Documenting the Future of Corporate Governance

Documenting the Future of Corporate Governance

Corporate governance is a process by which a corporation is directed, managed and run. Organized properly, it serves as the foundation for business decisions supporting enterprise growth and stakeholder value.

Healthy engagement between stakeholders, the board of directors and company management is paramount for the profitability, productivity and market positioning of a business. These functions are a particularly important element for attracting long term investors and capital.

Organizational documents are key to the legitimacy of a business and its growth. Primary here are corporate formation and operational documents which provide a clear articulation of business activities.

The business structure utilized depends on the type of entity a founder chooses to run and the jurisdiction they’re in. A corporation is codified by way of a Certificate of Incorporation (also known as an Articles of Incorporation), along with associated bylaws that outline operating procedures.

These documents form a corporation’s basic charter governing management, operations, and equity holders’ rights.

Today it’s not uncommon to see founders ignore proper corporate governance practices in their haste for a quick business launch and market presence. And as is often the case in a rapidly growing industry sector, this oversight can run afoul of stringent and rapidly evolving regulatory requirements and requests for transparency.

Moreover, early investors and stakeholders often overlook these governance shortfalls in their quest for a quick investment return.

One example of this involves cases where a founder may offer a verbal or handshake promise of equity or stock options to employees or advisors without any sort of documentation. The same with corporate restructuring or even a vendor arrangement that occurs without an agreement to reference back to.

All of this underscores the importance of facilitating and adopting proper documentation practices. As a business owner, you can avoid headaches by implementing strong corporate governance practices right out of the gate. This involves bringing order to your bylaws, operational documents, and agreements, ensuring that your business is consistently operating within established parameters and approval protocol.

https://shawnowen.us/Shawn Owen is the CEO of equaSTART an enterprise on the cutting edge of document simplification where from creation to execution, agreements are smartened into living adaptable core components of an organization. He had this to offer about the launch of the business:

“I think there were a lot of different elements that probably led up to this idea culminating. It involved some big ideas that I’ve had for a long time along with a lot of different experiences which led me to my own theories around how businesses should operate and function.”

Owen says that the ultimate spark for deciding that this was an idea that needed to happen on the heels of the pain he had experienced running a previous business.

“I had many moments of deep reflection where I began asking myself, ‘why is this so complicated, why is this so hard?’”

He found that the document process to be rather arduous, often involving the review of something that occurred in the past in order to identify the best, most accurate outcome for people to agree on. But at the end of the day, he says, it was all basically about the efficient execution of agreements and recordkeeping.

Asked about the value proposition of equaSTART as a solution to this, Owen added:

“Broadly speaking, we’re using technology that’s specifically focused on delivering a quality business user experience around documents and agreements, all with the aim of providing a single source of truth for the records.”

Owen’s concludes:

“With all of the technology that we have in the world that we live in, I kept thinking, ‘shouldn’t there be a better way of keeping records without all of this unneeded overhead and complexity?’ When things start to become too complex, you start wondering ‘why is this, this way?’ I’ve always been a big fan of simplifying things if there is an easier way”

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Doing The Startup “One Thing

Doing The Startup “One Thing

Acommon narrative among the world’s most prized companies is their early development as startups. In the past, creating a large and successful enterprise was seen as a major undertaking.

Today new businesses launch in small industrial spaces, spare bedrooms, even in garages. Globally, small businesses make up a significant portion of the global economy. In the U.S. alone, businesses of 500 employees or less comprise nearly half of the economy.

Despite these small beginnings, many startup owners are seeking exponential growth of their business, often with a single-minded vision of being acquired by a larger company.

In his number one Wall Street Journal bestselling book, Gary Keller extolls a concept called The ONE Thing. In it, he poses the question:

“What’s the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?”

At equaSTART, our laser-focused intent and “one thing” is to help mitigate the friction associated with new business formation, management, and ownership. We seek to help businesses begin on a solid foundation, one that allows them to accelerate their market entry while eliminating costs.

Large, well-funded companies often have a wealth of resources to fuel their strategic growth, thereby gaining a decided advantage in the marketplace. equaSTART hopes to bring balance to this startup playing field by delivering a cost-effective, streamlined destination for business management activities such as documents, banking, and compliance.

