If the Act becomes law, the bill requires the Securities and Exchange Commission (SEC) to implement “ESG Metrics” that address corporate disclosures under the Securities Exchange Act. The bill requires several elements, which include but are not limited to:

• In consent solicitation and proxy statements, issuers must include a clear description of the issuer’s review, and a description of any process the issuer utilizes to assess the impact of ESG metrics on its long-term business strategy. 
• Within audited financial statements, issuers must reveal ESG metrics so that a Sustainable Financial Advisory Committee may be formed. Issuers must also provide the SEC with recommendations about what metrics issuers should disclose. Additionally, the report must identify the challenges, as well as the opportunities for investors associated with sustainable finance.

Why ESG Reporting Matters

ESG reporting includes the disclosure of information connected to a company’s corporate, environmental, and social operations, and gives investors more detail which can assist their analysis on whether to avoid or engage with a company. When done correctly, ESG reporting provides a detailed image of the business’s impact in these three areas:

• Environment. This reporting analyzes how companies utilize energy and maintain the company’s environmental relations. For example, this would include disclosure of a company’s energy use, waste use, and how it treats animals. 
• Governance. This reporting reviews a company’s controls, practices and procedures. For example, this detail might include information about an illegal practice in which the company was once involved; or, the processes in place to avoid illegal practices that are common among publicly traded companies.
• Social. This reporting considers the connection between a company’s workers and the work culture. For example, this category might include details about whether a company donates a percentage of its profits to the surrounding community. 

The History Behind the Act

Long before this initiative went through the House of Representatives, the bill was introduced by a California legislator whose intent was that the proposed regulations would encourage both corporate and social responsibility in California, and throughout the country. The hope was that the regulation would result in companies being held to stricter standards involving ESG disclosure. The work on this bill comes during a time when many ESG lawmakers have begun working together to unify reporting standards, and provide more rigid and thorough environmental disclosures to the public due to various global environmental concerns. 

Obtain the Assistance of an Experienced Corporate Law Attorney

This Act represents just one of several pieces of notable corporate law legislation that have been filed in the last year. If you need help navigating the ESG Disclosure Simplification Act or any other corporate law issue, you should not hesitate to speak with a knowledgeable lawyer. Contact Resnick Law P.C. today to schedule a free case evaluation. 

Greater Discrepancies with Purchase Price

The pandemic has brought into question the long-term viability of many businesses; in turn, this tends to create discrepancies in purchase price and business valuations between buyers and sellers. Many business models are being scrutinized beyond normal due diligence, and sellers during the pandemic are increasingly expected to demonstrate the impact (albeit largely unknown) that the pandemic will have on a company’s long-term economic health. Discrepancies in valuation may result in more substantial purchase price adjustments. 

A buyer’s motivation for acquiring a business may also influence the purchase price. While buyers interested in financial gain will likely be focused more on short-term profits, others may be more focused on strategic plays and growth potential.  It goes without saying that the type of business plays a large role in all of this.  Additionally, in today’s economy there is still much uncertainty regarding survival and what the world looks like post-pandemic.  All of these factors can greatly impact the purchase price of a transaction.

Working Capital Adjustments

The way in which many businesses operate has changed substantially during the pandemic. Additionally, many businesses have been forced to pivot and/or adapt their operations to account for less working capital and cash flow.  One common area of contention within mergers and acquisitions right now is whether working capital should be measured against standards that existed before the pandemic, or if projections should be based on the current economy. Buyers will favor projections based on the current economy, as this will likely justify a lower purchase price, while sellers will tend to favor projections based on numbers and valuations pre-pandemic. 

Anticipated Timelines Have Increased Greatly

The day-to-day operations of many businesses have been significantly disrupted and impacted as a result of the Coronavirus. Understandably, some companies have implemented remote-work policies in the hopes of keeping workers safe and healthy.  Despite these efforts, however, the time frame for merger and acquisition transactions may inevitably take longer, as the flow of information is not as fluid as it once was.  Also, performing physical and internal inspections has become more difficult, dictating longer periods to be needed for due diligence.  For several reasons, the parties to a merger or acquisition can expect the entire transaction to take a longer period of time from beginning to end than they once did.

