YAHNIAN LAW CORPORATION provides legal counsel concerning all manner of corporate law issues, including, but not limited to, planning, design,  formation, operations, transactions, taxation, mergers and acqusitions and dissolution.

Part  of our services involve pre-incorporation advice and planning to individuals interested in forming a corporation. Clients are informed of the advantages and disadvantages of incorporation. The firm explores the advantages of incorporating and electing to be taxed as an “S Corporation.” The firm also explores with clients the possibility of forming a Limited Liability Company (LLC), instead.

We routinely form and advise nonprofit, tax-exempt corporations.

We also provide legal analysis, planning, design and implementation of Corporate Retirement Plan strategies.

When we form a new corporation for our clients, at conclusion we provide  them  with a “corporation package” consisting of  the following:

  • Articles of Incorporation,
  • Bylaws,
  • Private Placement Memorandum;
  • Investor Qualification Questionnaires;
  • Organizational Minutes of the First Meeting of Shareholders and Directors,
  • Statement by Domestic Stock Corporation,
  • Federal Employer Identification Number for the corporation,
  • S Corporation Election, if appropriate;
  • Stock issuance exemption form, if applicable;
  • Stock Certificates;
  • A  detailed Operations Memorandum
  • Checklists and Guides to enable the corporation to successfully get started, then implement its operations; and
  • Many other related documents

Finally, every Corporation and nearly every corporate action also involves tax issues. As an Attorney and a CPA, with a CFP®, an LLM in Taxation (NYU) and a Certificate in Taxation (UCLA), and further, as a California State Bar Certified Specialist in Taxation, Steve Yahnian is particularly suited for and experienced in advising his clients concerning tax matters, including, but not limited to,  preemptive tax planning and tax reduction strategies.

See below for a more detailed description of our Corporate Legal Services.

We provide planning, guidance and documentation to assist our corporate clients in maintaining protection of shareholders from Corporate creditors.

Under normal circumstances, the liability of shareholders is limited to their investment in the corporation.

This protection from personal liability may be lost, however, if the courts find a basis for invoking the alter ego doctrine.

Under this doctrine, if it would be inequitable not to do so, the courts may disregard the legal fiction of a corporation’s separate existence distinct from that of its shareholders and “pierce the corporate veil,” thus exposing the shareholders to personal liability for corporate debts and obligations.

If you own a business that was created in a state other than California, you will need to qualify or register that business in California if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-California) limited liability company (LLC) to do business in California.

What is a Foreign Corporation?

For California purposes, if your Corporation is formed in another state, then it is known as a foreign Corporation in California. Foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic Corporation, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an Corporation formed in Arizona is a foreign Corp in California.

Transacting Business in California

According to California’s Corporation Code, you are required to register your foreign Corporation with the state of California if you are “transacting business” in California. What does this mean? Well, like most states, California’s Corporation’s Code does not specifically define the phrase “transacting business” in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your Corporation as a foreign company in that state.

We plan, design, document, and implement corporate restructurings.

Capital restructuring definition: The modification of a firm’s capital structure either in response to changing business conditions or as a means to procure funding for the organization’s growth initiatives.

Capital restructuring is a corporate strategy aimed at creating new classes of stock, or eliminating certain stock classes. It is also a means of changing the ratio of equity and debt in a firm’s capital structure. It is usually done in response to the following:

  • Issuance of new shares to raise more working capital
  • Issuance of new classes of shares to attract outside investors or retire certain shareholders from active ownership
  • Creation and issuance of new corporate debt to raise working capital
  • Changing market conditions.
  • Hostile takeover bid.
  • Bankruptcy.

Before capital restructuring is implemented, the company must carefully analyze its liquidity and capital structure. This means that financial modeling, as well as financial statement valuation and analysis, are essential.

Restructuring is an action taken by a company to significantly modify the financial and operational aspects of the company, usually when the business is facing financial pressures. Restructuring is a type of corporate action taken that involves significantly modifying the debt, operations, or structure of a company as a way of limiting financial harm and improving the business.

At times, we form “Close Corporations”.

A California close corporation is a type of statutory corporation that has been formed based on specific requirements in this state.

What is a close corporation in California?

Basically, a California close corporation is a type of statutory corporation that has been formed based on specific requirements in this state.

Basics of a California Close Corporation

Section 158 of the California Corporation Codes allows for the formation of close corporations. This section defines a close corporation as a corporation that does not have more than 35 shareholders, and that number of shares and shareholders of the corporation are specified in the Articles of Incorporation.

