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Paris: What a Difference a Decade Makes

Dana — Sun, 18 Sep 2011 05:49:21 +0000

I have been in Paris for several days, and I am surprised by many changes that have occurred in the more than ten years since I was last here. If there is a theme that ties most of those changes together, it is that the world is a much smaller place: Between the Internet and international travel, foreign influences cannot be excluded.

I am fascinated by this topic, because for many years I have been somewhat of a francophile and francophone. The great attractions – the Eiffel Tower, Arc de Triomphe, Luxembourg Garden, etc. – are as beautiful as ever and should not be missed. However, I have seen a number of changes in the city’s everyday life:

More Parisians speaking English – This seems to be universal among those in their 20s. A taxi driver explained this is the case because all students are required to study English starting at about age 11.
More Asian restaurants and other businesses – Chinese, Japanese, Korean and Thai establishments appear to be particularly prevalent.
Continuously-available food service – Years ago, the jet-lagged traveler whose internal clock demanded food in the middle of the afternoon was out of luck, because restaurants shut down between lunch and dinner. Today, many restaurants offer food all day long.
Fewer smokers – Smoking appears to be less prevalent. However, as in many U.S. cities, applicable law requires smoke-free workplaces, so smoking on sidewalks during breaks is common.
Greater obesity – Not nearly to the extent in the U.S., but noticeable – perhaps as a result of less smoking and more-available food.
More-casual dress – There appears to be less interest in wearing the latest fashions and looking as beautiful as possible.
Animated pharmacy signs – Nowadays, the familiar, illuminated green-cross sign flashes and moves to gain attention. A friend told me that prices and inventories were decontrolled by the government, so there is greater competition for customers.
Better-tasting water – I don’t have objective statistics supporting this assessment, but I’m reasonably confident that tap water tastes better than it did when I was last here.

In summary, Paris still is a wonderful place to visit, and I’m delighted to be here. But it’s interesting to see these developments in a city that, previously, held traditions strongly and resisted change.

Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

U.S. Merchant Accounts for Foreign Companies – A Problem

Dana — Tue, 09 Aug 2011 01:54:12 +0000

I have helped dozens of foreign clients launch their businesses in the U.S. Almost every impediment to forming a corporation and running the business under that corporation can be overcome. But there’s one problem I have not been able to solve: Opening a U.S. merchant account (for processing credit and debit card transactions) if the company does not have personnel in the U.S.

The stumbling block used to be opening a bank account if the client has no U.S. personnel (and no home-country bank with an affiliate in the U.S.). However, as explained in Three Important Issues for Foreign Companies Coming to the U.S., I solved that problem earlier this year.

Here is why merchant accounts present a problem: The individual opening the account must have a U.S. social security number – an issue already addressed in opening a bank account, as referenced above.

In addition, that individual must agree, in writing, to provide a personal guaranty for the company’s obligations under the merchant account agreement! While the founder of a company may be willing to serve as guarantor, no mere employee, officer, agent or representative of the company will knowingly take on such a responsibility.

So U.S. merchant accounts for foreign clients remain an unsolved problem. I’ll welcome – and gladly publicize – any solutions that readers can bring to my attention.

MarketWatch: European Startups still Drawn to the Valley

Dana — Thu, 07 Jul 2011 16:51:12 +0000

An article (“For Europe’s start-ups, Silicon Valley still calls”) published yesterday by MarketWatch, part of The Wall Street Journal Digital Network, discusses why European tech entrepreneurs continue to flock to the San Francisco Bay Area.

The article’s theme:

Divided by geography, language, regulation and, in some cases, just old-fashioned cultural prejudice, the region has struggled to shed fully its image as a place where men and women with ideas are born, but where they do not necessarily stay, prosper or secure funding.

Some of its main points:

In Europe, failure is to be avoided; here, failure is seen as a step along the road to success.
European venture capitalists invest in established companies; VCs here are more likely to make seed- or startup-stage investments.
On a per-capita basis, the U.S. has twice the amount of VC investment in Europe – and almost half of the U.S. total takes place in California.

