In this recent post to our fellow DLA blog – Technology’s Legal Edge – our colleague Giulio Coraggio identifies some of the legal issues that are being sorted out with respect to the Internet of Things, including the following:

  • Is “industrial” data personal data?
  • How do you protect data and IoT technologies?
  • Who is the owner of the data?
  • Is data kept secure?
  • What liability if things go wrong?

He also notes some EU-specific questions.  His full post can be found here.
Continue Reading The Internet of Things and its Legal Dilemmas

Article prepared by and republished courtesy of our colleagues Evan Migdail and Steven Phillips; originally published here: https://www.dlapiper.com/en/us/insights/publications/2016/11/the-trump-tax-reform-plan/

As a result of the elections, the chances for the enactment of comprehensive tax reform are perhaps greater than at any time over the past decade. A great deal of work has already been done on tax reform in the Congress. What has been lacking is the political dynamic needed to make reform a reality.

President-elect Donald Trump and Congress may also consider a scenario whereby part of the tax reform could be used to pay for an infrastructure program to create greater domestic economic growth.

What follows are brief summaries of President-elect Trump’s tax proposals and the House Republican Tax Blueprint that is expected to be a possible starting point for the consideration of reform early in 2017. 
Continue Reading The Trump Tax Reform Plan – Key Points

Yesterday the SEC adopted rules intended to facilitate intrastate and regional securities offerings.  The SEC made general updates and modernized old Rule 147, the safe harbor exemption for intrastate securities offerings under Section 3(a)(11) of the Securities Act. The SEC also adopted a new exemption in Rule 147A, which differs from Rule 147 primarily in that it expressly permits general solicitation and does not require the issuer to be formed in the same state as its principal place of business and investors.  This should allow Rule 147A to work more effectively with state-level crowdfunding exemptions.  (We have previously blogged about the challenges of crowdfunding under Rule 147.)

The SEC also revised Rule 504 to increase the aggregate offering amount limitation from $1m to $5m and to add “bad actor” disqualifications (aligning it with recent updates to Rule 506). In addition, the SEC repealed the little used and now largely redundant to Rule 505.

These rules have various effective dates tied to publication of the rules in the Federal Register, which will likely occur next week:

  • Revised Rule 147 – 150 days after publication in the Federal Register
  • New Rule 147A – 150 days after publication in the Federal Register
  • Revised Rule 504 – 60 days after publication in the Federal Register
  • Repeal of Rule 505 – 180 days after publication in the Federal Register


Continue Reading New SEC exemption rules for intrastate and regional offerings

By Tyler Hollenbeck and Cisco Palao-Ricketts

Although there a number of web resources regarding the distinctions between “incentive stock options” (ISOs), which can only be granted to employees, and “non-statutory options” (NSOs)[1], which can be granted to employees, directors and consultants, these resources are often heavy with tax jargon that is difficult to understand.  To help entrepreneurs focus on what should be most important to them, we have put together the below quick reference guide[2].

I.  TAX CONSEQUENCES – TO THE INDIVIDUAL

A.  NSOs

  • At date


Continue Reading Understanding the differences between an ISO vs. NSO

The Division of Corporation Finance of the Securities and Exchange Commission has announced that “Tandy” representations are no longer needed in filing review correspondence.

If you have been involved in filing a registration statement any time after 2004, you have probably seen Tandy language.  Named after Tandy Corporation, the first company to receive a letter requesting this language, Tandy representations required, in the event that a company requested acceleration of the effective date of a registration statement, to acknowledge in writing that:

  • should the SEC or the staff,


Continue Reading Corp Fin no longer requires “Tandy” representations for file reviews

One of the more important tax decisions founders of early-stage companies will face is whether or not to make an election under Section 83(b) of the Internal Revenue Code for stock awards or other acquisitions of shares subject to vesting. By making this decision promptly upon acquiring the shares, founders can avoid missing the 83(b) filing deadline and protect themselves from significant tax consequences down the line. Below, we have set out six of the most commonly asked questions by our clients:

1) What is a Section 83(b) election?

