This blog has previously addressed the Nevada Series LLC, a unique type of business entity that affords limited liability protections to sub-entities (or series) under the umbrella of singular Secretary of State filings by the “mothership” entity.  As previously described, Nevada is one of a very few states in the country that allows the formation of the Series LLC.  That being said, what types of businesses are appropriate for the formation of a Series LLC?  Typically, the Series LLC is ideal for holding companies – especially for real estate holdings.  Under these circumstances, an entity that owned five (5) real estate parcels could form a Series LLC, placing each parcel in its own series, thereby providing limited liability protection per parcel.  For example, if someone was injured on parcel 1, that party’s remedy would be against the series that owned parcel 1, rather than against the umbrella entity.  In other words, although the five (5) parcels all fall under the singular Secretary of State filings of the umbrella entity, the injured party cannot look to the other four (4) parcels as assets from which a judgment might be satisfied.

There may be other business types suitable for the use of a Series LLC as well.  As always, it is best to consult with your Nevada business attorney prior to making the entity formation choice.

Global Business Lawyers’ Blog has previously featured information regarding the importance of a Nevada entity using a business lawyer as its registered agent.  These reasons include prompt notification and consultation or referral in the event the entity is served with a summons and complaint, or subpoena in litigation.  While commercial registered agent or corporate services firms will forward information received as a conduit to the entity, the legal analysis is absent unless a business lawyer is the one with initial receipt.

While one may think that the simple task of notifying the Nevada entity’s principal(s) of renewal fees and forms that are due is more economically handled by a corporate services company, consider the advice the entity may need if the filing deadlines are missed and the corporation, LLC or other entity falls into “default” or, eventually, “revoked” status with the Nevada Secretary of State.  Unlike a corporate services firm, a Nevada business lawyer will be able to advise the entity client that maintaining its good standing has a direct impact on whether the entity has the legal ability to participate in litigation in Nevada at all.  Indeed, a Nevada entity in default status (for something as simple as a neglected renewal deadline) loses its legal ability to prosecute and defend a law suit.  Additionally, the Court’s scrutiny of the entity in the face of adverse claims for disregard of the corporate entity or “piercing the corporate veil,” to obtain the personal liability of the entity’s principal(s), becomes harsher when the entity in question has failed to maintain its good standing.

Global Business Lawyers routinely advises its corporate clients in these matters and, if necessary, vigorously defends corporate clients in litigation in the face of such claims as described above.  Obviously, the preference is for the entity not to be in that position in the first place.  Competent advice from a Nevada business lawyer can achieve that – the mere forwarding of mail by a corporate services firm cannot.

Acquisitions of existing businesses occur on every scale of the business spectrum.  Fortune 500 companies and international conglomerates purchase other companies and participate in mergers on almost a routine basis.  Likewise, small businesses are often acquired by larger competitors or peer companies as part of a variety of strategic business plans.  Whether you are a decision-maker for the acquiring business, or the target of the acquisition, an essential decision in the process is the active participation of your business lawyer.

The acquiring company in such a transaction must perform comprehensive due diligence into the status and history of the target of the acquisition.  A complete record of exactly what is being acquired and what representations are being made by the target of the acquisition are necessary to minimize risk in the acquisition and maximize the potential for a successful move forward following the completion of the transaction.

The target business likewise has many issues to address.  First, what exactly is for sale and what packaging of assets will make the business more attractive to a potential acquirer?  Next, knowing that a potential acquirer of the business will likely not be willing to enter into a deal with open ended contracts or unresolved disputes with third parties, the principal(s) of the target business must work with their business attorneys to tie up all loose ends possible both prior to and during the sale/merger/acquisition process.

The attorneys of Global Business Lawyers – Lovaas & Lehtinen, P.C. have extensive experience in negotiating and documenting business sale, acquisition and merger transactions, both for public and private companies, and having represented both the acquiring and target businesses.  While these transactions are always exciting and create optimism for the future for both parties involved, they can also be minefields yielding the essential need for the participation of an experienced business lawyer.

