in Gatz Props., LLC v. Auriga Capital Corp (Del. Nov. 7, 2012), has opened the door to a different interpretation.

Cyberspace Law Committee's Upcoming Events

The Cyberspace Law Committee's recent newsletter is packed with upcoming programs for the new year. The Winter Working Meeting is scheduled for the end of January and the contents of the scheduled presentations are now available. The Digital Media Subcommitee and the Cybersecurity Subcommittee provide recent updates on their projects. Moreover, since the presentation on fiduciary access to digital assets of a deceased or incapacitated person, sponsored by the Cyberspace Law Committee in January 2012, the Uniform Law Commissioners have accepted the recommendations to appoint a drafting committee. For more information on getting involved, please be sure to read the newsletter.

New Edition of the Blue Sky Bugle

The ABA Business Law Section's Committee on State Regulation of Securities recently published the latest Blue Sky Bugle newsletter, packed with content. Be sure not to miss out on discussions on the SEC's Family Office Rule, Rule 506 offerings and investment advisers, and registration requirements in Canada for non-Canadian investment fund managers.