Anytime you see lots of fine print and terms you’re not comfortable with it can be a bit overwhelming.

Don’t sweat it, we’re going to tell you.

The VK blog will generate an interesting and informative series to help you understand that document, the Company Agreement.

The backbone of any LLC is a well-drafted Company Agreement. One of the most appealing aspects of an LLC is its flexibility (it can look just like a partnership, a C-Corp, or an S-corp), but because LLCs generally aren’t bound to the same stringent corporate governance rules that many other entities must follow. An LLC is only as good as its governing documents.

At VK we provide a thorough Company Agreement for clients that will satisfy their immediate company needs, and allow for future growth. When you’re starting a company, it can be information overload. Especially in regards to the Company Agreement. So to help answer a lot of the common questions we get, we’re going to write a series of blogs that will discuss and answer some of those questions.

Here’s the plan for now, but this is subject to change based on your feedback:

1. What exactly is a Company Agreement? What if I don’t have one?
2. Why do I need a Company Agreement if I have a Certificate of Formation?
3. What is a Capital Contribution?
4. What are Classes of Members?
5. Managmeent of an LLC – Member Managed vs. Manager Managed
6. Decision Making in an LLC- Simple Majority v. Super-Majority
7. Why are Fundamental Business Decisions Important?
8. Meetings of the Managers
9. Meetings of the Members
10. Confidential Information and Non-Competition
11. What is a “Tax Matters Partner”?
12. Involuntary Transfers vs. Voluntary Transfers
13. Dispute Resolution Ideas
14. Default of a Member & Expulsion of a Member
15. Buy-Sell Provisions
16. Fancier Provisions Part 1: Drag Along & Tag Along
17. Fancier Provisions Part 2: Put or Call Options

We’ll release these every week or so, so stay tuned. And enjoy.

This series will be written by both Ashley Robertson and Kevin Vela. Ashley is an associate at Vela Keller and focuses her practice in the areas of corporate law, startups and small businesses. You may reach Ashley at arobertson@velakeller.com. 

Kevin is a founding partner of Vela | Keller PC in Dallas, and focuses his practice on representing small businesses and startups. You can follow Kevin on Twitter @DalAngelNetwork or follow the firm @VelaKeller and you can contact Kevin at kvela@velakeller.com.

Each month Vela Keller contributes to small business owners through Kiva, a non-profit crowdfunding website that works with field partners all over the world to get much-needed loans to disadvantaged entrepreneurs across the globe. These borrowers are from all different sectors – agriculture, the arts, construction, retail, health and education (just to name a few).  While some are looking for capital to start their business, others are looking to grow their business or simply to get through hard times. Most people loan $25, but these micro-loans come together to make a huge difference in the lives of the borrowers. You can read more about their work here.

Every month at our firm meeting, we all sit down to read about a few potential borrowers, then determine who we want to lend to via a majority vote by the whole office. Some recent VK investments include loans to Abror from Tajikstan to give his son a wedding dowry, and to Herlenbaatar from Mongolia to purchase wheels for his transportation business. Overall, VK has made loans to both men and women from six different countries in four different “sectors” defined by Kiva: wholesale, agriculture, transportation, and personal use.

This past month Vela Keller decided to donate toward an Albanian man named Ferit. Ferit needs the capital to buy a new dairy cow to add to his herd; he has successfully been in the livestock business for twenty-five years! As of this week he is halfway to his goal. Once he reaches his goal and buys his new dairy cow, he will have repaid his lenders, including VK, within 20 months—incredible! VK picks a new borrower from Kiva to lend to each month. Check out Kiva’s website for yourself, and feel free to send us the links to your favorite borrowers for our May investment!

For now, keep your gambling money tucked in the top drawer…but just maybe soon enough you will be able to spend it in our own Texas casinos.

http://trailblazersblog.dallasnews.com/2013/04/oklahoma-benefits-from-gambling-texans-no-argument-here-says-advocacy-group.html/

Geoff Keller is a founding partner at Vela | Keller in Dallas and focuses his practice on representing small businesses, real estate, and criminal law.

Now, when we start discussing bingo, your mind probably doesn’t go exactly to “gambling,” but according to the Texas Legislature bingo is a game of chance that you pay to play…that’s the definition of gambling in Texas! It’s also the reason that bingo is so heavily regulated within the state. Generally speaking, this means that not just anyone can decide to host a bingo game or open a bingo hall (lawfully)—there are some serious hoops you have to jump through to have the Lottery Commission (the governing body responsible for bingo regulation) give you the okay. Texas is one of the very few states that has a constitutional provision authorizing the regulation of bingo games and halls.

