I have received a lot of positive feedback for an article I wrote which was published in the July 22 issue of the Dallas Business Journal. It was titled "Acquiring Knowledge: Don't let your M&A deal end up in the rough." Based on the premise that everybody loves quotes from the movie Caddy Shack, the article takes several quotes from Judge Elihue Smails and explains how they apply to merger or acquisition transactions. In case you missed it, here is a link to the article: http://www.canteyhanger.com/content.php?page=news&newsid=165
Special thanks to the Dallas Business Journal for publishing my work.
Monday, August 22, 2011
Wednesday, July 13, 2011
Limits on Distributions by Texas Corporation
Are there limits on the ability of a Texas corporation to distribute cash or other property to its shareholders? As former Alaska Governor Sarah Palin might say, “You betcha.”
It’s important that the board of directors of a Texas corporation correctly determine the amount of corporate funds available for distributions because directors may be held jointly and severally personally liable for distributions in excess of the amount permitted by law (Section 21.316 of the Texas Business Organizations Code (TBOC)).
That’s the answer, but the TBOC does not make it particularly easy to get there. Let’s walk through the daisy chain of definitions in the portion of the TBOC which provides rules for distributions from a Texas corporation, Title 2 (Corporations), Chapter 21 (For-Profit Corporations), Subchapter G (Distributions and Share Dividends)(a/k/a Section 21.301-318 of the TBOC).
A Texas corporation may not make distributions that would make the corporation insolvent or that would exceed the corporation’s distribution limit, except upon winding up and termination of the corporation (Section 21.303 of the TBOC).
A corporation’s “distribution limit” is generally equal to the corporation’s surplus, with certain exceptions (Section 21.301 of the TBOC).
A corporation’s “surplus” is the amount by which the net assets of the corporation exceed the stated capital of the corporation (Section 21.002(12) of the TBOC).
A corporation’s “net assets” is the amount by which the total assets of the corporation exceed the total debts of the corporation (Section 21.002(9) of the TBOC).
A corporation’s “stated capital” is the sum of (a) par value of all shares issued by the corporation, plus (b) the aggregate consideration received by the corporation for the issuance of shares without par value, reduced by any portion of such consideration that the board properly allocates to surplus, plus (c) any additional amounts added to the corporation’s stated capital by share dividends or board resolution (Section 21.002(11) of the TBOC).
Friday, June 17, 2011
Lessons from Dallas Mavericks Championship Season
As part of the North Texas business community, I must congratulate the World Champion Dallas Mavericks on their first ever NBA championship! In a sense, the success of the Dallas Mavericks reflects what's going on across our region and around the global economy. Here are the top 5 lessons from the Mavs championship season:
1) Globalization. It's become a bit of a business cliche that today's competition doesn't come from the guy down the block so much as the from around the globe. Never was that more true than in the NBA than in 2011, when Dirk Nowitzki, the "Big German," led the Mavs to the championship and proved to be one of the best, if not the best, player in the world. The Mavs roster also boasts a Serbian (Paja Stojakovic), two Frenchmen (Ian Mahinmi and Rodrigue Beaubois), a Puerto Rican (J.J. Barea). Successful businesses must be able to mold the best talent from around the world to compete on a global stage.
2) Don't Mess With Texas. Just as the Larry O'Brien Trophy is headed to Texas, so is much of the growth of the U.S. economy. In the twelve months ending this April, the Texas economy has created 254,400 new non-farm jobs, representing almost 20% of all jobs created in the U.S. during that time. See http://www.texasahead.org/economy/outlook.html. The absence of a state income tax, the right-to-work laws discouraging unionization, and a generally friendly regulatory environment makes Texas a great place to do business, whether you are an NBA team or any other business.
3) German Efficiency. Just as the Mavs were rewarded by trusting in their Big German and his hard work, responsibility, and precision shooting, the U.S. political and business leaders would do well to look to the model of the German economy, the world's fourth largest, when it comes to smaller budget deficits, higher savings rate, and high quality products built with attention to detail. Dirk's tireless work ethic to continually refine and improve his game should be an inspiration to all of us.
4) Teamwork Matters. Few question that the Miami Heat's roster boasted two of the top ten players in the world, and many thought that superior talent would be decisive in the NBA Finals. It wasn't. The Mavs played together as a team with small egos and role players knowing their role. You can't have success without talent, but talent alone is not enough. Successful business leaders get buy-in from their team members and get everyone rowing in the same direction. Teamwork matters and chemistry matters. The 2011 Mavs proved that.