The equaSTART platform allows members to form a new business entity, obtain a bank account, and secure a tax ID within minutes. All of this significantly reduces the amount of time and money associated with forming and managing a business.

The Building Blocks

EQAU founder and CEO Shawn Owen, says the company’s primary focus is to deliver a quality user experience to those starting a business or entrepreneurial venture. In other words, how to bring efficiency to the end user whether it’s an owner, business manager, investor — anyone who is the part of an organization.

Comments Owen: “Anytime you can make something more efficient and save people time and money, they love it.”

But the bigger picture, he says, is the notion of a central source of truth. In other words, once you have everyone’s information in one place, why not evolve it into all the other forms of agreements that people make.

“There is always a series or sequence of agreements tied to business transactions. Keeping these in one place allows you to free up time for your “One Thing” which is to deliver a great product.”

Owen also underscores the theme of simplicity for business owners:

“When you get too technical people get scared. By way of example, think about something as simple as bitcoin. When you talk about what Bitcoin is in a simple way, people are like, ‘I get it. It’s digital gold or whatever.’ But when you get too deep into the details, it can actually be very complicated. So at the end of the day, we want to avoid confusing people and keep their lives simple.”

Continues Owens: “One of the things I have always wanted to see and I think most people who are technology advocates also want to see is a user interface and experience that’s easy enough for even a grandmother to use. In other words, they are intuitively able to use it without having to know too much.”

Heconcludes: “Our goal is to make user experience our number one focus so a person would never have to know anything about the underlying technology. As long as someone gets just the basics, they’ll be able to use it.”

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

Feature Interview With Corporate Attorney Garrett Sutton 1

EquaProfile: Feature Interview With Corporate Attorney Garrett Sutton

Garrett Sutton is a corporate attorney, asset protection expert and best selling author who has sold more than 900,000 books on corporate formation related themes.

For over 30 years, Sutton has been providing business leaders and real estate investors with the necessary support for asset and legal protection while maximizing their financial goals. He founded two companies, Corporate Direct and Sutton Law Center, which have helped scores of clients and incorporate their businesses and protect their assets.

Garrett also is part of the elite group “Rich Dad Advisors” tied to bestselling author Robert Kiyosaki. A number of the books Sutton has authored are part of the bestselling Rich Dad, Poor Dad wealth-building series.

Garrett attended Colorado College and the University of California, Berkeley, where he received a B.S. in Business Administration in 1975. He graduated with a J.D. in 1978 from Hastings College of Law, the University of California’s law school in San Francisco.

Licensed in Nevada and California, Sutton is a member of the State Bar of Nevada, the State Bar of California, and the American Bar Association. His professional articles have appeared in the Wall Street Journal and Credit.com, among other publications.

In this EquaStart interview, Sutton discussed the growing world of business formation and what it means for both startups and established businesses.

Feature Interview With Corporate Attorney Garrett Sutton 2

How did the concept of corporate entities come into existence?

When we fought in the American Revolution, we took not only the English crown on but a giant corporation, the British East India Company. This was during a period in our history when people were generally upset about corporations.

So at the founding, there was some interest around creating a national corporate law. There was a lot of resistance to this as the populace instead wanted each state to have its own corporate law. So that’s how it was carried forward, a decision which allowed states to compete in terms of the favorability of their laws.

So which states currently offer the greatest favorability?

Delaware has always been out in front. But Nevada and Wyoming have made efforts to become the go-to states. Wyoming when it comes to LLC’s is great. And Nevada is the only state that allows the charging order protection, the key LLC asset protection feature for corporate shares. So we’re in a dynamic period, one where each state that wants to compete can amend their laws in an effort to become the most favorable they can.

What’s one of the common mistakes businesses make when setting up a corporation?

With all due respect, the first one is that you often have CPA’s, telling people that they don’t need to set up a corporation or LLC when starting a new business. Our joke as corporation attorneys is that CPA stands for “Can’t Protect Assets.” So in my opinion, it’s imperative for new businesses to talk with an attorney, someone who understands what the risks are of operating as a sole proprietor, such as the fact that all of your personal assets are exposed. So that’s a rookie mistake right out of the gate, not setting up an entity from the get-go.

Are there any other mistakes?