Why Apple Didn’t Let “Giant Cock” into its App Store

Dana — Wed, 02 Mar 2011 22:14:45 +0000

Yesterday, in San Francisco, I had talked to one of the many foreign attendees at the Game Developers Conference. He told me about a game he had developed, which featured a giant rooster.

In the developer’s native language, the word for “rooster” is similar to the English word “cock”, so he called the game “Giant Cock” and submitted it to Apple’s App Store. Apple rejected the game without explanation.

The developer thought that perhaps “Giant” was the problem, so he resubmitted it with the name “Epic Cock”. Again, it was rejected.

This time, however, apparently suspecting that there was a foreign-language issue, Apple explained the rejection by directing the developer to the “Other” section of the Wikipedia entry for “cock”, which explains that “cock” is a colloquial, profane vulgarism for “penis”. He then understood.

Bottom line: If you need to localize software, an agreement or any other work product, retain an expert who can help you do so properly and avoid cultural embarrassment.

Three Important Issues for Foreign Companies Coming to the U.S.

Dana — Tue, 01 Mar 2011 02:23:12 +0000

Forming a corporation for a foreign client (see Foreign Companies: Form a New Corporation when You Come to the U.S.) is a lot like forming a corporation for a domestic client. Having gone through the process dozens of times, however, I realize that there are three important post-formation issues that foreign clients often need help addressing:

Obtaining an Employer Identification Number if no principal officer has s U.S. social security number – This process is described in Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S.
Opening a bank account if the client does not yet have personnel in the U.S. – This problem was largely resolved today when I confirmed with an accountant who has helped several of my foreign clients that, as part of his services, he can take a Vice President position that includes responsibility for opening a bank account.
Obtaining a visa to work in the U.S. – Realistic visa options are discussed in Visa Basics for Foreign Entrepreneurs Coming to the U.S.

Once you form your corporation and take care of these three issues, you will be ready to conduct business in the U.S.

How Much Does It Cost to Incorporate?

Dana — Tue, 08 Feb 2011 03:58:51 +0000

Recently I have seen a huge increase in the number of inquiries from prospective clients – especially foreign companies – interested in forming a corporation. One of their first questions usually is, “How much does it cost to incorporate?” This post answers that question.

First, though, I need to make a couple of points:

The following is merely illustrative. While the services described below suffice for many clients, we can know whether they are right for you only after we discuss your specific requirements in detail.
The only way we can agree that I will provide incorporation services is via an engagement letter signed by both of us.

My incorporation services typically include the following for a fixed fee of $2,000:

Preparing Articles of Incorporation / Certificate of Incorporation / Certificate of Formation (title varies among the states)
Filing with the Secretary of State requesting standard turnaround time (need and cost for accelerated turnaround varies among the states)
Secretary of State filing fee and, in states where a registered agent is required, first-year registered agent fee
Preparing action of incorporator (as appropriate), bylaws, secretary’s certificate, and written consent in lieu of organizational board meeting
Corporate records book, seal, and share certificates
Printing share certificates (for signature by corporate officers) and preparing share transfer ledger for initial shareholder(s)
Obtaining an Employer Identification Number (assuming a principal officer has a social security number)
All associated counseling

For foreign clients who lack a U.S. social security number, I can obtain an Employer Identification Number for a fixed fee of $500 (used to be $300, but a change to Internal Revenue Service procedures dramatically increased the amount of time I spend on telephone hold, so I had to increase the fee).

Related posts:

Photo credit: Thiago Felipe Festa via stock.xchng

Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

US Launch Advisors: Business Assistance for Companies Entering the US

Dana — Wed, 02 Feb 2011 23:12:40 +0000

As you may know, during the past few years I have helped approximately 30 overseas clients – most from Europe – bring their businesses to the United States. I have seen, recently, a dramatic increase in the number of inquiries from such companies. I, thus, am pleased to announce the formation of US Launch Advisors (USLA), a network of seasoned, highly-skilled service professionals in the San Francisco Bay Area that helps foreign companies create successful businesses in the United States.