The main purpose of forming a California close corporation is to give the shareholders of your company more control than they would have with a normal corporation.

Generally, the shareholders of a close corporation will act as the managers of the company. In addition to giving shareholders more control, forming a close corporation means not having to follow as many corporate formalities as normal corporations. This means that close corporations are less likely to have their corporate veil pierced and their owners’ personal assets put at risk in a lawsuit.

For instance, Section 300 of the California Corporations Codes states that if a close corporation fails to hold shareholder or directors’ meetings, shareholders will not be exposed to personal liability. That being said, the shareholders in a close corporation that handle management duties have the same financial responsibilities as the officers or directors of a normal corporation.

To form a statutory close corporation California, multiple requirements must be met:

There can only be 35 shareholders in the close corporation. Corporations, spouses, partnerships, and trusts count as a single shareholder.
The close corporation’s Articles of Incorporation must include a provision that limits the amount of shareholders to the required number.
The share certificates of the corporations must indicate that it is a close corporation and that there cannot be more than 35 shareholders.
There must be a written agreement between the shareholders that outlines that the shareholders, not a board of directors, will manage the company. This agreement should be filed with the Secretary of State and needs to available to potential buyers.

Besides these basic requirements, statutory close corporations in California are not allowed to go public. This is related to the 35-shareholder limit. When a corporation goes public, limiting the number of shareholders is not permitted, making it impossible for a close corporation to also be a public corporation.

Although California close corporations cannot trade their stock publicly, they can place restrictions on stock ownership, which is one of the biggest benefits of this type of corporation. Essentially, close corporations are operated very similarly to a partnership. With both of these entities, the owners are very hands-on in regard to the daily operations.

Not a common corporate form. Relatively few close corporations are believed to exist in California. Perhaps because of a perceived risk of increased personal liability of shareholders or a perceived risk of involuntary dissolution, many California practitioners have been reluctant to recommend close corporations to their clients. Another possible reason for the apparent lack of interest in close corporations may be practitioners’ lack of familiarity with the form.

Benefits. California close corporations offer many benefits that practitioners may be overlooking. They are easy to form and operate, and offer many benefits comparable to those offered by limited liability companies (but without the related gross receipts tax). Through effective use of a shareholders’ agreement, shareholders may design their own corporate governance regime, including a waiver of mandatory meetings of the board of directors and shareholders. This not only enables a corporation to operate more efficiently and effectively, but may also operate to protect the interests of minority shareholders.

We provide business insurance legal aspects counseling for the following:

  • Interpretation of Insurance Policies
  • Commercial Property Coverage
  • Commercial General Liability Policies
  • Commercial Automobile Policies
  • Personal Automobile Policies
  • Homeowners Policies
  • Directors and Officers Liability Policies
  • Employment Practices Liability Policies
  • Umbrella Insurance
  • Intellectual Property liability policies
  • Workman’s compensation policies
  • Business Interruption
  • Life Insurance
  • Health Insurance
  • Key Person
  • Unemployment
  • Cyber
  • Professional Liability
  • Crime Insurance

We plan, design, counsel upon, review, prepare, implement and ultimately assist in the application of Corporate Stock Buy Sell Agreements also called Stock Transfer Restriction Agreements.

Many new business owners overlook one of the most important aspects of starting a new business relationship: clearly providing for how significant future changes will affect the management and control of the business. For example, what happens if your partner dies, becomes disabled, or is otherwise incapacitated? What if he files for divorce? Or bankruptcy? A well designed buy-sell agreement addresses these and other vital questions—before things get out of hand.

If you don’t have a binding buy-sell agreement in place, your business is at risk. Without a clear succession plan, disputes can arise among partners—or their surviving spouses—that lead to loss of valuable time, increased expenses, and costly litigation.

A well drafted buy and sell agreement is one of the most valuable tools a company can have to protect its value in the event of death, disability or divorce striking one or more of the owners and can also provide vital business saving methods to handle both voluntary sale of shares or bankruptcy of a shareholder. Absent such an agreement, any of the events described above can destroy even a healthy business or force the owners to work with strangers with no expertise within their business. Such events may even cause a dissolution of the corporation and destruction of the business or its operations. With such an agreement, not only is the business protected, but the family of a deceased shareholder is fairly compensated for their loved one’s ownership interest without draining the company of needed reserves.