The Bingo Enabling Act, codified into the Occupations Code in 1999, is quite lengthy, and provides many precise definitions and directions for those wishing to operate bingo games in Texas.  The Act explicitly prohibits organizations less than three years old from conducting bingo activities within the state. Even if your organization has been around for more than three years, you won’t be able to run a bingo game or hall unless you are one of the following types of organizations: fraternal orders, religious societies, non-profits dedicated to medical research, veterans’ organizations, or volunteer firefighter or EMS groups.

The Texas Lottery Commission is serious about enforcing the bingo laws currently in effect, too. You can get heavily fined if you’re caught operating an unauthorized bingo game, even if it is for charitable purposes. The Lottery Commission is even receiving an extra $1.3 million in the budget this year in order to hire more auditors in the bingo division to help enforce these laws.

So while bingo is really the only true form of “gambling” game authorized by the state of Texas, it’s not a free-for-all to go nuts hosting and playing bingo. Make sure that you follow the detailed procedures laid out in the Act, and if you have questions or want to get your legal ducks in a row to open or become involved with a bingo hall or bingo game, then give us a call! We have experience–and We’re Here to Help.

Geoff Keller is a founding partner at Vela | Keller in Dallas and focuses his practice on representing small businesses, real estate, and criminal law.

Current legislation in Texas makes it a little difficult to be a craft brewer in Texas and sell your own brews through distributors on a larger (geographic) scale. However, a new two-pack of bills that was just passed through the Senate would allow brewpubs to sell a limited amount of their beer through distributors. These brewpubs would also be allowed to sell their products to consumers on-site, yet another new and much needed development in the world of craft brewing in Texas.

Along with these two bills (authored and sponsored by Senator Kevin Eltife, R-Tyler), a third bill affecting small brewers and distributors passed that would ban the practice of reach-back pricing. Reach-back pricing is where the manufacturer changes what they charge the distributors of their brews after the distributor has already sold the alcohol to a retailer. This bill was proposed by Senator John Carona from Dallas.

While these three proposals still need to pass through the House in order to become enacted as law, the overwhelming approval in the Senate is definitely a victory for craft and small-scale brewers across the state, and the passage of the bills would hopefully lead to a boom in craft brewing. If you’ve always dreamed of opening your own brewery, or want to learn more about this new and exciting area of development in Texas, reach out to us – We’re Here to Help.

Geoff Keller is a founding partner at Vela | Keller in Dallas and focuses his practice on representing small businesses, real estate, and criminal law.

On January 10, 2013, FINRA invited portals to fill out and file a voluntary Interim Form (http://www.finra.org/Industry/Issues/Crowdfunding/). The purpose of the Interim Form is to assist FINRA in developing the specific regulations for portals. In FINRA’s News Release (http://www.finra.org/Newsroom/NewsReleases/2013/P197636), the Interim Form asks some of the following information:

• address of the portal
• ownership
• funding
• management
• compensation
• business model and relationships.

Also, FINRA welcomes potential portals to submit any additional information the portals have that may be helpful. All of the files will be confidential, and FINRA expressly states that “in applying for membership, crowdfunding portals will not be bound by the[ir] responses.”

It appears the benefits of submitting an application may be minimal considering that the portals will still need to fill out a final application for formal registration once the regulations are issued because the final application may ask for additional information and paperwork than the Interim Form. But, on the other hand, the Interim Form may provide FINRA and the SEC with enough information, or at least enough to make some headway, which will help streamline the adoption of the portal regulations and finally bring crowdfunding to life in the US. At the rate the SEC is currently moving at, maybe both the SEC regulations and the crowdfunding regulations will be released around the same time. We can hope.

Ashley Robertson is an associate at Vela Keller and focuses her practice in the areas of corporate law, startups and small businesses. You may reach Ashley at arobertson@velakeller.com.

We can’t wait until our next VK Cook Out!

     Where are Series LLCs recognized? Currently, only a few states have statutes allowing and governing Series LLCs. Texas, of course, but also: Delaware, Illinois, Iowa, Kansas, Minnesota, Nevada, North Dakota, Oklahoma, Tennessee, Utah, Wisconsin, District of Columbia (D.C.), and Puerto Rico. This just means that these states allow Series LLCs to be formed in their states, and recognize a cell within a series as its own entity.

I’m thinking about/am in the process of buying a piece of property. When should I set up my Series LLC? Because of the different implications of transferring ownership of a property after you purchase it (check out this blog about the potential triggering of a Due on Sale clause acceleration), you should, ideally, set up your Series LLC prior to purchasing any of the property you’d like to put into it.