USLA has two other co-founders, gentlemen I have known and respected professionally for a number of years: David Hutton and Rob Schock. David specializes in early-stage business development and strategic relationship searches and recently has been working with life sciences companies from Australia. Rob’s areas of expertise include corporate finance, accounting and business modeling.

We are in the process of adding more colleagues so that, collectively, USLA members will be able to assist with virtually any business need that arises for foreign companies coming to the US.

Of course, my role will continue to include advising on and forming the right legal entity; preparing and negotiating contracts; identifying and protecting intellectual property; and finding the right legal specialists for matters that are outside my areas of expertise.

Check out all International posts on this blog.

What’s in a Name? A Lot, if You’re a Corporation

Dana — Wed, 02 Feb 2011 00:07:43 +0000

In Act II, Scene II of Shakespeare’s Romeo and Juliet, Juliet wishes that she and Romeo could simply set aside their warring families, famously asking, “What’s in a name?” I thought about this question recently as I was helping a foreign client set up a corporation here in the U.S.

The foreign client is based in the U.K. It wanted to form a U.S. subsidiary with a similar name for brand-identification purposes. To avoid revealing the identity of the client, I will refer to it as “Amalgamated Widget Solutions, Ltd.” and the desired name of its U.S. subsidiary as “Amalgamated Widget Solutions, Inc.”

Because the U.S. corporation would have a warehouse and employees in Texas, we decided to form the corporation there. (See “Why [not] Incorporate in Delaware”.) Checking the Texas Secretary of State’s database, I saw that there was a Texas corporation with a name that started with “Amalgamated Widget’, but not one that started with “Amalgamated Widget Solutions”.

Had we been forming the corporation in Delaware or California, “Amalgamated Widget Solutions, Inc.” would have been an acceptable name because it is not confusingly similar to “Amalgamated Widget, Inc.” In Texas, however, there is an additional consideration.

In Texas, subject to certain exceptions, if the first two words of the new corporation’s name are the same as the first two words of an existing corporation’s name, then the owner of the existing must provide written consent to the new name, even if the new name is not confusingly similar.

We were in a rush to form the corporation, and there was no guarantee that consent would be granted if we sought it, so we chose an alternative name by using only part of the first word: “Amalgam Widget Solutions, Inc.” Not pretty, but it got the job done.

Bottom line: When forming a new corporation, pay particular attention to acceptable-name rules in the state of formation.

Related posts:

Visa Basics for Foreign Entrepreneurs, Part 2: What Constitutes Work?

Dana — Tue, 18 Jan 2011 18:00:35 +0000

In “Visa Basics for Foreign Entrepreneurs Coming to the U.S.”, I discussed certain immigration statuses (visa waiver, B-1 and H-1B visas) that permit a non-resident alien to take a passive role in a business (such as forming it) but not to work for it. This post discusses the boundary between permissible passive activities and prohibited work.

Let’s assume that the new business is formed as a corporation. Being a shareholder certainly is a passive activity. Being a director (board member) typically should be a passive activity, too, because directors’ role is one of oversight and approval (elect officers, approve major transactions, etc.), rather than running the business.

Being an officer is not permitted, however. Officers are directly responsible for running the business, thus they inherently are actively involved in working for it.

Summary if you are a non-resident alien who must keep his or her activities for a business passive: It’s OK to be a shareholder and a director, but don’t become an officer, employee or independent contractor of the business or do any additional work for it.

Are International Contracts Effective and Enforceable?

Dana — Thu, 06 Jan 2011 04:29:37 +0000

Flag of England (Yes, fellow Americans, there is an English flag separate from the UK flag - do you see the relationship?)

This post reproduces, almost verbatim, a Quora question and my answer. Q. How effective and enforceable are contracts between parties located in the United States and England?

A. Such agreements can be effective and enforced – agreements between parties in different countries are entered into routinely.

The stickiest issue during negotiations may be selection of venue and jurisdiction and choice of law. These, in turn, will have a bearing on how certain provisions should be drafted.

Depending on the subject matter of the agreement, you may need to think about whether the United Nations Convention on Contracts for the International Sale of Goods will be applicable and, if so, whether it should be disclaimed.