Category: Corporate law

Consent Isn’t the Only Consideration: NY Comic Con Attendees Disagree that Hijacking Twitter Accounts Makes the Event “100x cooler! For realz.”

MintzLogo2010_Black

The comic book industry is no stranger to displays of heroic anger and berserker rage, but over the weekend New York Comic Con (NYCC) was on the receiving end of considerable fan fury after it began ghostwriting effusive tweets about NYCC and posting on the Twitter pages of NYCC attendees in a way that made it appear as though the attendee was the author of the tweet.

During the event registration process, NYCC attendees were given the option of linking RFID badges to their Twitter account through the event’s mobile application interface.  During the application registration process, attendees were asked to authorize NYCC to access their Twitter accounts.  At this point, attendees arguably consented to having NYCC impersonate the attendee when posting about NYCC on the attendee’s Twitter feed.

The NYCC website page explaining the ID badge technology and the site’s registration page did not mention that NYCC would be posting to attendee Twitter pages on the attendee’s behalf.  Rather, the registration process is explained as a method for giving the attendee access to enhanced social media content, while helping NYCC protect against fraudulent credentials.  The activation terms provided that NYCC could use the information collected through the badge “for internal purposes” and to contact the user about future events.  After a user registered his or her badge and elected to link a Twitter account, the user was presented with an opt-in notice (a screenshot of which can be seenhere), specifying that following authorization, the application would be able to, among other things, “post Tweets for you”.  This type of warning is not uncommon.  For example, any website that allows users to click to share news articles or stories on their Twitter pages requires this type of access.

In spite of the opt-in warning, the wide-spread surprise among attendees suggests that the opt-in language did not draw a clear distinction between posting tweets for a user and posting tweets as a user.  Moreover, the failure to mention this practice when explaining the registration process could have led attendees to conclude that even if they were agreeing to provide this type of access, NYCC would not be taking the unusual step of pretending to be the attendee when it published tweets on the user’s page.

NYCC’s initial response was a brief tweet telling attendees not to “fret” over the ghostwritten posts and informing attendees that the “opt-in feature” had been disabled.  However, after anger continued to spread, NYCC issued a longer statement apologizing for any “perceived overstep.”

This type of disconnect between online service providers and users is becoming increasingly common as advances in technology permit mobile device and social media data to be accessed and used in new ways.  Earlier this year, for example, Jay-Z and Samsung stepped into a public relations debacle when the “JAY Z Magna Carta” mobile application required that the user, in exchange for receiving a free music download, authorize the application to have extensive access to phone data and social media accounts. The response from NYCC attendees also underscores the lesson learned by Googleearlier this month, that consent provided by users who do not fully understand what they are consenting to may not be consent at all.

As your online business finds new and innovative ways to deliver products and services to your users, it is important to take a step back and consider whether additional communications in different formats, such as just-in-time notifications, are necessary to ensure that the only surprise your customers have is how great your products and services are.   Or, to put it another way, “with great power comes great responsibility.”

Article By:

 of

New SEC Rule Helps Entrepreneurs Raise Capital

GT Law

Start-ups, small businesses, venture capi- talists and hedge funds can for the first time in 80 years begin openly advertising to raise money in private offerings. The change by the Securities and Exchange Commission is part of the JOBS Act requirement to amend Rule 506 of Regulation D to permit general solicitation. While opening the gates for general solicitation, the SEC has simultaneously tightened rules to protect investors.

Prior to the new rules that be- came effective Sept. 23, companies seeking to sell securities to raise capital had to either register the offerings or qualify for exemptions from registration. The costs and complexities of public offerings often were beyond the reach of many small businesses. The new public solicitation rules make it possible for startups, small businesses, venture capitalists and hedge funds to search for investors via the internet, newspaper and other ads, social media and other general solicitation methodologies — previously forbidden territory. At the same time, they avoid the challenges and costs that come with the full registration process.

