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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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I am planning on making an equity investing into an existing

Customer Question

I am planning on making an equity investing into an existing business to develop a new product line-division. I will be involved in planning, developoing, and marketing the division. I need advice on how to structure a contract for this type of venture.
Submitted: 4 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 4 years ago.
Thank you for your question. Please permit me to assist you with your concerns.

That very much depends on your role. It sounds like you will both have an equity stake and a management stake in the business, correct? What is the current business structure and how many other shareholders are out there?
Customer: replied 4 years ago.


should I be getting a response today?

Expert:  Dimitry K., Esq. replied 4 years ago.
Amy,

Thank you for your post. Did you receive my post about additional information? Could you respond so I can more specifically tailor my response to you?

That very much depends on your role. It sounds like you will both have an equity stake and a management stake in the business, correct? What is the current business structure and how many other shareholders are out there?
Customer: replied 4 years ago.


I did reply on Wednesday around 2:15 PT?


 


We will both have an equity stake. There is only one owner of the business. I am not sure if her children are stake holders. its womens clothing retail store and we are discussing launching a shoe line with the goal of opening a stand alone shoe store.

Expert:  Dimitry K., Esq. replied 4 years ago.

Amy,

I am sorry for the delay, I just finally received this response form you. Please allow me reply below.

It does not appear as if you would be having a management stake. This potentially appears to be a situation where an agreement setting forth condition for employment and ownership would be sufficient. If you are investing funds, then you could do either as a 'limited' shareholder or as a 'general' shareholder--the difference is that a limited investor has no management stake, it is essentially a silent partner situation. If you aren't management, this would likely be the focus of your terms--in that case make sure to discuss conditions of repayment of investment if any, percentage of ownership how profits would be calculated and paid out, and what your wage would be. If you are also bringing in your own 'sweat equity', you would need to figure out intellectual property concerns--what would belong to you, what to the company, and in case of dissolution or your termination, what rights you can remove and take back with you. This is most important because while investments are positive, what you really need to focus on are the conditions of emoval should something go wrong. You may also demand a set period of time during which you cannot be terminated or if terminated, a significant financial penalty is imposed on the employer, such as remainder of your guaranteed salary, legal fees, court costs, and other expenses.

Good luck.

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