It is such a valuable and critical  tool that one would expect each and every company to prepare one from inception. However, most companies fail to have corporate buy sell agreements in place. The reason? Probably the same reason that most people neglect to create a well thought out estate plan. Like a well drafted estate plan, most people do not take the time, trouble (and money) to draft an appropriate buy and sell, preferring to let such unpleasant matters as death, divorce and disability remain in the background while concentrating on the immediate matters of business operations.

This is a bad strategy for many reasons. First, many of the important provisions of such an agreement are relatively easy to negotiate only before a party becomes disabled or deceased and almost impossible thereafter. Such issues as developing a fair method to value stock are easy to compromise before it is needed since no one knows who will be buying and who will be selling. Terms of the sale and security for the sale are likewise easily negotiated but in the event of divorce, for example,  it is often impossible to engage in useful discussions once emotions become aroused.

Second, such accessory tools as life or disability insurance, which can be quite useful, are only available to fund the agreements prior to the need arising.

Third, it is not uncommon for a party who is becoming elderly or ill to find him or herself unable to convince the other party, at that stage, to agree to reasonable terms since the other party may feel that a “waiting” tactic will force the increasingly desperate elderly or ill shareholder to accept any terms at all.

We provide legal services related to Corporate Changes.

Corporate Changes include the following:

  • Amendment of Articles
  • Corporate Acquisitions and Reorganizations
  • Conversions
  • Sale of Assets
  • Dissolution and Liquidation

Corporate compliance is the way that a company ensures that it is following all the laws and regulations that apply to their business. This generally involves the design, implementation, and monitoring of policies, trainings, procedures and practices. Corporate compliance programs are grounded in creating formal policies to prevent violations of laws, training personnel on relevant regulations, implementation of compliance procedures and monitoring for violations. Without any of these elements, your company is open to serious risk and legal liability. If you do not yet have a formal corporate compliance program, it may be a good idea to speak with a corporate compliance attorney about developing a plan.

Our Corporate Compliance Service provides your company with a knowledgeable review of the existing circumstances. We help you to revise and design the policies, procedures and internal controls that your company, whatever its size, needs to remain in full compliance with relevant laws and regulations.

We can conduct an objective analysis of your company’s compliance efforts, confirm and assure your company officers and directors that the company has implemented prudent policies and procedures to comply with relevant laws and regulations.

If necessary, we will recommend specific measures and remedial actions that should be taken for your protection.

The dissolution of a corporation is the termination of its existence as a legal entity. Dissolution generally involves the liquidation of the corporation, but dissolution and liquidation are distinct legal concepts. Liquidation is the settling or winding up of a corporation’s affairs: assets are collected, debts are identified and paid or provided for, and any remaining assets are distributed to shareholders. Liquidation is a part of the process of dissolving a corporation.

The statutes governing the dissolution of a California corporation establish procedures requiring that shareholders and creditors receive notice of the event and that the priority of their interests in the assets of the corporation be respected. Corp C §§1800–2011. The considerations involved and the safeguards established by law are similar to those associated with probating an estate after the death of a natural person, with the shareholders in the role of the heirs.

Professional corporations are generally subject to the dissolution provisions of the General Corporation Law, but special rules may apply to particular professions, such as those governing the work in progress of law corporations. Corp C §13403. See Fox v Abrams (1985) 163 CA3d 610.

Steve Yahnian is an Attorney/CPA/CFP® with a Masters in Taxation from NYU, and a Tax Certificate (With Distinction) from UCLA. He is also a California State Bar Board of  Legal Specialization Specialist in Taxation Law. He also has a separate accounting practice called DSA ACCOUNTING.

As tax specialists, we both analyze tax law and render tax opinions. We also provide tax planning.

Our Corporate Tax services include the following areas of corporate taxation:

  • C Corporations
  • S Corporations
  • When to Incorporate?
  • Incorporating a Business
  • Capitalizing a Corporation
  • Using Multiple Corporations
  • Tax Accounting Periods and Methods
  • Maximizing Tax Benefits from Income and Expenses
  • Passive Activity and At-risk Rules
  • Alternative Minimum Tax (AMT)
  • Avoiding Penalties
  • Employment Tax issues
  • Corporate penalties for accumulated earnings and personal holding company status
  • Corporation and Shareholder Transactions and Issues
  • Tax Free Fringe Benefits
  • Nonqualified Compensation Plans
  • Qualified Retirement Plans
  • Dividends
  • Stock Redemptions
  • Liquidations
  • Shifting Control
  • Tax-free Reorganizations
  • International Tax Transactions and Planning
  • Tax Controversies and resolution
  • Domestic International Sales Corporations
  • Welfare Benefits Trusts to create tax free fringe benefits
  • Captive Insurance Companies
  • California Tax matters
  • ASC 740-10—Accounting for Uncertainty in Income Taxes

For more in depth information concerning our corporate tax services and planning please visit our affiliated tax websites:  YAHNIAN TAX and YAHNIAN LAW CORPORATION  as well as  our affiliated accounting website: DSA ACCOUNTING

We provide basic to advanced and sophisticated tax analysis and planning for Corporations formed and/or doing business in California.