Section 83(b) of the Internal Revenue Code allows founders, employees and other service providers to accelerate the time for determining taxable income on restricted stock awards or purchases subject to vesting. A Section 83(b) election is made by sending a letter (a sample form can be found here) to the Internal Revenue Service requesting to be taxed on the date the restricted stock was granted or purchased rather than on the scheduled vesting dates.

Founders that decide to make an 83(b) election need to do so promptly to ensure that they do not miss the 83(b) filing deadline. An 83(b) election must be filed with the IRS within 30 days after the grant or purchase date of the restricted stock. The last possible day for filing is calculated by counting every day (including weekends and holidays) starting with the day after the grant date.
Continue Reading A Founder’s Guide to Making a Section 83(b) Election

Article prepared by and republished courtesy of our DLA Piper Trusts and Estates colleagues.

Earlier this month, the US Treasury issued proposed regulations that, if finalized, will significantly increase the transfer tax cost of transferring interests in family-controlled entities to other family members, both during lifetime and upon death. These regulations relate to how the value of the transferred interest is determined for gift, estate and generation-skipping transfer tax purposes. Under current law, well-established valuation methods permit the application of discounts for the lack of control and lack of
Continue Reading New IRS Proposed Regulations Eliminate Valuation Discounts: Planning Likely Required before the End of 2016

From our colleagues William H. Hoffman and Cisco Palao-Ricketts

Due to high competition to attract employee talent and to improve employee recruiting and morale, several private companies in the technology sector have recently altered typical stock option terms to extend the exercise period of vested stock options following termination of employment.

This new trend carries with it a complex set of considerations for employers that we examine in more detail here.
Continue Reading Equity Compensation Trend: Extending Time to Exercise Vested Stock Options

Deciding on the name for your to-be-formed company can be a stressful process given the seemingly endless number of possibilities and the limited legal requirements. Whether you have brainstormed a robust list of potential names and are having difficulty taking the final plunge, or are just now starting your search for the perfect name, we believe the practical considerations and legal overview below may be helpful to both new and experienced entrepreneurs alike when it comes to navigating the name selection process.

What is a corporate name?

The commonly used term “corporate name” is a bit of a misnomer, as certain state naming requirements apply to non-corporate entities as well. As most entrepreneurs are likely aware, entities must adopt an official name at formation that complies with certain state-specific legal requirements.  While the requirements for legal names tend to vary in minor ways state-by-state, there are two basic requirements that will need to be considered regardless of the entity’s state of incorporation:

  1. A corporate name must always include an expressly authorized “suffix” (often referred to as an “entity designator” or “entity indicator”) indicating the company’s entity type and limited liability status; and
  2. The proposed corporate name must be distinguishable from those of existing entities in such state of incorporation.

Though the focus of this article is on corporations and limited liability companies (which are by far the two most prominent entity structures used for aspiring venture-backed startups), it is important to keep in mind that certain name-related legal requirements can apply to other entity types as well.
Continue Reading Choosing a Corporate Name: Practical Considerations and Legal Requirements

The US Department of Commerce announced that it will begin accepting applications for Privacy Shield certifications beginning on August 1.

For US organizations collecting personal data from the EU, the past year has been an anxious one, as the European Court of Justice invalidated the EU-US Safe Harbor program in October 2015 and the terms of a far-reaching General Data Protection Regulation (GDPR) have been promulgated to replace the EU’s 1995 Data Protection Directive. Among other things, one of the major impacts of the GDPR – when it takes effect in May 2018 – is that it will apply to US businesses that sell to, make services available to or somehow target data subjects in the EU – even if those US businesses have no operations or affiliates in the EU. With the GDPR looming, the issue of cross border data transfers and the significance of the Privacy Shield program for US businesses are likely to become even more relevant.
Continue Reading Privacy Shield is final: What it means for businesses