Tax Considerations

Signed into law on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a $2 trillion spending package that contains various types of pandemic-associated relief, including direct payments to individuals as well as small business loans. Many of these changes impact tax returns for previous years as well as for the 2020 tax year. The changes and issues that have arisen may also have a substantial impact on determining valuations of companies and their assets.

Speak With a Knowledgeable Corporate Law Attorney

If you are interested in discussing a potential merger or acquisition, one of the best things that you can do is retain the assistance of an experienced attorney. Contact Resnick Law PC today to schedule a free consultation. 

Employee Retention Credit

The employee retention credit was created to encourage businesses to retain workers on their payroll. The tax credit results in a refund of up to 40% of up to $10,000 in wages paid by a qualifying employer who has had its business impacted by the COVID-19 pandemic. The only businesses exempted from this credit are local and state governments as well as small businesses that receive small business loans. 

Qualifying employers must have their business fully or partially suspended by the government as a result of the pandemic and the employer’s gross receipts must be 50% below the comparable quarter in 2019. Employers who can retain staff during the pandemic should not hesitate to utilize this credit.

The Paid Sick Leave Credit

The paid sick leave credit was created to allow businesses to obtain a credit for a worker who cannot work as a result of either COVID-19 isolation or self-quarantine. These workers are qualified to receive paid sick leave of up to 10 days at a maximum of 80 hours at the worker’s regular rate of up to $511 a day and $5,110 in total. Employers can immediately be reimbursed for this credit by reducing the required amount of payroll taxes owed. 

The Family Leave Credit

Employers can also receive a credit for workers who cannot work because the worker is caring for a family member with COVID-19 or because a child’s school or place of care is closed. Workers who fall under this category are entitled to receive paid sick leave of up to two weeks at a maximum of 80 hours at two-thirds of their regular pay rate with a cap-off at $200 a day or $2,000 in total. Qualifying employers can immediately redeem this credit, as well. 

Credits are Optional

Remember, payroll tax credits are optional. As a result, eligible employers need not feel required to claim the credits. If employers do claim the credits, however, it is critical to include the amount of credits by the employer in its gross income when federal income taxes are reported. One of the best ways to decide whether these credits are worth claiming is to speak with your corporate lawyer.

Speak with a Knowledgeable Business Law Attorney

Planning for your business’s continued success is more important now than it ever was. One of the best ways to make sure that you take tax laws into full consideration is to obtain the help of an experienced business lawyer. Contact Resnick Law today to schedule a free case evaluation.  

While there are several common ways that partnership disputes arise, there are several strategies that can be used to resolve them. 

Disagreements Among Partners

Some of the most common types of disputes that partners encounter include:

• Intellectual property disputes. If a company is based on one partners’ intellectual property, it is possible to take steps against this asset being classified as company property. This is why there should always be clear documentation about who retains the asset and how it is handled during and after the life of the business.

• Monetary disputes. Business partners often disagree about how money should be spent. In many partnerships, one individual manages operations while the other decides how money is handled. To avoid disagreements over finances, it is a good idea to make clear ownership rules up front. In terms of compensation, both partners should be honest about how much time they put into the company and take the corresponding amount in salary.

• Operational disputes. Many partnerships begin with co-equal management and the partners intending to make decisions mutually. Disagreements, however, can still arise because one partner might feel that the other partner is not performing his or her job. One of the best ways to avoid escalating conflict is to clearly outline the process for dispute resolution in your partnership contract. 

Tips in Resolving Partnership Disputes

Some strategies that can be utilized to reduce partnership disagreements include:

• Actively listen. Practice “active listening” in which each partner agrees to compassionately listen to the other’s position without interjecting. 
• Avoid rush judgments. For small companies, even small decisions can be critical. If partners disagree about an issue, it can be easy to end up in an argument. Rather than rush into a decision, relax and consider your partner’s position.
• Plan in advance. If you anticipate that certain topics will result in disputes, attempt to plan how to handle these disputes ahead of time. 
• Seek outside help. Realize that outside help can be useful. Mediation can be a great choice in these situations. Mediation is focused on reaching a fast and effective resolution that benefits both parties in a dispute. If mediation is undesirable for some reason, it might be time to consider retaining the assistance of a knowledgeable corporate lawyer. 