The new rules are complex, and ensuring compliance will invariably require advice from securities lawyers and investment bankers who can help companies raise capital safely. This includes ensuring they qualify for the traditional exemption or are in the “safe harbor” of the new rule. While this involves cost and time commitments, the new avenues for fund raising are still less complex and ex- pensive than traditional registered offerings. For example, offerings under the original Rule 506 exemption (now retained as a Rule 506(b) offering) allowed companies to raise an un- limited amount of capital from an unlimited number of accredited investors, but not from more than 35 nonaccredited investors. The new alternative, Rule 506(c), allows companies to generally solicit potential investors, gaining access to wider au- diences through solicitation and advertising methods previously unavailable – good news for startups and small companies.

Other changes require issuers to provide ad- ditional information about the 506(c) offerings and require companies using the new rule to take “reasonable steps” to ensure every inves- tor is qualified. The definition of a “reasonable step” is not clear under the new rule. It will take time to fully understand what the SEC views as a “reasonable step.” Practitioners will want issu- ers to document in their files that the companies did more than just take the investors’ word that the investors are accredited. It is generally understood that tax returns, certifications from tax accountants, review of bank account statements or other independent confirming information about potential investors will suffice to meet the “reasonable steps” standard.

Another change imposed by the new rules: a “bad actor” disqualification. This means issuers and other market participants will be disquali- fied from relying on Rule 506 when felons or other bad actors participate in Rule 506 offerings. As part of the adoption of these new rules, the SEC also voted to issue new companion rules containing stronger investor protections. Theseinclude requiring entrepreneurs who take advantage of the new general solicitation rules to (i) provide additional information about their capital raising offerings, (ii) provide more information about the in- vestors who are participating in the offerings, and (iii) require companies to file Form D with the SEC at least 15 calendar days before engaging in general solicitation and within 30 days of completing the offerings to update the informa- tion contained in the Form D and indicate that the offerings have ended.

Although it remains to be seen whether these rules will make it easier for entrepreneurs to raise money, the new rule changes will certainly allow companies to reach more potential inves- tors in a more cost-effective manner. If handled properly, entrepreneurs should have a powerful new vehicle at their disposal to support the de- velopment and growth of their companies.

This article was previously publsihed in Daily Business Review.

Article By:

 of

Lawsuits Against Creditors of NewPage

Michael Best Logo

The trustee for the litigation trust resulting from the NewPage Corporation bankruptcy has launched nearly 800 lawsuits against pre-bankruptcy creditors of NewPage Corporation seeking payment to the trust.

The lawsuits (also called adversary proceedings) have been filed in Delaware bankruptcy court by litigation trustee Pirinate Consulting Group LLC to recover allegedly preferential payments made in the months prior to the company’s Chapter 11 bankruptcy filing in September, 2011.

Much to the surprise of many who did business with the debtor prior to the bankruptcy filing, not only are they waiting for payment on amounts owed, but they will now face claims that they must give back monies previously received.

Defendants should know there are often defenses to these claims, including that the allegedly preferential payments were made in the ordinary course of business or that additional goods were shipped after those allegedly preferential payments were received. Upon receipt of a complaint, defendants should contact counsel knowledgeable about bankruptcy avoidance actions for assistance. Failure to respond to the adversary proceeding complaint in a timely manner, can result in a judgment and collection efforts by the litigation trustee.

Article By:

 of

Former Head of Investor Relations Penalized by SEC for Selectively Disclosing Material Nonpublic Information, While Self-Disclosing Company Escapes Charges

Katten Muchin

The selective and early disclosure of material non-public information resulted in a Securities and Exchange Commission cease and desist order and civil penalties against the former head of investor relations at First Solar, Inc. (First Solar or the Company), an Arizona-based solar energy company. The SEC determined that Lawrence D. Polizzotto violated Section 13(a) of the Securities Exchange Act of 1934 and Regulation FD by informing certain analysts and investors ahead of the market that First Solar would likely not receive an important and much anticipated loan guarantee commitment of nearly $2 billion from the US Department of Energy (DOE). The day after those disclosures, the Company publicly disclosed this information in a press release, causing its stock price to dip six percent.

