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As discussed in our December 16, 2010 blog article, the IRS issued final regulations in 2009 under Section 6039 of the Internal Revenue Code (the “Code”) that require employers to annually furnish each employee who exercised incentive stock options (“ISOs”) or sold or otherwise transferred shares acquired under an employee stock purchase plan (“ESPP”) during a year with a detailed information statement by January 31 of the following year.  In addition, employers must generally file an information return with the IRS by February 28 of the following year, or by March 31 for employers filing electronically.  These due dates are delayed until the next business day if they otherwise fall on a weekend.
Continue Reading Reminder to Perform Annual ISO/ESPP Reporting in January 2022

Procedural History

In August 2016, the Department of Homeland Security proposed an “International Entrepreneur” parole rule that would allow qualifying foreign entrepreneurs to develop and grow their start-up companies in the United States. After public comment, the rule was finalized and released in the closing days of the previous Administration.
Continue Reading Dear Congress: Your District Needs a New E-4 Visa for Promising Entrepreneurs

Two amendments have been proposed to the Delaware General Corporation Law (the “DGCL”) to permit corporate record keeping utilizing blockchain databases (the “Blockchain Amendments”). Specifically, “stock ledger” is to be defined in Section 219 of the DGCL to include ledgers “administered by or on behalf of the corporation,” in order to permit a record keeping system utilizing blockchain databases. Section 224 of the DGCL is to be similarly amended regarding all corporate records, and provide that such records may be kept on “one or more electronic networks or databases (including one or more distributed electronic networks or databases).”…
Continue Reading The “Blockchain Amendments” to the Delaware General Corporation Law

Corporate lawyers and software developers have been watching eagerly as the State of Delaware takes steps to enable Delaware corporations to issue shares of their stock as digital tokens. Instead of recording shares on paper ledgers, corporations will record ownership using “Blockchains”: ledgers that are secured by cryptographic keys that can be distributed around the world without fear of tampering.
Continue Reading Taking Stock in Blockchains

On October 26, 2016, the Securities and Exchange Commission amended its existing safe harbor rule for intrastate investing, Rule 147, and added a new intrastate safe harbor, Rule 147A in an effort to reflect the realities of modern business. While these changes could provide a useful tool for small businesses, the SEC’s evolving stance on nationwide crowdfunding and lack of coordination with existing state law may hinder their usefulness to any business beyond those looking for local or niche investors.

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Continue Reading Changes In Intrastate Crowdfunding Rules: Will They Make A Difference?

As published on Medium.

My fellow moderator, Stephanie Zeppa from Sheppard Mullin, sits with, from left, AdRoll’s Aaron Bell, Floodgate’s Arjun Chopra, Cisco’s David Ulevitch and Luxe’s Curtis Lee.
My fellow moderator, Stephanie Zeppa from Sheppard Mullin, sits with, from left, AdRoll’s Aaron Bell, Floodgate’s Arjun Chopra, Cisco’s David Ulevitch and Luxe’s Curtis Lee.

Sheppard Mullin, along with Silicon Valley Bank, recently co-hosted a panel of seasoned entrepreneurs at Runway on “Building and Motivating a Kick-Ass Team.”

The combined experience of these panelists was incredible, and we heard some great advice about how to build and manage teams, which sometimes requires ignoring conventional thinking. The following are five of those suggestions.…

Continue Reading Building a Kick-Ass Team: 5 Lessons

Summarizing the week Jared writes, “Lewis Carroll famously said, ‘Begin at the beginning, go on to the end, and then stop.’ But that is hard advice to follow when one’s head is spinning…”  It would have been just as apt if Jared had added that “here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”  Because, at the end of Season 3 Pied Piper is in pretty much the same place as at the end of Season 2, and about to begin at the beginning all over again.  (But at least it’s a promising place to start!)…
Continue Reading Begin at the Beginning, Go on until You Reboot, and then… (Silicon Valley – Season 3 Finale)