As discussed in prior blog posts, Nevada is a great place to do business.  Excellent tax benefits, privacy and enviable climate make for compelling reasons to open a new business, set-up an affiliate office, or completely re-locate your company to Las Vegas.   In addition, the availability of Series LLCs encourages many company owners to explore the possibility of changing their current LLC to the status of a Series LLC.  Series Limited Liability Companies are ideal for companies or business owners with a variety of holdings, whether commercial property, residential property, or other investments looking to take advantage of the liability protections of a LLC, but minimize the annual costs that would be incurred by setting up individual Limited Liability Companies.    A Series LLC consists of a parent LLC with multiple series of LLCs within the overhead of the parent LLC.  Each series has its own LLC liability protection, has its own Employer Identification Number and assets and liabilities particular to its holdings.  Fortunately, Nevada allows a current LLC to be converted to a Series LLC with the filing of an Amendment to the Articles of Organization.  Specific language is required on the Amendment to the Articles of Organization and the Operating Agreement provisions of the current LLC in order to effect the series status change and comply with the statutory requirements of NRS 86.  In order to ensure any amendment to your LLC is effectuated we recommend engaging the services of a Nevada business lawyer experienced with the specifics of Series LLC creation.  If you are interested in converting your LLC to a Series LLC, please contact us at Global Business Lawyers.

Businesses and business owners are frequently served with subpoenas seeking the disclosure of information that might be relevant to litigation involving other parties.  Similarly, state and local regulatory agencies and, of course, the Internal Revenue Service have the authority to obtain subpoenas to assist in investigations by gathering documents and other information.

Perhaps a current or former employee of the business is involved in litigation and the opposing party issues a subpoena to the employer to obtain wage or performance review information.  Equally common is a subpoena served by the IRS to obtain income information regarding individual taxpayers going through audits.

The most important thing for a business owner to remember is that a subpoena is akin to a court order and must be taken seriously.  When a business is served with a subpoena seeking documents and other information, the subpoena will always set out a date by which the disclosure must be made.  If the business fails to disclose the requested information, it is technically in contempt of court and subject to contempt sanctions, such as monetary penalties.

When served with a subpoena, the best thing the business owner can do is contact his or her Nevada business attorney.  Even though the disclosure is required under the subpoena, the business owner also has potential liability for disclosure of information that is protected, such as certain financial and health information.  If the business owner discloses protected information, even if pursuant to the subpoena, he or she could face liability to the employee or the person who the information involves for breaches of those privacy rights.

By contacting a Nevada business attorney, such as Global Business Lawyers, the business owner can enjoy the reassurance of both timely compliance with the subpoena, as well as a thorough review of the documents to be produced to protect the business from potential liability for producing what might be protected or privileged.

Even parties who are not directly involved in litigation or some sort of investigation fall within the reach of the courts as those other parties put together their cases.  Have your Nevada business attorney involved right away if your business is served with a subpoena.

Many businesses have an interest in protecting themselves from competition engendered by a former employee or executive who might have specialized knowledge of the business or business components that puts him or her in a more advantageous competitive position than outside competitors.  To address this situation, businesses often utilize non-compete agreements to contractually prevent company personnel from competing with the business or capitalizing on established relationships by soliciting existing clients or customers.  Most often, non-compete agreements are designed to restrict the former employee after leaving the business on the theory that once the business invests time and capital into training the employee and entrusting him or her with sensitive business information, the business should be protected from the employee’s use of that information to the business’ disadvantage.

Non-compete agreements are enforceable in Nevada.  However, in reviewing them, the Nevada courts have determined to strike a balance between the protection of the former employer and the ability of the former employee to make a living.  Generally speaking, if overbroad, non-compete agreements in Nevada, if litigated, will be modified by the Court to the shortest duration of time (generally a year) and the smallest geographic area (city, county or state) that will achieve that balance.  These considerations may weigh in favor of a broader non-compete agreement, however, if the knowledge or skills of the former employee, directly attributable to his former employment, are highly specialized, rare, or confidential.

As with any business agreement, business owners are encouraged to seek the counsel of a Nevada business lawyer to assist in producing a non-compete agreement that is narrowly tailored to the business and the unique competition issues it may face from former employees, rather than relying on an “off-the-shelf” non-compete agreement that is sure to be reformed by the court if litigated.

Nevada is one of the only states in the United States to allow businesses to operate under an organizational structure known as a “Series LLC.”  A Series LLC is an ideal structure for the ownership of income producing real estate holdings, such as rental properties.  In forming a Series LLC, the organizer files only one set of Articles of Organization to establish a master or “mother ship” limited liability company.  So long as the Articles and Operating Agreement provide for the establishment of a series under the mother ship LLC, as allowed by Nevada statutes, the organizer can then establish cells or “series” underneath the mothership within which to hold assets.

