Last month, Texas Governor Greg Abbott signed into law Senate Bill 29 (SB 29), introducing significant amendments to the Texas Business Organizations Code (TBOC). Chief among these are the codification of the “business judgment rule” and new limitations on shareholder derivative actions. [1] The changes reflect efforts to make Texas a more business-friendly jurisdiction by
For nearly all companies, but particularly companies in the technology sector, the intellectual property (“IP”) they create are the crown jewels of the business. Without the IP, the company has nothing to sell. Of course, the IP does not form out of thin air—someone has to create it. That “someone” is the company’s founders, as well as employees and contractors hired by the company. Accordingly, companies should have an approved form of Proprietary Information and Inventions Assignment Agreement (often referred to as a “PIIA” or an “IP Assignment Agreement”) executed by each of its founders on formation and each future employee and contractor upon hiring or engagement.Continue Reading IP Assignment Agreements: Protecting Your Company Today and Saving Yourself from Headaches Tomorrow
Emerging growth companies commonly search for an influx of cash through funding provided by investors. Venture capital firms, angel investor groups, and high net-worth individuals (collectively, “Investors”) are common sources tapped for obtaining that much-needed cash. In these scenarios, the Investors provide cash to the corporation in exchange for shares of the corporation’s preferred stock. Each time a corporation offers its stock for cash, a new series of preferred stock is created. The name of the financing round generally corresponds to the name of the series stock. Typically, the initial rounds of financing are known as a “Series Seed” or “Series A” round, followed by a “Series B,” then “Series C,” and so on and so forth as further funding is taken in over the years. When going through these financing rounds, whether the very first Series Seed round to the last financing round before an exit, the same agreements are entered into and amended to memorialize the rights, privileges, and preferences of the various series of preferred stock offered.Continue Reading Venture Capital Financing: An Overview of Financing Documents