“Not much to report this week, dear readers! Everything is perfectly fine.”  Or so says Jared.  But as Gilfoyle is quick to point out, “That’s a lie.”  The problem is that even though the Pied Piper product has incredible buzz, and celebrates half a million downloads, regular people can’t stand using it once they have it.  Pied Piper has a scant 19,000 daily active users, and the product is being savaged in focus groups.  Richard pours his efforts, and almost all of Pied Piper’s remaining funding, into trying to educate the public about what Pied Piper is and how to use it.  But all his efforts yield only one convert, Bernice… and “Pipey,” a horrifying animated flute that pops up to give tips on using the product.  In other words, Pied Piper is “fine” in the same way someone who lost their job and their dog in the same day is “fine”—they’re wretched and nearly broke.  In desperation, Jared goes rogue and secretly starts buying daily users from a “click farm” in Bangladesh.
Continue Reading Pied Piper Is Like Empty Tables, and Empty Chairs (Silicon Valley – Episode 27)

Alas, poor Erlich!  We knew him; ‘a fellow of infinite jest, of most excellent fancy; he hath borne us on his back a thousand times; and now,’ as Jared poetically recounts, “Erlich’s Bachmanity boondoggle has led to his being unceremoniously bucked off the Pied Piper unicorn, [lock-] stock-and-Board-seat-wise.”  Unfortunately, Erlich’s lavish over-spending of Bachmanity’s capital, combined with his personal liability for Bachmanity’s debts, have brought Erlich to the brink of bankruptcy.  He’s so desperate for funding he’s willing to sell his Pied Piper shares to dig himself out of his hole.  But yet again, the “onerous terms” that Richard accepted when he took Russ Hanneman’s investment rear their ugly head.  Previously these terms enabled Raviga to take control of Pied Piper’s board and fire Richard.  Now Laurie uses the terms to block Erlich from selling half his shares to Russ for $5 million, and forces Erlich to sell all his shares to Raviga Capital for the exact amount of Erlich’s debts ($713,000).  This leaves Erlich with nothing except extreme public ridicule.
Continue Reading …And The Unicorn You Rode In On (Silicon Valley – Episode 26)

In this week’s episode of Silicon Valley, Richard enjoyed an unprecedented run of success, culminating with the official launch of Pied Piper’s platform.  Richard has suffered so many setbacks, it’s little wonder he is initially reluctant to launch even a beta version—certain that the platform is buggy and will only subject Pied Piper to further mortal embarrassment.  But the team convinces him to try a very limited, private beta, and the embarrassment never comes.  Everyone loves it, from the beginning to the shockingly happy ending… everyone, except Monica.  (But that doesn’t matter because her dissatisfaction just convinces us that we aren’t dreaming.)  The team even manages to foil Gavin Belson’s attempt to steal the beta, turning the tables on him and leaving him screaming to “cut the power to building” in order to shut down the team’s zip bomb.
Continue Reading Happy Times, High Crimes and Misdemeanors (Silicon Valley – Episode 25)

At its heart, Episode 24 was about relationships – from the wayward dating lives of Richard and Dinesh to Big Head and Ehrlich’s marriage of “Bachmanity,” the Pied Piper entourage found themselves faced with the messy unraveling of unsuccessful relationships.  To recap some of those relationships, Richard loses a girlfriend over his obsession with code formatting, Dinesh sabotages his chances of dating a coworker by improving the video streaming and revealing “Pakistani Denzel” to be more of a “Dogface,” and Bachmanity faces the cold consequences of profligate and unnecessary spending and lack of accounting oversight.  Perhaps Jared’s “spreading his plumage” to display his dating prowess was the only silver lining.  Even though this episode left us feeling like the Pied Piper guys need the advice of a “Love MD” more than that of a J.D., some of their problems may still be solvable with a better understanding of the law.
Continue Reading Bachmanity – From Sizzle to Fizzle and Maybe Bachruptcy (Silicon Valley – Episode 24)