As you can imagine, California has some of the highest  tax rates and most complex state tax laws in the nation. Further, California corporate tax law does not necessarily parallel the Federal tax laws. Some matters that receive favorable federal tax treatment are not similarly favored by the California. As a result, California corporations need expert tax advice.   There are ways to reduce or avoid certain California taxes. But, you will need a tax expert to discover them. That is a major part of what we do for our clients. See our affiliated website YAHNIAN TAX for more information.

We Provide Counseling for Boards of Directors.

By ensuring that your board has the resources it needs to act within the confines of its governing documents and applicable law, you can further ensure that your business continues to grow without legal impediment caused by the decisions the board makes, including the following:

  • The creation of corporate policy and objectives
  • Preparation of annual minutes
  • Employment actions
  • The maintenance of management’s compensation
  • HR Policies
  • Complying with California law restricting corporate distributions;
  • Avoiding IRS Responsible Person Penalties due to unpaid payroll tax withholdings;
  • Business Sales
  • Internal investigations
  • Transactions involving actual or potential conflicts of interest
  • Shareholder activism
  • Government challenges to board authority
  • Contests for corporate control
  • Director and officer indemnification and insurance
  • Other questions of director and officer fiduciary responsibilities and liabilities

We provide tax and non tax law  guidance and planning to corporate management concerning dividends and other distributions.

Frequently we are asked for advice regarding whether the corporation can make distributions under California law. In considering what advice to give, we  keep in mind the following concerns:

  • Accuracy of financial figures. The lawfulness of a corporation’s distributions under California law is generally a function of the value of the corporation’s assets and liabilities as well as its retained earnings. See Corp C §500. This type of financial information is usually prepared by a third party, such as the corporation’s accountant. Our objective is to make sure the information is timely and accurate before advising the client as to the legality of the distribution.
  • Tax consequences. If the corporation is an S Corporation different tax consequences result than if the Corporation is a C Corporation.

Among the responsibilities of a board of directors is deciding whether to declare a dividend or other distribution to shareholders. We advise upon the  factors to be considered in making such a decision and its impact on both the corporation and its shareholders.

The importance of tax planning for corporate clients cannot be overemphasized, nor can the necessity that counsel advising a corporate client about distributions and dividends have a strong understanding of the tax consequences. As indicated elsewhere on this website, we are tax specialists.

We assist, analyze and make recommendations for the type of entity our clients should have us create for them.

One of the first and most important decisions a business owner makes is to choose the legal form or entity through which the business will be operated. The forms of business available in California provide varying levels of personal asset protection for the business owner, various tax advantages and disadvantages, complexity or simplicity of operation of the business, and other characteristics and choices. The traditional business forms of sole proprietorship, corporation, and partnership were joined in the mid-1990s by newer forms of limited liability entities.

These entities are the following:

  • Sole Proprietorships
  • C Corporations
  • S Corporations
  • Limited Liability Companies (LLCs)
  • General Partnerships
  • Limited Partnerships
  • Limited Liability Partnerships (LLPs)
  • Real Estate Investment Trusts (REITs)
  • Business Trusts (Massachusetts Trusts)
  • Other Trusts
  • Joint Ventures
  • Family Limited Partnerships (FLPs) and
  • Family Limited Liability Companies (FLLCs)

We plan, design and form Corporations for our clients, in appropriate circumstances where a corporation is beneficial to them.

A corporation is a form of business ownership that helps avoid personal liability for business debts, as a general rule. There are exceptions. For example, a corporation will not protect you from your personal acts that cause personal injury to someone else.

Are you looking to start your own business? . We can help you decide which legal structure is best and how to create your business entity.  We educate our clients on the  pros and cons of a corporations vs. a  limited liability company (LLC)  versus a sole proprietorship.