Yes, a second blunder common among business owners when setting up an entity is utilizing one of those $99.00 providers that will form the company for you and get it chartered with the state without providing you with the paperwork you need to be a legitimate corporation. In other words, things like by-laws for the corporation or an operating agreement for an LLC are often missing. The issue here is that if you don’t have that paperwork together, someone can pierce through the corporate veil of your business and reach your personal assets. So it’s important to not only to do it right at the start but to have all the documents you need set up and ready to go when requested.

How are these documents typically organized?

Some of these formation services send you a disk with the agreement on it and you’re supposed to fill it out and sign it. But many business owners forget to execute the signatures. So you just have this disk when you walk into court, try to print out what’s on it, and if it hasn’t been properly signed, you are going to lose the case. So it’s important from the very start to make sure that you print out the document and sign it.

What about corporate minutes?

Businesses need to have minutes every year, the corporate annual documentation of the directors and the shareholders' meetings. For LLC’s, its important to have regular meetings of the members that are documented through meeting minutes. If you’re ever called into a court of law, you’ll need to have those annual minutes prepared. Because if a judge looks at your minute book and sees that you haven’t met the requirements for a couple of years, he/she could say that you’re not following the requirements of a business.

Are these minutes an annual requirement?

Yes. You need to be conducting your annual meetings even if the state law says otherwise. In Germany where the LLC was started way back when, if you didn’t have the annual meeting minutes, your corporate veil could be pierced.

What about corporate entities and how they’re set up business taxation?

There are two issues. The first is how your business is going to be taxed. We work with CPA’s all the time to have an LLC taxed as an S Corp, if necessary, or as a C Corp, or partnership or as a disregarded single entity. So we work with CPAs on how your entity is going to be taxed and what’s the best taxation method for you.

And certainly, the CPA has a great role in selecting the method of taxation.

What about stock certificates? And the emergence of blockchain to manage them?

When it comes to stock certificates and all, they’re going to be important if you are a public company, or if you are going to have a large number of shareholders.

It’s here where blockchain technology is certainly going to assist in the issuance of stock certificates. Delaware, in fact, has recently allowed for blockchain stock certificates. So it’s a dynamic area right now.

Can you share with us a little about you’re long-term working relationship with Rich Dad/Poor Dad author Robert Kiyosaki?

I’ve been very fortunate to collaborate with Robert Kiyosaki and the Rich Dad/Poor Dad group for almost 20 years. They initially asked me to write a book that would be accessible to the average person who wants to understand corporate and LLC structures. So that’s why I wrote the first book “Start Your Own Corporation” which I’ve updated a number of times over the years because of tax laws changes and changes in asset protection laws.

And then there’s the book “Loopholes of Real Estate” where I talk about the legal strategies for investing in real estate. I use stories to make points about the concepts. Instead of a dry narrative around how you’re supposed to do things, I tell a story as my readers seem to learn better from the examples.

So it’s been very enjoyable for me to write these books, and to get feedback from others. I’m on the phone with people all the time from around the country and the world and a lot of them say that they have appreciated the book because it provides such a comprehensive overview of asset protection.

What do you believe is ahead in terms of corporate entities?

That business formation will continue forward at a steady pace. Because a lot of people are investing in real estate you are certainly going to see a growing demand for LLCs. People are also using LLC for other forms of investing. A lot of people, for example, are looking to Wyoming as a place to form a Wyoming LLC and hold their digital assets there because such a favorable set of laws exists there for bitcoin and other forms of digital currencies.

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What Are Corporate Bylaws and LLC Operating Documents? 3

What Are Corporate Bylaws and LLC Operating Documents?

Corporate bylaws are a vital element of a newly formed company, providing key rules and regulations for operational effectiveness. They aredrawn up and codified by the board of directors when a corporation is being formed. This document helps to ensure that a business runs consistently from its inception.

Bylaws thus become the critical document to aid the board of directors in their oversight of the corporation.

Terms included in a corporate bylaw are dictated by the guidelines set by a particular state. These typically include important information such as the following:

In most states, limited liability companies (LLCs) are required to create an LLC operating agreement. These operating agreements, essentially function as a set of corporate bylaws, offering guidelines for how an LLC operates as well as owner responsibilities. The documents are often key for responding to legal issues and are legally binding.

Typically LLC’s and corporations are not required to file bylaws and operating agreement documents with the Secretary of State office. They may, however, be requested by lenders, banks, attorneys, and potential investors for various business activities.

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

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