For example, the organizer establishes “Anybiz, LLC,” which under its Articles and Operating Agreement allows for the creation of series within its structure.  Anybiz, LLC then purchases three (3) rental properties and title is taken to each property in the names of Anybiz, LLC Series 1; Anybiz, LLC Series 2; and Anybiz, LLC Series 3 respectively.  So long as each series is governed by its own Operating Agreement and is treated by membership and manangement as separate and distinct business entities, the liabilities of one series will not infect the others.  Series LLC’s reduce costs in allowing for the formation and maintenance of only one LLC with the Nevada Secretary of State (and therefore the payment of formation and annual renewal fees for only one LLC) while providing the limited liability benefits of multiple LLC’s.  Under the right circumstances, the series LLC may have to file only one federal income tax return as well.

Series LLC’s are yet another component of Nevada’s pro-business arsenal and favorable corporate climate.  In order to benefit fully from this unique business structure, however, it must be formed correctly.  Consult with your Nevada business lawyer to ensure proper formation and operation of the Series LLC.

Business agreements run the gamut of subject matter from employer/employee relations, to shareholder issues, business governance, distributorship of products, relationships with vendors – the potential subject matter is almost endless.  Your Nevada business lawyer is the appropriate first stop in the consultation and preparation of the various business agreements that your enterprise will need in conducting its business, but realize that assembling the right team of professionals to collaborate in the generation of a properly functioning and enforceable agreement is essential.

For example, most good partnership or buy-sell agreements address succession in the business among principals.  Insurance is a tool widely used to fund various succession plans.  Involving an insurance professional in the generation of this agreement ensures that it functions as intended from the beginning, thereby avoiding costly amendments, or worse, ambiguous situations in the future.

Business valuation and buy-out agreements will necessarily require the involvement of accountants and other financial professionals.  When considering international relationships as a business takes its enterprise global, distributorship and other agreements that cross national boundaries must consider the laws of each jurisdiction involved.  This necessitates the involvement of lawyers and other professionals in those jurisdictions.  If a company is moving its principals or key employees to another country to facilitate global expansion, or bringing skilled employees in from other areas of the world, immigration counsel must be involved every step of the way.

Global Business Lawyers maintains an extensive network of attorneys in every discipline around the world, as well as a network of other professionals needed to facilitate soundly functioning business transactions.  Assembling the right team at the outset of a project guards against unwanted time, expense and ambiguities at critical points in the future.

Assuming that the overseas individual or entity has sufficient contacts with Nevada to make them subject to Nevada’s jurisdiction and the subject matter of the case has a sufficient connection with Nevada, parties located in other parts of the world can be sued in Nevada just like those parties located in Nevada and within the United States.  The issue in effectively commencing the case, however, lies with proper service of process on the overseas party through a method recognized as valid service in that party’s home jurisdiction.  The most prevalent of these methods is through the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (commonly known as “The Hague Service Convention”), to which sixty-two (62) nations subscribe.

The Hague Service Convention specifically describes how service must be made upon a party located in one of the member nations and addresses issues such as translation and who may serve the documents.  The laws of that individual country must be consulted as well in order to determine more specific issues.  For example, while the Hague Convention describes service by a “judicial officer,” the laws of each subscribing nation will define what a “judicial officer” is in that nation.

Without proper service of the initiating documents, the case will go nowhere – even if the overseas defending party has actual prior knowledge of the case.  Nevada is very strict on parties’ compliance with the Hague Service Convention in these circumstances and affords no method for a defending party to waive proper service even if willing to do so.

Global Business Lawyers routinely represents parties in U.S.-based litigation involving parties in international locations.  We and our worldwide network of professional partners are proficient at Hague Convention service and have prevailed on many occasions in defense of deficient service under the Hague Convention for many transnational clients.

No Nevada or international business owner looks forward to receipt of a Complaint against their corporation or LLC.   In Nevada, there is very limited period of time (20 days) to prepare a response to the Complaint.  A response to the Complaint may be an Answer or a Motion to Dismiss.  Not responding to the Complaint within the deadline allows the Plaintiff rights to file a Default Judgment against the corporation or business. Accordingly, upon receipt of a Complaint or other pleading, forward immediately to your business law attorney.  If the Complaint is in a jurisdiction outside of the business’ home country, a business lawyer dealing with global entities will be able to assist in the resident state jurisdiction or forward to their law firm partners in the country of the lawsuit to ensure a strong and efficient defense against the Complaint.

Other points to consider:

Have a Nevada law firm as the business’ Registered Agent.  Upon service of any Complaint, the law firm can act quickly to provide recommendations regarding responses to the Complaint and potentially negotiate a longer time to respond.

Ensure all business contracts contain provisions stating the jurisdiction of where disputes between the parties will be litigated or mediated. Ensuring a jurisdiction is stated in the contract eliminates costly fees at the outset of the litigation where parties may begin arguing what court, state, or country is the appropriate venue.  Agreeing to a jurisdiction eliminates these costly fights.