When we form a new corporation for our clients, at conclusion we provide  them  with a “corporation package” consisting of  the following:

  • Articles of Incorporation,
  • Bylaws,
  • Private Placement Memorandum where necessary and appropriate;
  • Investor Qualification Questionnaires;
  • Organizational Minutes of the First Meeting of Shareholders and Directors,
  • Statement by Domestic Stock Corporation,
  • Federal Employer Identification Number for the corporation,
  • S Corporation Election, if appropriate;
  • Stock issuance exemption form, if applicable;
  • Stock Certificates;
  • A  detailed Operations Memorandum
  • Checklists and Guides to enable the corporation to successfully get started, then implement its operations; and
  • Many other related documents

We also generally provide advice and documents for Employee Handbooks and Pension Plan choices.

We have counseled our clients with respect to and formed numerous limited liability companies.

There are a number of important business and strategic reasons to form and use an LLC to conduct a business and/or own assets. In many cases, an LLC is a viable and more flexible alternative to a Corporation, particularly in the tax context.

A limited liability company (LLC) is one of the newer forms of business entities available to businesses and individuals. An LLC is the entity favored by many attorneys because it combines the limited liability attribute of a corporation with the favorable taxation treatment and structural flexibility attributes of a partnership. An LLC has the rights, powers, and obligations given by the laws of the state under which it is organized. Since it is a separate entity, it may sue and be sued in its own name. Depending on the desires of its owners, called members, an LLC may be structured to resemble a sole proprietorship, a partnership, a corporation, or an amalgam of the attributes of each.

One advantage of an LLC is the flexibility it offers in terms of management and ownership structure.  LLCs also offer the tax flexibility of partnerships called special allocations. Finally, LLC interests are more difficult for an owner’s creditor to seize, whereas corporate stock is relatively easy for a shareholder’s creditor to take.

We provided legal advice, structuring, counseling and documents for the daily operations of the Corporate business.

Pursuant to that that, we provide the following services:

  • Annual Minutes preparation
  • Shareholder Meetings and Actions
  • Director Meetings and Actions
  • Corporate Officers Issues
  • Conflict of Interest analysis
  • Contracts
  • HR Issues
  • Advising the Board
  • Strategies for Avoiding Management Liabilities
  • Internal Investigations
  • Analysis and guidance on Shareholders’ Rights and Liabilities
  • Strategies concerning Derivative Suits and Securities Litigation
  • Amending the Articles and Changing the Capital Structure
  • Legal analysis for Declaring and Paying Dividends and Other Distributions
  • Establishing a Corporate Compliance Program
  • Corporate Governance for Private Companies
  • Corporate Buy Sell Agreements

We plan, design, form and implement partnerships for our clients in appropriate circumstances.

What is a partnership?

A partnership is an association of two or more persons who carry on as co-owners and share profits. There can be a contribution of money (capital investment in the business project) or services in return for a share of the profits.

What are the different types of partnerships?

There are four types of partnerships —

General Partnerships,
Joint Ventures,
Limited Partnerships and
Limited Liability Partnerships (LLPs).

In a general partnership, the partners equally divide management responsibilities, as well as profits.

Joint ventures are the same as general partnerships except that the partnership only exists for a specified period of time or for a specific project.

Limited partnerships consist of partners who maintain an active role in the management of the business, and those who just invest money and have a very limited role in management. These limited partners are essentially passive investors whose liability is limited to their initial investment. Limited partnerships have more formal requirements than the other two types of partnerships.

Finally, there are LLPs. For attorneys, accountants, architects, engineers, and land surveyors, the best form of entity may be the LLP. An LLP eliminates the vicarious liability of partners for partnership liabilities and offers the pass-through treatment of income and loss.

We prepare Private Placement Memorandums for our clients in appropriate circumstances.

A private placement memorandum (PPM) is a legal document provided to prospective investors when selling stock or another security in a business. It is sometimes referred to as an offering memorandum or offering document. A PPM is used in “private” transactions when the securities are not registered under applicable federal or state law, but rather sold using one of the exemptions from registration. The PPM describes the company selling the securities, the terms of the offering, and the risks of the investment, amongs other things. The disclosures included in the PPM vary depending on which exemption from registration is being used, the target investors, and the complexity of the terms of the offering.