Speak With an Experienced Business Law Attorney

At Resnick Law PC, our attorneys have helped business owners resolve disputes. Contact us today by calling (248) 642-5400 today to schedule a free case evaluatio

Burgeoning Coronavirus Lawsuits

In May 2020, lawsuits were filed against Princess Cruise lines alleging that the company was grossly negligent in exposing passengers to COVID-19. The lawsuit claims that the cruise ship was allowed to go to sea despite the knowledge that previous ship passengers had the disease. The Princess Cruise lawsuit is only one COVID-19 lawsuit of many, and the numbers keep going up. 

To minimize the risk of ending up in a lawsuit, some companies have resorted to what once seemed like drastic measures. For example, there have been several news stories of companies throwing away tens of thousands of dollars in food to avoid potential infection risks.

What Duty Business Owners Have to Customers

In Michigan, business owners have a duty to use reasonable care to protect customers from an unreasonable risk of harm created by dangerous conditions. Business owners must take reasonable care to provide customers with a safe environment. This means that business owners must discover and eliminate dangerous conditions on their premises and avoid creating conditions that could make things unsafe.

In Michigan, a customer’s contributory negligence is not a complete bar to recovery. Given the extensive recommendations about staying indoors and maintaining a six feet distance from others, there is at least some degree of culpability if a person claims to have contracted COVID-19 while patronizing a business in person.

The Role of CDC and MIOSHA Guidelines

While there is no specific requirement that business owners must follow guidelines established by the Centers for Disease Control and Prevention, to avoid third-party liability, it might be a good idea to follow these guidelines to keep customers as safe as possible.

Unlike the CDC, the Michigan Occupational Safety and Health Administration (MIOSHA) has issued workplace guidelines for business owners that include requirements that must be followed. For example, employers must create a written exposure control plan that includes exposure determination and addresses what measures will be taken to prevent worker exposure to COVID-19.

Steps Businesses can Take

Some of the helpful strategies business owners can take to mitigate the risk of coronavirus exposure include:

• Discouraging handshaking
• Informing workers about what they can do to reduce the risk of COVID-19 spread
• Practicing proper respiratory hygiene
• Routine cleaning and disinfecting
• Separating sick employees
• Using sufficient building ventilation

Speak With a Michigan Corporate Law Attorney Today

If you have questions or concerns about how your business can better mitigate liability during the COVID-19 pandemic, it can help to speak with a knowledgeable corporate law attorney. Contact Resnick Law, PC today to schedule a free case evaluation.

The following are some of the most common mistakes made by companies on social media as well as what can be done to avoid them.

Using Fake Testimonials

Testimonials, when used appropriately, can be a powerful way to build your reputation as a trusted business. The use of fake testimonials, however, can create trouble among regulators. State attorney generals strictly enforce how testimonials are used. Fake testimonials can quickly lead to substantial legal fines and other serious penalties.

Not Having an Internal Social Media Policy

As social media plays a larger role in society, it is increasingly more important for companies to have a social media policy. This policy should address things like whether workers can pursue social media opportunities while on the clock and who owns social media followings. 

When improperly handled, these issues have the potential to result in wrongful termination lawsuits. Employers can also encounter legal trouble if they delete social media posts and activity related to salary and other work conditions. 

Running Contests Without Proper Legal Authorization 

While companies realize that everyone loves the opportunity to win a prize and running a contest can create a great deal of publicity, it does not come without its risks. Regulatory agencies frequently watch how companies implement contests and whether those contests conflict with gambling or lottery laws. 

If your company decides to offer a contest, it must consider all applicable regulations. 

Requiring Employees to Promote Campaigns on Their Personal Profiles

For most business owners, employees play a vital role in the company’s future success. This extends to the company’s social media presence. While it might be tempting to ask a younger worker in the office who has a huge social media following to help promote a campaign, this can create various challenges. 

There is a substantial difference between making content available for workers to post and requiring employees to share content. While making information available to share is often permissible, companies are generally prohibited from forcing workers to share campaign details.

Not Being Prepared for the Associated Fines

Posting on social media might be free, but paying for the associated fines is not. Social media lawsuits often result in companies paying up to $100,000 in fines. Many companies fail to budget for these costs. In many cases in which a company is likely to win, the associated costs are still substantial and must be anticipated or can end up eating into other budgets. 