How long does it take to set up a Series LLC?  Not very long. Once you’ve had a consultation with us and we have all of your information (just your name, address, a few substantive questions about the structure of your entity, and your preferred entity name), it typically only takes one to two days to register with the Secretary of State, and only a day or two more to get the confirmation back from the state.

How much does it cost to set up each additional cell? The LLC formation package we offer includes instructions for setting up additional cells. As far as registration with the state goes, there is no additional charge for setting up a cell within a Series LLC once that Series LLC has been established.

Can the different cells have different ownership or ownership structures?  As of now, all of the cells in a Series LLC will have to file one single return with the state and with the IRS. While the IRS issued a Private Letter Ruling confirming that individual cells in a Series LLC could operate under different ownership structures, it’s not really practical or advisable for tax purposes.

Are Series LLCs really only usable in real estate transactions? Not at all! It’s just a fairly simple and straightforward example that people who are curious about Series LLCs can understand. Stay tuned for a post coming soon which highlights some other uses for Series LLCs.

I’m located in a different country. Will that be a problem? Not at all. With the boom in real estate investments here in North Texas, we get calls from potential clients outside of the country on a monthly, almost weekly basis.

Now, these are just some of the more common questions we get about Series LLCs, and as the old adage goes, there’s no such thing as a dumb question. Series LLCs are an emerging entity, and there’s still a lot of confusion as to how they can best be utilized and what the actual requirements and restrictions are. If you have questions about setting up a Series LLC, please contact a legal professional or give us a call – We’re Here to Help.

Kevin Vela is a founding partner of Vela | Keller PC in Dallas, and focuses his practice on representing small businesses and startups. You can follow Kevin on Twitter @DalAngelNetwork or follow the firm @VelaKeller and you can contact Kevin at kvela@velakeller.com.

Add to this list…gambling.

We have horse racing and dog racing.

We have bingo halls.

We have the lottery.

We have private gambling exceptions under Texas Penal Code § 47.02(b)(1-3) to allow for private place gambling when no one receives any economic benefit other than personal winnings (nothing to the house) and the chances of winning or losing are the same for all participants (except for the advantage of skill or luck).

But as Texans we have to ask ourselves – are we ready to expand our gambling regulations so we can better compete for our Texan dollars that are going to our neighbors to the North and East who allow for Commercial and Indian reservation gambling?  (A side note – Texas also allows for Indian reservation gambling, but we only have one in Eagle Pass).

A number of our Texas representatives are submitting bills in the 2013 session calling for everything from Constitutional amendments to reworking existing gambling laws to allow for Texas to profit more directly from (what appears to this author) as an increased demand for gambling.  It will be interesting to see if any of these bills eventually make their way onto the Governor’s desk so we will be able to decide if we are ready for expanding gambling within our borders.

I guess we’ll find out in our own Texas time.

Geoff Keller is a founding partner at Vela | Keller in Dallas and focuses his practice on representing small businesses, real estate and criminal law.

6) Growth is expensive. Growth usually means more people. Not only does more people mean a higher payroll, but also it means more office space, more desks, more computers, more decor, more copiers, more phones, etc. Before you add another employee, figure out what your current revenue is per employee, and make sure that you can maintain that with the additional resource(s).

7) You will be involved in a lawsuit. You’ll need to sue for something (probably a payment owed to you), or you will be sued for something (hopefully not a payment owed to someone). The worst part of a lawsuit is the anticipation prior to the actual filing. Once it gets filed, you will be greatly disappointed by the pace. It never gets resolved by the end of the episode like it does on Franklin & Bash or Harry’s Law. In fact, there’s a good chance that Harry’s Law will be cancelled before your lawsuit is concluded. (Update: I think Harry’s Law was cancelled last fall. This upsets me).

8) No one else will love your business as much as you do.

9) Banks are impossible to work with. It takes an act of Congress to get a small business loan these days. But a good bank partner is a priceless asset. Build a good relationship with a local bank. Once you get your business going – take out a small loan that you know will be easy for you to repay. This will build a foundation for future loan applications. Also, build good credit for your business by leasing small office equipment and paying on time; same with credit card purchases. After a few years, it will be easy to go and get working capital from your bank partner.

10) You will have to fire someone. This will have your stomach in knots for days, or even weeks. But not everyone is a good fit for your business. You have to do what’s best for your business. You’ll feel much better after you do.

Kevin Vela is a founding partner of Vela | Keller PC in Dallas, and focuses his practice on representing small businesses and startups. You can follow Kevin on Twitter @DalAngelNetwork or follow the firm @VelaKeller and you can contact Kevin at kvela@velakeller.com.