A Business Plan Versus a PPM

A business plan and a PPM serve different functions. A business plan is primarily a marketing document created to promote a company. It purposely contains forward-looking information. For example, the plan will outline market demand, customer profiles, growth opportunities, competitive landscape, revenue channels, and potential strategic partners. A PPM is primarily a disclosure document that is descriptive but not persuasive in its style and allows the investor to decide on the merits of the investment. The presentation of the PPM is more factual and concrete. It must address external and internal risks facing the company. A PPM may indirectly serve a marketing purpose if it is professional looking and thorough. A well drafted PPM will balance disclosure requirements with marketing elements designed to sell the deal.

Where appropriate, we form professional corporations for our clients.

What is a professional corporation?

A professional corporation is a corporation created under state law for the purpose of practicing a particular profession in corporate form. Professional corporations are governed by the Moscone-Knox Professional Corporation Act (Corp C §§13400–13410).

Permitted forms of professional corporations. The following businesses may incorporate as professional corporations:

  • Accounting (see Bus & P C §§5150–5158),
  • Acupuncture (see Bus & P C §§4975–4979),
  • Architecture (see Bus & P C §§5610–5610.7),
  • Audiology (see Bus & P C §§2536–2537.5),
  • Chiropractic (see Bus & P C §§1050–1058),
  • Clinical social work (see Bus & P C §§4998–4998.5),
  • Dentistry (see Bus & P C §§1800–1808),
  • Dental hygienists in alternative practice (see Bus & P C §§1967–1967.4),
  • Law (see Bus & P C §§6127.5, 6160–6172),
  • Marriage and family therapy (see Bus & P C §§4987.5–4988.2),
  • Medicine (see Bus & P C §§2400–2417),
  • Naturopathic doctors (see Bus & P C §§3670–3675),
  • Nursing (see Bus & P C §§2775–2781),
  • Optometry (see Bus & P C §§3160–3167),
  • Osteopathy (see Bus & P C §§2402–2417, 3600),
  • Pharmacy (see Bus & P C §§4150–4156),
  • Physical therapy (see Bus & P C §§2690–2696),
  • Physician assistants (see Bus & P C §§3540–3546),
  • Podiatry (see Bus & P C §§2402–2417),
  • Psychology (see Bus & P C §§2907–2907.5, 2995–2999),
  • Speech-language pathology and audiology (see Bus & P C §2537.5), and
  • Shorthand court reporters (see Bus & P C §§8040–8047).

Architecture firms may incorporate under the Professional Corporations Act, as noted above, or under the General Corporation Law (GCL). Bus & P C §§5535.2–5535.25. Engineers may incorporate under the GCL. Bus & P C §6738.

Governing law

The Business and Professions Code contains laws governing most, if not all, licensed professionals. For incorporations, that code must be consulted in addition to the Moscone-Knox Professional Corporation Act.

Why Form a Professional Corporation?

Professional corporations provide a limit on the owners’ personal liability for business debts and claims. Incorporating can’t protect a professional against liability for his or her negligence or malpractice, but it can protect against liability for the negligence or malpractice of an associate. In California, professionals sometimes form a Limited Liability Partnership instead of a Professional Corporation.

We provide advice, planning and compliance with respect to Federal and California Securities law issues.

Each time we form a Corporation or other Business Entity the issue of Securities law is involved.

The issuance of securities is subject to both federal and state securities laws. A security is stock in the company (common and preferred) and debt (notes, bonds, etc.). The laws covering securities are so broad that any instrument that represents an investment in an enterprise in which the investor is relying on the efforts of others for profit is considered a security. Even a promissory note has been held to be a security. Once an investment is determined to involve a security, strict securities rules apply. There can even be criminal penalties that apply. Further, civil damages can be awarded to purchasers if the securities rules are not precisely and perfectly followed. All parties involved in the issuance of securities, included the attorney who advises upon and/or forms the new company can be liable if the investment does not succeed and an investor loses their investment.

The rules are designed to protect people who put up money as an investment in a business. In the stock market crash in the 1930s, many people lost their life savings in swindles, and since then, the government (federal and California) wants to be sure that will not happen again. Unfortunately, the laws can also make it difficult to raise capital for many honest businesses.

The goal of the laws covering sales of securities is that investors be given full disclosure of the risks involved in an investment. To accomplish this, the law usually requires that the securities must either be registered with the federal Securities and Exchange Commission (SEC) or a similar state regulatory body, and that lengthy disclosure statements be compiled and distributed.

The law is complicated and strict compliance is required. You most likely would not be able to get through the registration process on your own without an Attorney. YAHNIAN LAW CORPORATION is prepared to assist you.