Given these costs, many companies decide to respond to potential infringement cases by first sending cease and desist or DMCA takedown letters. 

Speak with a Knowledgeable Corporate Law Attorney

Any business owner can accidentally make mistakes on social media, and when those mistakes threaten future business success, an experienced business litigation attorney can help. Contact Resnick Law PC today to schedule a free case evaluation. 

In January 2020, the

While the law is directed toward companies that do business in California, given today’s internet-based economy, there is a high probability that many companies besides those physically located in California will be impacted by CCPA, including many businesses right here in Michigan. 

Other states are currently in the process of passing legislation that is similar to the CCPA. The following will review some critical details that all Michigan business owners should understand how these laws might impact business operations. 

What Businesses are Impacted by the CCPA?

The CCPA impacts any for-profit entity or business that falls into any of the following categories:

• Businesses that collect personal information either directly or through the use of a third party and make decisions about how that data is used and processed.
• Businesses that operate in California and either have a gross yearly revenue of at least $25 million, which buy/sell/exchange the personal information of at least 50,000 consumers/households/devices, or 
• Businesses that make at least half their annual revenue from the sale of consumer personal information

Some businesses, however, are entirely excluded from the CCPA. These include businesses that collect or sell personal information entirely outside of California, that do not hold onto any collected personal details, or that sell personal details as part of a merger.

What Personal Information is Covered by the CCPA?

The CCPA covers a wide range of information. If any data could potentially be viewed as personal in any way, it is protected by the CCPA. The most common examples of data covered under the CCPA includes browsing histories, credit card numbers, email addresses, and geolocation data.

What Rights are Granted by the CCPA?

The CCPA grants California residents various rights regarding their privacy and personal data. Michigan business owners should become acquainted with these rights, which include the ability to pursue damages for data breaches as well as the right to opt out of the sale of their personal data. Companies are also required by law to disclose whenever they are collecting personal data. 

How Should Businesses Respond to the CCPA?

If your Michigan business has made any update following the EU’s most recent privacy regulation, you are likely still in compliance with the CCPA. If not, you should carefully review your business’s data collection methods as well as what type of data you collect. One of the reasons that you should promptly make these revisions is that businesses that fail to conform to the CCPA are at risk of facing civil penalties of up to $7,500 for each incident. 

Contact an Experienced Michigan Corporate Law Attorney

If you have questions or concerns about how the CCPA might impact your business, it can help to speak with a knowledgeable corporate law attorney. Contact Resnick Law PC today to schedule a free case evaluation.

Anyone who has seen the TV show

The Basics of Investor Agreements

Investor agreements outline the terms of an investment in a company. These agreements should include several important terms, such as: 

• The addresses, dates, and names of each of the parties to the agreement
• The amount of money that is being invested as well as details about how the investment will be used
• Payments terms about how the payment will be made and the dates on which the payment will occur
• The type of investment
• The length of time that the investor agreement will be valid
• Any deliverables to be fulfilled by certain dates
• Any products or services to be developed and certain dates

The Return on Investment

The agreed-on return on investment (ROI) should also be included. Terms should include details about what the investor will receive in exchange for the investment. You might decide that the ROI should be a flat interest rate or even a percent of the success of the investment. 

Escape Clauses

Investor agreements should address what will happen if the company ends up filing for bankruptcy or dissolving. Any risks associated with an investment should also be fully disclosed. Doing so protects both parties in case the company encounters challenges. 

Investor Management

Sometimes, parties decide to give an investor either control or management rights within the investor agreement. If you decide to utilize this relationship, it should be contained in your investor agreement. Similarly, companies sometimes decide to give investors voting rights to the company so they can participate in making business decisions. 

Strategies

The role that outside investment plays in growing a business is a complex one. As is true with other types of business deals, it is not without risk. As a result, investment agreements often contain provisions that limit a party’s ability to provide contract value payouts in some situations. When evaluating investment options, it is a wise idea to fully understand the potential risks involved with each term of the agreement. 

Contact an Experienced Corporate Law Attorney

Investing is a complicated and risky process. To make matters even more complex, after a company secures an investor, the relationship is not over. Instead, companies should make sure to avoid substantial challenges by properly drafting all investor agreements. 