On September 13, 2011, First Solar’s then-CEO publicly expressed confidence at an investor conference that the Company would receive three loan guarantees of close to $4.5 billion, which the DOE previously committed to granting upon satisfaction of certain conditions. Polizzotto and several other First Solar executives learned a couple of days later that the Company would not receive the largest of the three guarantees. An in-house lawyer expressly advised a group of First Solar employees, including Polizzotto, that they could not answer questions from analysts and investors until the Company both received official notice from the DOE and issued a press release or posted an update on the guarantee to its website. According to the SEC, notwithstanding this instruction, Polizzotto and a subordinate, acting at Polizzotto’s direction, had one-on-one phone conversations with approximately 30 sell-side analysts and institutional investors prior to First Solar’s public disclosure. In the conversations, they conveyed the low probability that First Solar would receive one of the three guarantees. In some instances, Polizzotto went further and said that a conservative investor should assume that the guarantee would not be granted.

Polizzotto agreed to pay $50,000 to settle the charges without admitting or denying any of the SEC’s findings. He, however, was not subject to even a temporary industry bar. The SEC did not bring an enforcement action against First Solar due to the Company’s cooperation with the investigation, as well as its self-disclosure to the SEC promptly after discovering Polizzotto’s selective disclosure. In addition, the SEC emphasized the strong “environment of compliance” at the Company, including the “use of a disclosure committee that focused on compliance with Regulation FD” and the fact that the Company took remedial measures to address improper conduct, including conducting additional compliance training.

In the Matter of Lawrence D. Polizzotto, File No. 3-15458 (Sept. 6, 2013).

The Facts on FATCA – Foreign Account Tax Compliance Act

McBrayer NEW logo 1-10-13

On August 19, 2013, the Internal Revenue Service introduced its new registration portal to assist Foreign Financial Institutions (“FFI”) as they make efforts to comply with the Foreign Account Tax Compliance Act (“FATCA“). Financial firms (banks, investment funds, and insurance companies) around the world must comply with the law, aimed at keeping US persons from hiding income and assets overseas, or risk serious consequences that could shut them out of financial markets. In recent years, the U.S. government has suspected that U.S. persons are underreporting massive sums of money hidden in offshore accounts.

FATCA was enacted as part of the Hiring Incentives to Restore Employment Act of 2010 (“HIRE”). Under FATCA, FFIs are required to collect, verify, and provide information about their U.S. clients to the IRS. If they fail to do so, they are subject to a 30% withholding tax on U.S. source payments. To assist foreign countries with the Act’s reporting requirements, the U.S. Treasury Department developed model Intergovernmental Agreements (“IGAs”). FATCA implementation has been tumultuous, largely because there are foreign governments which have not entered into these IGAs with the U.S. government. To date, the Treasury has signed ten IGAs, and is engaged in ongoing conversations with more than 80 other countries. The Act was scheduled to take effect in January 2014, but the enforcement date has been postponed to July 2014. As of now, the IRS will start collecting firms’ customer account information in 2015.

FATCA implementation is set to occur in three phases. The first is implementation of the Act itself, with the collection of information regarding U.S. accountholders in FFIs. Second, FATCA partner countries will enter into bilateral agreements for the purpose of exchanging this information. Last, this information will be transferred to a centralized FATCA database that acts as the central repository for offshore account information for all countries that are members of the Organization for Economic Co-Operation and Development (“OECD”). A list of these countries can be found here.

There has been significant resistance from FFIs, who are opposed to the IRS snooping into their financial affairs and frustrated with FATCA’s reporting and compliance requirements. Many FFIs believe that the law turns them into tax collectors and burdens them with a job that the IRS should be handling itself. Some FFIs, faced with the complicated burdens and tax exposure risks, have simply chosen to drop their U.S. clients. Major banks like HSBC, Deutsche Bank, Credit Suisse and Commerzbank are among those that have done so. This, of course, presents a major problem to Americans who conduct business or invest internationally; it is harder to obtain bank accounts, find insurance coverage, and qualify for loans. Expatriates are especially hard hit by institutions that are dropping American clients. Businesses are not exempt, either. Pursuant to FATCA, FFIs are required to report any private foreign corporation, business, or partnership in which a U.S. citizen is a ten percent or greater shareholder. A foreseeable consequence of the law is that foreigners become hesitant to do business with U.S. citizens because FATCA could expose sensitive account information and compel tax investigations.