5) "The Main Thing is to keeping the Main Thing the Main Thing." That quote from business guru, Stephen Covey, came to mind as I watched the Mavericks tear through the 2011 NBA playoffs. The Trailblazers were more athletic, the Lakers were more experienced, the Thunder were younger and faster, and the Heat were more talented, but the Mavs did one thing better than any team I've ever watched. In basketball, the Main Thing is putting the basketball through the hoop. Throughout the NBA Finals, the Mavs shot 41% from 3-point range, including 5 players who shot 36% or better from 3-point range (Nowitzki 37%, Terry 39%, Kidd 43%, Stevenson 57%, and Cardinal 67%). Dirk shot an out-of-this-world 97.8% from the free throw line. When you can put the ball in the basket that efficiently, you are very difficult to beat. The Mavs did the Main Thing.
1) Globalization. It's become a bit of a business cliche that today's competition doesn't come from the guy down the block so much as the from around the globe. Never was that more true than in the NBA than in 2011, when Dirk Nowitzki, the "Big German," led the Mavs to the championship and proved to be one of the best, if not the best, player in the world. The Mavs roster also boasts a Serbian (Paja Stojakovic), two Frenchmen (Ian Mahinmi and Rodrigue Beaubois), a Puerto Rican (J.J. Barea). Successful businesses must be able to mold the best talent from around the world to compete on a global stage.
2) Don't Mess With Texas. Just as the Larry O'Brien Trophy is headed to Texas, so is much of the growth of the U.S. economy. In the twelve months ending this April, the Texas economy has created 254,400 new non-farm jobs, representing almost 20% of all jobs created in the U.S. during that time. See http://www.texasahead.org/economy/outlook.html. The absence of a state income tax, the right-to-work laws discouraging unionization, and a generally friendly regulatory environment makes Texas a great place to do business, whether you are an NBA team or any other business.
3) German Efficiency. Just as the Mavs were rewarded by trusting in their Big German and his hard work, responsibility, and precision shooting, the U.S. political and business leaders would do well to look to the model of the German economy, the world's fourth largest, when it comes to smaller budget deficits, higher savings rate, and high quality products built with attention to detail. Dirk's tireless work ethic to continually refine and improve his game should be an inspiration to all of us.
4) Teamwork Matters. Few question that the Miami Heat's roster boasted two of the top ten players in the world, and many thought that superior talent would be decisive in the NBA Finals. It wasn't. The Mavs played together as a team with small egos and role players knowing their role. You can't have success without talent, but talent alone is not enough. Successful business leaders get buy-in from their team members and get everyone rowing in the same direction. Teamwork matters and chemistry matters. The 2011 Mavs proved that.
5) "The Main Thing is to keeping the Main Thing the Main Thing." That quote from business guru, Stephen Covey, came to mind as I watched the Mavericks tear through the 2011 NBA playoffs. The Trailblazers were more athletic, the Lakers were more experienced, the Thunder were younger and faster, and the Heat were more talented, but the Mavs did one thing better than any team I've ever watched. In basketball, the Main Thing is putting the basketball through the hoop. Throughout the NBA Finals, the Mavs shot 41% from 3-point range, including 5 players who shot 36% or better from 3-point range (Nowitzki 37%, Terry 39%, Kidd 43%, Stevenson 57%, and Cardinal 67%). Dirk shot an out-of-this-world 97.8% from the free throw line. When you can put the ball in the basket that efficiently, you are very difficult to beat. The Mavs did the Main Thing.
Monday, June 13, 2011
EDGAR Electronic Signatures
Nowadays, virtually all SEC filings are made electronically via the SEC's EDGAR database. Such filings are generally required to be signed by one or more representatives of the filer. But how does one sign an electronically filed document?
The signer signs a paper copy of the document manually, and the signature itself is typed into the signature block of the filed version of the document. The filer is required to keep a copy of the manually signed version of the filed document for five years for possible inspection by the SEC. This is all covered in the SEC's Rule 302 under Regulation S-T.
Was the SEC's position on the treatment of electronic signatures impacted by the federal E-Sign Act? No, the E-Sign Act, which generally recognizes electronic signatures in commerce, specifically exempts most government filing format requirements from the E-Sign Act. In the SEC's 2001 Interpretive Release No. 33-7985, the SEC explained that the E-Sign Act would not apply to EDGAR filings because SEC filings are generated principally for governmental purposes.
