I am often asked when working with a new business who should serve as the company's Registered Agent. The Registered Agent must have a physical address within the State where the company is incorporated or registered as well as a local contact in each state where it might register as a "foreign" entity because the Registered Agent serves as the contact for official State documents such as business license renewals and, in some cases, tax documents. In addition, any summons for an appearance in court or other proceeding will be sent to the Registered Agent. You may serve as your own agent or have an attorney, CPA or any other third party serve in the role. Ideally, the Registered Agent should have a stable address and understand the implications and requirements of the official documents received on the company's behalf. Remember that if the Registered Agent changes its address or ceases to work with the company, the information must be updated with the State.
There are two primary methods of handling liabilities of the business, in conjunction with the sale of a business. First, the buyer purchases the assets of the business and leaves the liabilities in the hands of the seller. Alternatively, the buyer purchases the stock of the business and requires indemnification for any liabilities that may arise due to prior acts. Even in the case of an agreement specifically stating these expectations, an exception may exist if the purchaser is deemed a "successor" of the prior comapny. Obviously there are many factors that determine whether the purchaser is a successor but some key determinants are 1) whether the purchaser is a "mere continuation" of the seller's business; 2) whether the companies essentially merged rather than a purchase occurring; and 3) whether the intent of the transaction was for the seller to avoid liabilities. Consider whether the ownership and employees are the same and whether the price paid was reasonable for the assets purchased. Even if the purchaser doesn't meet the "successor" criteria, it may still be held liable for certain tax liabilities such as employment security for which the seller would then be responsible for reimbursing the purchaser - if the seller can pay it. If you think you might be in a successor situation, recognize that you may be on the hook for some liabilities that you didn't count on under your Purchase & Sale Agreement.
I've received some questions recently about the difference between online Privacy Policies and website Terms and Conditions and when each is used. Privacy Policies are critical when you are collecting any information from visitors to your site, whether that information is provided voluntarily or involuntarily. The Privacy Policy states how you plan to use the data collected and, hopefully, gives visitors to your site the confidence to provide you with useful data for your business, either "personally identifiable information" (or "PII") or generic information. Terms and Conditions of Use are more often used in connection with a business transaction on a site such as the purchase of an item or the free download of an item. The T&Cs appear in a contract format with the typical provisions and indemninfications to protect the owner of the site and the product from liabililty associated with the user's use of the product or from the user's misuse of the product. The T&Cs also typically require the user to check an"I Agree" box to avoid someone later saying, "I didn't actually read the terms." We've all (including lawyers) downloaded software or joined an online organization without reading the Terms & Conditions -- it's rare that you'll get burned but it's good practice to know what the agreement says and what rights you might be waiving!
Have a very happy and safe Independence Day!
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