Curbing tax evasion is a worthy goal, but FATCA comes at an expense to the law-abiding Americans citizens, expatriates, and businesses that engage in financial transactions overseas. Whether it will be a successful endeavor remains to be seen, but you can be sure that the side effects of it are already being felt by many.

International Group Structures Are Subject to An Ongoing Review for Optimizing Their Tax Position

GT Law

The recent trends show that offshore jurisdictions are off the corporate agenda in view of the increased scrutiny and decreased levels of acceptance from both fiscal and corporate social responsibility perspectives. Client feedback confirms the following rationale for moving corporate tax planning solutions onshore:

  • Increased scrutiny on tax havens and statutory requirements regarding tax substance, potential issues concerning withholding tax and taxation of foreign profits; and
  • Avoiding overtly complicated tax systems with strict CFC (controlled foreign company) regulations, thin capitalization rules and prohibitive transfer tax applicability.

It is a well-known fact that the Netherlands is not a tax haven but a safe haven and a logical choice as an alternative with an extensive double taxation treaty network. In addition, the Netherlands has an extensive bilateral investment protection treaty network that is regarded to provide premium coverage in view of the broad definition of “investor” and “investment” and providing access to dispute resolution through arbitration against independent states and awards that are enforceable against states, often referred to as “the Dutch Gold Standard.” Dutch structures are increasingly a recurring feature in international corporate structures for the purpose of protecting key corporate and personal assets. In this GT Alert, we briefly set out the options for migrating a corporate structure to the Netherlands to benefit from the all of the features that the Netherlands has to offer.

How to Achieve a Corporate Migration

Migrating a corporate entity within the EU into the Netherlands is a straightforward process from a Dutch law perspective. The following options are available:

Registration of an EU member state entity with the Dutch Trade Registry

The tax residence of an existing holding company can often be changed by moving its place of effective management and control outside of its existing jurisdiction for tax purposes. This may trigger a tax charge on exit.

Cross border merger

EU parent companies can migrate to the Netherlands by effecting a statutory merger with a Dutch entity under the cross-border merger regulations. It is also possible for non-EU parent companies to merge with a Dutch company by initially entering into the EU through a conduit EU jurisdiction that permits cross-border mergers with non-EU entities.

Share swap

It is possible to incorporate a holding company in the Netherlands whereby the existing shareholders exchange their existing shares for shares in the newly created Dutch holding company.

Re-registration as Societas Europaea 

An EU parent company can re-register as a European Company (Societas Europaea) and transfer its statutory seat to the Netherlands followed by a re-registration in the Netherlands as a Dutch parent company.

Why migrate to the Netherlands?

Key drivers for migrating the top holding company of an international group structure to the Netherlands are:

  • Low corporate income tax rate of 25% on trading profits (20% up to EUR 200K first band);
  • The Netherlands has an extensive double taxation treaty network with well over 90 jurisdictions;
  • The Netherlands has entered into a vast number of bilateral investment protection treaties (BITS) that offer comprehensive protection against unfair treatment of investments by sovereign states through access to world class dispute arbitration;
  • International and well-recognized jurisdiction with one-tier corporate governance system similar to that of common law countries;
  • Straightforward, cost-efficient and fast incorporation process for Dutch entities;
  • Public company N.V. entities are widely recognized as listing vehicles;
  • The Netherlands is the premier port of entry to mainland Europe with excellent facilities in terms of corporate and financial services;
  • English language optional for proceedings before the Amsterdam courts; and
  • Limited and straightforward corporate reporting requirements.

Taxation

The Netherlands is a gateway to Europe and the rest of the world. For many years, the Netherlands has been a preferred location for foreign companies to establish a business. The location, the political stability and, especially, the beneficial tax regime have turned the Netherlands into one of the go-to countries in this respect. The following tax points are of particular relevance:

  • The general Dutch corporate income tax rate is 25% (20% up to EUR 200K first band). This rate is more than competitive in the region, as all countries surrounding the Netherlands have higher corporate income tax rates.
  • Traditionally, the Dutch participation exemption has been a major attractor of companies to the Netherlands. This facility allows the receipt of dividends and capital gains from subsidiaries free of tax in the Netherlands. The Dutch facility is still one of the most flexible and easy accessible compared to other jurisdictions, especially, with regard to the following conditions: no holding period is required, an interest of 5% is already sufficient to apply, interest in subsidiaries located in tax havens are allowed to benefit from the facility and certain other specific benefits are available.
  • No withholding tax on royalties and no withholding tax on interest.
  • Dividends are taxed at a statutory rate of 15%. However, this rate may be reduced by virtue of tax treaties to 0-10%. In principle, no dividend withholding tax applies to distributions made by a Dutch cooperative pursuant to the domestic rules.
  • No controlled foreign company/Subpart F rules
  • No thin capitalization rules.
  • There is no stamp duty or capital tax.
  • One of the most extensive international tax treaty networks (the Netherlands has concluded over 90 tax treaties, more than most other countries) and the membership of the EU (and corresponding access to EU treaties) ascertain minimal taxation on payments to any group company.
  • Another traditional benefit of the Netherlands is the open attitude of the Dutch tax authorities. The Netherlands offers the possibility to discuss and reach agreement on tax positions in advance with the Dutch tax authorities that can be formalized in agreements (or advance tax rulings) to offer optimum certainty in advance.
  • Currently, the Dutch government´s main focus is on innovation. In 2007, the government was one of the first countries to introduce a special tax regime aimed at innovation (Innovation box). Based on the Innovation box, income earned out of R&D activities can benefit from an 80% exemption, resulting in an effective tax rate of 5%;
  • The Netherlands has extensive experience in the use of hybrid structures (i.e. hybrid entities and hybrid loans). These structures can be used to further optimize the group tax rate.
  • The Netherlands has traditionally not only been very welcoming to foreign companies, but also to expatriates. In the Dutch Personal Income Tax Act, expatriates (with certain skills) can receive 30% of their income as a tax free allowance under the so-called “30%-ruling.” A benefit that also benefits the employer in negotiating (net) salaries.
  • Customs authorities in the Netherlands have a reputation for being cooperative, innovative and exceptionally efficient; all to facilitate the free flow of goods. Customs duties or import charges are charged at a later date, if the goods are stored in accordance with customs procedures in the Netherlands. This leads to considerable cash-flow advantages to foreign shippers.
  • The Netherlands’ position on Value Added Tax (VAT) is also advantageous. In contrast to other EU member states, the Netherlands has instituted a system that provides for the deferment of VAT at the time of import. Instead of paying VAT when the goods are imported into free circulations within the EU, the payment can be deferred to a periodic VAT return. The Dutch VAT system offers companies significant cash-flow and interest benefits.
  • Even though the Netherlands provides several unparalleled tax facilities, it is not blacklisted as a tax haven, but can be considered as a safe haven.
Article By:

 of

For Small Business Owners, Suing in Small Claims Court Can Become a Big Headache

Odin-Feldman-Pittleman-logo

I recognize that when a business owner believes a monetary debt of $5,000 or less is owed to the business, there may be a temptation to control litigation costs by filing a lawsuit in the Small Claims Division of a Virginia General District Court.  Admittedly, there are some benefits, including:

  • Expeditious justice between the litigants, so the cases are not protracted
  • Formal rules of evidence do not apply, and neither side can be represented by an attorney
  • A corporation or partnership has discretion to send the owner, general partner, officer or employee to handle the case
  • Limited discovery afforded to either side, and judges tend to allow all relevant evidence to be considered with a goal towards determining the merits of the dispute

What’s the downside?  I will name a few:

  • You are not guaranteed to stay in Small Claims Court even if you start off there. If the other side hires counsel, the case can no longer be adjudicated in the Small Claims Court and it will be removed to General District Court where there is greater formality and the rules of evidence apply.  Even if the other side does not hire counsel, a defendant still has the right to remove a case to General District Court prior to the court rendering a decision.
  • You could be countersued. There are often two sides to every story.  Be aware that if the defendant files a counterclaim against the business, you as the plaintiff no longer have the ability to unilaterally discontinue the litigation.
  • You could potentially enter a protracted and expensive appeal process. Even if you are awarded a judgment, the defendant has an automatic right to appeal the case to Circuit Court when the judgment exceeds $50.  If this happens, the litigation can go on for a year in a more formal forum with considerably broader discovery allowed.