You can read more about the E-Sign Act in my paper on E-Corporate Law which is available here: http://www.canteyhanger.com/content/Clayton_SR11_paper_revised_02_10_11.pdf
The signer signs a paper copy of the document manually, and the signature itself is typed into the signature block of the filed version of the document. The filer is required to keep a copy of the manually signed version of the filed document for five years for possible inspection by the SEC. This is all covered in the SEC's Rule 302 under Regulation S-T.
Was the SEC's position on the treatment of electronic signatures impacted by the federal E-Sign Act? No, the E-Sign Act, which generally recognizes electronic signatures in commerce, specifically exempts most government filing format requirements from the E-Sign Act. In the SEC's 2001 Interpretive Release No. 33-7985, the SEC explained that the E-Sign Act would not apply to EDGAR filings because SEC filings are generated principally for governmental purposes.
You can read more about the E-Sign Act in my paper on E-Corporate Law which is available here: http://www.canteyhanger.com/content/Clayton_SR11_paper_revised_02_10_11.pdf
Monday, June 6, 2011
TECH Fort Worth Impact Awards
I recently attended the Impact Awards luncheon presented by TECH Fort Worth, a business incubator and accelerator serving the Fort Worth business community. Each year, the Impact Awards are given to three North Texas companies who the judges believe will have an impact on people's lives in the areas of Environmental, Community, or Health. As usual, TECH Fort Worth put on a terrific event that highlighted North Texas companies doing amazing things.
My firm, Cantey Hanger LLP, was one of the sponsors of the event. I was lucky enough to be seated with the management team of Image Vision Labs, the winner of the Community category. Image Vision Labs is a pioneer in the field of visual recognition products which help businesses and parents identify and filter inappropriate images from computers and other communication devices. It is inspiring to see all of the great work being done by Image Vision Labs and the other Impact Award finalists. Congratulations to all of them - and thanks for making an impact!
My firm, Cantey Hanger LLP, was one of the sponsors of the event. I was lucky enough to be seated with the management team of Image Vision Labs, the winner of the Community category. Image Vision Labs is a pioneer in the field of visual recognition products which help businesses and parents identify and filter inappropriate images from computers and other communication devices. It is inspiring to see all of the great work being done by Image Vision Labs and the other Impact Award finalists. Congratulations to all of them - and thanks for making an impact!
Wednesday, June 1, 2011
Leadership Southlake Graduation
The graduation luncheon for the Leadership Southlake Class of 2011 was held on Thursday. Leadership Southlake is an 8-month program sponsored by the Southlake Chamber of Commerce in which participants learn about our community, network with business and civic leaders, and develop leadership skills. I am a proud member of the Class of 2011.
In the class, a learned a tremendous amount about the way our city, region, and state operate. More importantly, I met some amazing and talented classmates who will be friends long after the class is complete. I encourage readers of this blog to participate in a leadership program in your community. You won't regeret it.
I am especially proud of our class project, a website with information for Southlake families in need called SouthlakeCommunityResource.com. The website provides names and contact information for organizations that assist in meeting the emotional, financial, legal, health, spiritual, and other needs of our community.
In the class, a learned a tremendous amount about the way our city, region, and state operate. More importantly, I met some amazing and talented classmates who will be friends long after the class is complete. I encourage readers of this blog to participate in a leadership program in your community. You won't regeret it.
I am especially proud of our class project, a website with information for Southlake families in need called SouthlakeCommunityResource.com. The website provides names and contact information for organizations that assist in meeting the emotional, financial, legal, health, spiritual, and other needs of our community.
Friday, May 27, 2011
Little Known Facts: The Zero Percent General Partner
One often sees general partnerships in which the general partner owns 1% or even 0.1% of the limited partnership. But may the general partner of a Texas limited partnership own 0% of the limited partnership?
Yes. Section 153.151(d) of the Texas Business Organizations Code, adopted effective 2006, provides that: “A written partnership agreement may provide that a person may be admitted as a general partner in a limited partnership, including as the sole general partner, without acquiring a partnership interest in the limited partnership.”
Every general partnership must have at least one general partner. The general partner is generally responsible for managing the limited partnership and faces unlimited liability for the debts of the limited partnership if the limited partnership is unable to pay its debts.
So why would a person agree to serve as a 0% general partner – getting all of the downside but none of the upside of the limited partnership? Typically a 0% general partner is also an affiliate of one or more of the limited partners who do enjoy part or all of the upside of the partnership.
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