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28
May

Exporting – Evaluating Local Foreign Sales Partners

As difficulties continue in domestic markets US companies looking to survive and grow must take a serious look at expanding their businesses through exporting.  There are a number of export strategies that can be used; however, the most common method that firms use for getting their feet wet outside of the US is engaging a local sales agent or distributor in the target foreign market.  In this report I discuss some of the factors to be considered when evaluating and selecting local foreign sales partners.

25
May

Knowledge of the Business is an Essential Trait for Effective Law Department Leadership

Responding to the dramatic changes in both business and legal markets over the last several decades, attorneys who run corporate legal departments of any significant size have become fairly proficient at basic management skills. Today, most law departments are reasonably well managed. Yet, many general counsels have come to realize that good management alone is not enough. In an increasingly complex world where the competitive environment can change very quickly–where key attorneys can easily move to other companies or into private practice and where internal clients are more demanding than ever before–being well managed is essential but not sufficient. Corporate law departments must also be well led. They must have leaders who can identify and drive strategies for long-term success, who can spot opportunities and take advantage of them, and who can develop and inspire others to help guide where the department and the company as a whole needs to go.

There is no doubt that extensive resources have been devoted to the search for “traits” and “attributes” of effective leaders, as well as characteristics of dysfunctional leaders.  In fact, one of the earliest and most popular conceptions of leadership that flourished in the 19th and early 20th centuries, often referred to as the “great man” theory, assumed that certain individual characteristics, or “traits”, could be found in leaders but not in non-leaders and that those characteristics could not be developed but must be inherited.  Much of the work based on this theory was conducted under the umbrella of settling debates about whether leaders were “born or made” and, to the extent that genes were not totally responsible for leadership success, what strategies could be used to teach people how to execute the behaviors though to be associated with effective leadership.

Eventually the “great man” theory was discredited in the face of a continuous stream of new theories that had as one of their core principles the democratization of leadership opportunities.  However, the “great man” theory did leave behind a keen interest in attempting to identify those individual traits that could be most tightly linked to leadership and laid the foundation for the “trait school of leadership” which held that the traits of leaders—assumed to include their capacities, motives and patterns of behavior—were different from those of non-leaders.  In contrast to the “great man” theory, trait theories did not particularly care whether the leadership traits were inherited or acquired and, in fact, early suggestions about optimal traits included items that were inherited (e.g., height, weight and physique) as well as items that were dependent on experience and training (e.g., industry knowledge).

Many leadership scholars lacked confidence in the research findings relating to leadership traits and, in fact, trait theories were largely abandoned for a significant period.  However, Kirkpatrick and Locke argued that new research using a variety of methods had provided support for the general proposition that effective and successful leaders were “different” and that there were a handful of core traits that were extremely important contributors to, albeit not guarantors of, the success of leaders in the business world.  According to Kirkpatrick and Locke, there are six traits on which leaders differ from non-leaders: drive, the desire to lead, honesty/integrity, self-confidence, cognitive ability and knowledge of the business./All of the traits mentioned by Kirkpatrick and Locke would presumably be important for leaders of corporate law departments; however, particularly intriguing and relevant is the admonition of the researchers that effective leaders demonstrate a “high degree of knowledge about the company, industry and technical matters”.  Effective general counsels are privy to extensive information about their company and the industry and overall economy in which they are operating and this specific information in invaluable to their ability to make intelligent decisions regarding strategy and operational matters within the law department.  Another important benefit of relevant technical expertise is that it enables the general counsel to have a clear understanding of the concerns of other attorneys in the department and gives them credibility when they are offering advice on potential solutions to technical issues that may arise within the department.  The power of expertise can be enhanced by appropriate behaviors, such as “leading by example”.

21
May

Documentary Requirements for Dissolving & Liquidating a Corporation

It is not often that business counselors are called upon to dissolve and liquidate a corporation; however, when it does happen it is important to be aware of all the documents that will be needed to complete the process.  Among the most common are:

• Notice of intent to dissolve;

• Notices, proxies, ballots, and resolutions for board and shareholder actions;

• Articles of dissolution;

• A plan of liquidation and distribution;

• A notice of liquidation for publication;

• Notices to creditors, employees, government agencies, and taxing authorities;

• If responsibility for the liquidation is being given to an independent trustee, a liquidating trust that appoints the trustees and lays out the rules they are to follow with respect to orderly payment of the obligations of the corporation and distribution of the remaining assets to the shareholders;

• Transfer documents relating to sale of assets by the corporation and “in-kind” distributions of assets to the shareholders;

• Settlement agreements with creditors; and

• Final tax returns.