Suing in Small Claims Court may be a valid choice in some cases. However, it is always wise that a business owner consult a litigation attorney before deciding to file a lawsuit in Small Claims Court.

Doing Business In Latin America: Does Your Local Supplier Have Best Practices In Place So That Your Company Can Avoid Liability Under The Foreign Corrupt Practices Act (FCPA)?

Sheppard Mullin 2012

Imagine yourself the CEO of a successful multinational company. In the past few years, you have overseen ACME’s expansion into Latin America – a market whose demographic profile holds the promise of mouthwatering profits for your company, particularly with the upcoming holiday season. As they say, la vida es buena!

In planning for the Latin America expansion, you knew about the rules and prohibitions of the Foreign Corrupt Practices Act (“FCPA”) and implemented measures to ensure your employees do not run afoul of the law. However, you may not have known that the company can incur FCPA liability for payments made by third parties, such as such as suppliers, logistics providers, and sales agents, with whom your company works. In fact, a company can be held liable if it knows or should know that a third-party intends to make a corrupt payment on behalf of or for the benefit of the company. Because a company can be responsible for conduct of which it should have known, a conscious disregard or deliberate ignorance of the facts will not establish a defense.

To protect your company from third party liability, it is essential to perform due diligence on potential business partners. This is not to say that you cannot consider the recommendations of local employees in selecting business partners. Relying on those recommendations alone, however, could expose the company to FCPA liability if that company does not conduct itself with the same level of integrity that you do. The amount of diligence necessary varies from one potential business partner to the next and can include an anti-corruption questionnaire, document review, reference interviews, or local media review, among other things.

That’s all well and good, but what about companies with whom you are already doing business and whom you now realize you may not have adequately investigated? Asking to review those companies’ FCPA compliance policies is a good first step. If you determine that a policy is inadequate, you may ask the company to provide FCPA training to its employees. You should also carefully monitor the company’s contract performance to ensure compliance. In particular, you should consider evidence of unusual payment patterns, extraordinary “commissions,” or a lack of transparency. The key question is: how is the company spending your money?

When in doubt, experienced legal counsel can assist you in navigating these and other FCPA issues. For example, Sheppard Mullin offers Spanish language training on the provisions of the FCPA and advice for successfully implementing internal safeguards and controls to protect against FCPA liability.

With a solid FCPA plan in place, your thoughts wander back to the upcoming holiday season and your company’s projected profits for the new Latin America division and you smile to yourself. La vida es buena.

 of

Starting an Online Business: Licensing Requirements

Odin-Feldman-Pittleman-logo

Individuals interested in starting an online business are often confused or uninformed as to the licensing requirements for such businesses.  In many ways, an online business is like any “brick and mortar” store and the owner will probably be required to obtain certain licenses or permits to operate.

Federal Requirements

Business Licenses.  Most businesses do not require a federal business license or permit.  However, a business engaged in one of the following activities should contact the responsible federal agency to determine the requirements for doing business:  Investment Advising, Drug Manufacturing, Preparation of Meat Products, Broadcasting, Ground Transportation, Selling Alcohol, Tobacco, or Firearms.

Tax Identification Number.  A federal tax identification number, also known as an Employer Identification Number (EIN), is a federal identification number issued by the Internal Revenue Service to identify a business entity.  Nearly all businesses are required to have a tax identification number.

If a business is operated as a sole proprietorship, the owner may use his or her social security number in place of an EIN on all governmental forms and other official documents.  However, most small business advisors recommend using a federal tax identification number instead.

To obtain a federal tax identification number, a business owner should contact the nearest Local IRS Field Office or call the IRS Business and Specialty Tax Hotline at 800-829-4933.  The necessary form, IRS Form SS-4, can be downloaded directly from the Small Business Administration website.

State Requirements

Many states and local jurisdictions require a person to obtain a business license or permit before beginning business operations.  A business that operates without the required license or permit may be subjected to fines or may be barred from further business activity.  In some localities, a business operating out of a residence may require an additional permit.

