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Corporate Governance

Corporate Governance. Chris Sackett, Attorney 515-242-2470 sackett@brownwinick.com Joe Leo, Attorney 515-242-2462 leo@brownwinick.com BrownWinick Attorneys at Law 666 Grand Avenue, Suite 2000 Des Moines, IA 50309 www.brownwinick.com. Examples.

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Corporate Governance

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  1. Corporate Governance Chris Sackett, Attorney 515-242-2470 sackett@brownwinick.com Joe Leo, Attorney 515-242-2462 leo@brownwinick.com BrownWinick Attorneys at Law 666 Grand Avenue, Suite 2000 Des Moines, IA 50309 www.brownwinick.com

  2. Examples • We are going to discuss the issues associated with corporate governance through several typical examples. • First we need some basic framework.

  3. Definition • Definition: • Governance is a set of rules that are applicable to a system of government or management. • Corporate governance is a more specifically a set of rules that apply to corporate entities.

  4. Basics of Corporate Governance • Who makes what decisions on behalf of the company? • Owners/Shareholders • Directors/Managers • Officers • How are these decisions made? • Creates a hierarchy of decision-making.

  5. Factors Affecting Governance Decisions • Size of the company now and in the future. • Number of individuals involved. • What contributions the individuals involved make to the company (money or other). • Special skills or other assets individuals bring to the company. • Personalities of the individuals involved.

  6. Company A Example • Company A has three individuals who are developing a new phone application. • All three individuals are contributing $50k and will work full-time for the company. • Each has a comparable level of skill and will be actively involved in managing the business.

  7. Company A Discussion • Board of Directors Positions • Officers • Special Decisions • Deadlock provisions • Compensation for duties • Who owns the intellectual property? • Corporate opportunities; competition; other activities; etc.

  8. Company B Example • Company B has three individuals who are developing a new phone application. • One individual is contributing $150k and the others contribute no capital. • All three will work full-time for the company. • Each has a comparable level of skill and will be actively involved in managing the business.

  9. Company B Discussion • Board of Directors Positions • Officers • Special Decisions • Deadlock provisions • Compensation for duties • Who owns the intellectual property? • Corporate opportunities; competition; other activities; etc.

  10. Company C Example • Company C has three individuals who are developing a new phone application. • One individual is contributing $150k and the others contribute no capital. • Two (non-capital partners) will work full-time for the company. • One is a CPA who got tired of that profession and one is a natural leader. • The third has no interest in operating the business and is simply providing the startup capital.

  11. Company C Discussion • Board of Directors Positions • Officers • Special Decisions • Deadlock provisions • Compensation for duties • Who owns the intellectual property? • Corporate opportunities; competition; other activities; etc.

  12. Company D Example • Company D has two individuals who are developing a new phone application. • One individual is contributing $150k and the other contributes no capital. • The non-capital partner will work full-time for the company and the other will not. • The two partners appreciate the skills and money that the other brings but do not completely trust each other.

  13. Company D Discussion • Board of Directors Positions • Officers • Special Decisions • Deadlock provisions • Compensation for duties • Who owns the intellectual property? • Corporate opportunities; competition; other activities; etc.

  14. Company E Example • Company E has thirty individuals who are developing a new phone application. • Twenty-five of the individuals have invested a total of $2 million in roughly equal amounts. • The remaining five individuals have technical skills that are important to the development of the product but have contributed no capital. • Only a few of the investors are interested in being involved in operating the company. • Several of the capital investors have connections and skills which could be useful in operating the business.

  15. Company E Discussion • Board of Directors Positions • Officers • Special Decisions • Deadlock provisions • Compensation for duties • Who owns the intellectual property? • Corporate opportunities; competition; other activities; etc.

  16. Company F Example • Company F has thirty individuals who are developing a new phone application. • Twenty-four of the individuals have invested a total of $2 million in roughly equal amounts. • One investor provided an additional $1 million in capital. • The remaining five individuals have technical skills that are important to the development of the product but have contributed no capital.

  17. Company F Discussion • Board of Directors Positions • Officers • Special Decisions • Deadlock provisions • Compensation for duties • Who owns the intellectual property? • Corporate opportunities; competition; other activities; etc.

  18. Questions

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