Contact Resnick Law today for assistance navigating any of your contract-related challenges. 

(image courtesy of Luca Bravo)

If you write a bad one, your

Make Sure the Liquidated Damages are Not Optional

One of the most common ways that parties challenge liquidated damages clauses is by arguing that the terms are optional and not mandatory. With few exceptions, courts tend to take the perspective that optional liquidated damage clauses are unenforceable. Courts have found that enforcing optional clauses would mean that parties would only exercise them when they are to their advantage. Consequently, companies are best off avoiding the use of optional damage clauses altogether. 

Specify the Amount of Damages

Parties to a contract often fail to give adequate consideration to the type or amount of damages that will be liquidated. When fully considering the damages that might result, parties often decide to include frequently overlooked damages like reputational harm. Your business lawyer can help ensure you do not omit damages that you should be sure to include.

Include the Clause’s Rationale

Michigan courts have a long history of enforcing liquidated damage clauses. In one case from the early 1900s, the Michigan Supreme Court stated: “In cases, where it is difficult to accurately determine the damages which one party may suffer by the failure of the other to perform his contract, the parties themselves may agree upon such sum as in their judgment and will be ample consideration for the breach.” 

Breaching parties often argue that the terms of the contract were not satisfied, which is why including the rationale for a liquidated damages clause in a contract can be a powerful strategy. While these statements will not ensure that a clause is found enforceable, these statements do have the ability to establish that a clause was not reasonable at the time of contracting.

Consider including What Events Trigger the Clause

In liquidated damage clauses, it is common for parties to argue that trigger events have not occurred. The strongest liquidated damage clauses often specify exactly when they will apply. In clarifying the events that both will and will not trigger the clause, it is possible to greatly reduce disputes about whether the liquidated damage clauses should be found to apply to any given situation. 

Speak with an Experienced Corporate Law Attorney Today

Writing a strong liquidated damages clause is just one of many ways to ensure successful business contracts. No matter your corporate law question, however, a knowledgeable lawyer at Resnick Law PC can help. Contact us today for assistance.

Signing a commercial lease is not a decision that should be made in a rush. One of the largest costs for many business owners is commercial real estate rental. As is the case with most contracts, a business owner who enters a commercial lease contract without considering all of the available options might end up signing a deal from which there is no easy way out. If you are a business owner about to sign a

Read the Lease Carefully

While it might seem like an obvious piece of advice, it is absolutely critical to read through a lease agreement to fully understand all of the terms involved. You should make sure to understand all the final points of the lease, the responsibilities of each involved party, and what happens if certain potential events occur. There are often potential events contemplated in a lease that could have a substantial effect on how your company is operated. As a result, it is vital to make sure that you agree to each and everyone of these terms before signing a lease. If you happen to disagree with any lease term, you should either negotiate for an agreeable term or find another commercial unit that is much more agreeable.

Negotiate the Terms of Your Lease

Even though a landlord has likely provided you with the same lease that is offered to other tenants, it is still possible to negotiate on some of the terms of the lease if you find them particularly disagreeable. By listing any of the provisions with which you disagree, you might create an opportunity to reach a more agreeable relationship with your landlord. Of course if a space is particularly attractive to other tenants or if you are renting substantially less space than other tenants, it might not be possible to negotiate the terms of your lease. Your business attorney can help you negotiate the best possible commercial lease agreement with your potential landlord.

Make Sure Your Business Structure Exists

It is essential to make certain that your business’s structure is in place before you sign a lease. Deciding on a business entity after entering into a lease is likely to make things much more complicated and can cause much more substantial problems for your business down the road.

Get Legal Advice Before Entering Into a Lease

It is often best to speak with an attorney before signing a lease. An experienced business attorney can make sure that you save time and money when entering into a contract. A knowledgeable attorney can help discuss your various business goals to make sure that commercial lease contract actually reflects your best interests.

Speak with an Experienced Business Law Attorney

First time business owners are faced with a number of daunting obstacles. One of the largest and most serious challenges for many business owners concerns signing a commercial lease. If you need the assistance of an experienced corporate law attorney, contact Resnick Law today to schedule an initial consultation.