While business licensing requirements vary from state-to-state, the most common types include:

·    Basic Business Operation License – a legal document issued by a local governmental authority that authorizes a person to conduct business within the boundaries of the municipality.  Many states have established small business assistance agencies to help small businesses comply with state requirements;

  • Fictitious Name Certificate – a document, usually filed with a state agency, which is required to operate a business using an assumed name or trade name (essentially, any name other than the full, formal name of the individual or company);
  • Home Occupation Permit – a permit which may be required to conduct business from a residence;
  • Tax Registration – if the state has a state income tax, a business owner must usually register and obtain an employer identification number from the state Department of Revenue or Treasury Department.  If the business engages in retail sales, the owner must usually obtain a sales tax license;
  • Special State-Issued Business Licenses or Permits – these permits may be required for a business that sell highly-regulated products like firearms, gasoline, liquor, or lottery tickets;
  • Zoning and Land Use Permits – may be required to develop a site or property for specific purposes
  • Employer Registrations – if the business has employees, the owner must usually make unemployment insurance contributions;

Additional state licenses may be required for regulated occupations such as building contractors, physicians, appraisers, accountants, barbers, real estate agents, auctioneers, private investigators, private security guards, funeral directors, bill collectors, and cosmetologists.

Article By:

 of

Crying Over Spilled Milk: What Companies Can Learn from the Paula Deen Disaster

McBrayer NEW logo 1-10-13

Paula Deen may be the most recent celebrity to ruin the brand she built, but she is certainly not the first. Consider Martha Stewart, Tiger Woods, and Lance Armstrong. At one point, all had an empire built around their name and reputation. And, just like that, all were vehemently vilified by the press and public when an aspect of their personal lives became front-page news, resulting in the swift destruction of their businesses.

PR disasters can happen faster than a boiling pot can run over, and as Paula Deen is learning, it is hard to contain the mess once it has been unleashed. Even if companies do not have a national celebrity as the face of their business, there is a lot they can learn from the Calorie Queen’s downfall.

Separate the brand from the CEO (or other high-powered figure)

We are all human. What happened to Paula Deen can happen to any business owner.  People make inappropriate comments, go to prison, sleep around, and take steroids (see above-named individuals). When your face is more than just who you are, though, you have to tread lightly in the public eye.  When your face is your brand, negative publicity affects business.

Food Network, Smithfield Foods, Wal-Mart, Novo Nordisk, and Home Depot did not drop Paula Deen because her products were not up-to-par. They dropped Paula Deen because her public image tarnished her brand.

A company should not rest on one person’s reputation, but should be built around principles, a mission, or a niche. That way, when the higher-ups make a mistake, the company can continue. With that being said, management and boards should be concerned with how the highly visible, well-known figures in their companies are behaving, whether they are on national TV or at a local charity gala. Employment agreements should always include expectations regarding behavior and how one represents the company. Extensive background checks should occur for any employee who could potentially taint the brand.

Act fast, but fully assess the situation

In the age of social media, an incident can lead to pandemonium in no time. Allegations can spread quickly and extensively. Whether, when, and why Deen may have uttered an offensive racial slur is of no matter because Facebook and Twitter reported that she did; that was enough for public conviction. If gossip is spreading about your business, do not be afraid to address it head-on through social media or a press release. But do not fall victim to knee-jerk reactions. Take time to investigate, come up with a game plan, and take necessary action before addressing the publicity. If the incident is so bad that your company’s future is on the line, then hire a PR team to step in.

Thank employees, customers and clients for loyalty

There are a lot of angry fans out there who think Paula Deen was thrown under the milk truck. In the midst of almost every PR crisis, there will be supporters. These people will stand by the company when others are jumping ship. Make your gratitude to them known, whether it is in the form of a bonus, sincere message on your company Facebook page, or a customer appreciation day. Find some way to turn the situation into a positive one.

We have likely not heard the last of Paula Deen. Her brand, though in the trenches now, may pull through. And there is always a scorned celebrity book deal to be made. Smaller companies may not recover so easily from PR blows. Business owners should always be monitoring their image and employees to minimize risks. HR departments should be pro-active. Expectations should be communicated. Professionals should be consulted if needed.

Article By:

 of