While the winding up and dissolution of a corporation can be done pursuant to the default rules established by applicable statutes, shareholders often prefer to modify and/or supplement the statutory rules with a comprehensive and customized dissolution agreement that cover a wide range of legal and operational issues such as preparation of a final accounting, management of “work in progress”, satisfaction of liabilities of the corporation, ongoing liability insurance, distributions of corporate assets and amounts received from collection of accounts receivable, management of books and records, dispute resolution, rights and restrictions with regard to soliciting and servicing customers of the corporation after dissolution and responsibility for termination of registration with applicable boards and/or licensing authorities.   An agreement of this type should be used in conjunction with the required actions by directors and shareholders.  In order to provide greater certainty to the process, the parties should consider supplementing the agreement with exhibits to identify and describe pending projects, outstanding liability, tangible and intangible assets and outstanding accounts receivable.

For further discussion and examples of the forms and other documents referenced above, see Dissolution and Liquidation of Corporations (§§ 305:1 et seq.) in Business Transactions Solutions, which is available by accessing Westlaw Next.

18
May

Entrepreneurship in Vietnam

Entrepreneurship is an exciting and dynamic factor in Vietnam and this report provides an introduction to some of the drivers of entrepreneurial activity in that rapidly growing economy, including the influence of cultural and socioeconomic factors and the role of the State with respect to supporting and encouraging entrepreneurism.

14
May

Expanded Coverage of Registration Statement Preparation in Business Transactions Solution

This month’s Business Counselor Update on Westlaw Next includes updated and expanded coverage of the preparation of registration statements for public offerings in Registered Public Offerings (Ch. 288).   The timetable for a registered public offering included in that chapter has been updated and a new Master Form of a registration statement for the initial public offering of a smaller reporting company with a limited operating history has been added to the materials.  In particular, illustrations have been provided about how to address the requirements for disclosures in key areas including: 

  • Prospectus summary (§288:149.04)
  • Risk factors (§288:149.05)
  • Use of proceeds (§288:149.06)
  • Management’s discussion and analysis of financial condition and results of operations (§288:149.10)
  • Description of business (§288:149.11)
  • Security ownership of principal and, if applicable, selling stockholders (§288:149.13)
  • Management and corporate governance §288:149.17)
  • Executive compensation (§288:149.18)
  • Certain relationships and related transactions (§288:149.19)

While registration statement preparation is often thought of as the exclusive preserve of larger law firms, business counselors working at smaller firms can assist their clients with capital raising through a registered public offering that takes advantage of the streamlined disclosure rules that are applicable to smaller reporting companies.  In addition, knowing how to draft a registration statement can provide dividends in assisting clients who are raising funds privately and need help with creating their private placement memorandum.

7
May

New Slide Deck Presentations from Business Counselor Institute Programs

The May 2015 Business Counselor update includes new slide deck presentations from recent Business Counselor Institute programs as additional practice materials in several chapters.  Specific presentations cover fee arrangements (§ 1:264); conflicts when representing business clients (§ 1:265); admitting owners of non-corporate entities, such as partnership (§ 50:151) and limited liability companies (§ 61:149), and supplier selection and management (§ 82:162).  The slide deck presentations were adopted from presentations originally prepared for a teleconference program on the topic that is part of the Business Counselor Institute series offered by Thomson Reuters West LegalEdcenter®. To listen to the programs (not maintained) and learn more about the Business Counselor Institute series, visit the West LegalEdcenter® online at http://westlegaledcenter.com.

4
May

African Leadership & Management

This week's report focuses on “African leadership and management”, which is one of the most controversial areas of comparative management studies.  Relying on a review conducted by Nkomo several years ago, we examine four alternative approaches to the subject that have been used by various scholars: “African management development”, which focuses on the need for capable leadership and management in Africa in order to achieve economic and social goals; literature on national culture, which examines African leadership and management using one or more of the various cultural dimension models that have been developed and popularized by various researchers such as Gaart Hofstede; the representations of African leadership and management that have appeared in management textbooks, which typically focus on how historical feats in Africa such as the building of the pyramids in Egypt fit into the progression toward the development of “classical” and “scientific” management theory; and a small but growing number of works defining the elements of indigenous “African management philosophy” and development and adoption of management practices that are congruent with African cultural values as opposed to ill-suited prescriptions from Western cultures that were introduced during the colonial period.