Message from the Chair of the NCBA Business Law Section

By Ben Baldwin

Dear Members of the Business Law Section:

Yesterday (Tuesday, April 7, 2020) the office of the North Carolina Secretary of State advised registered agents of entities organized in North Carolina as follows:

“By law, most Annual Reports and fees are due April 15 for corporations, LLCs, and other business entities. Like many other state agencies, we do not have the statutory authority to extend an Annual Report filing date or associate fees. However, any Annual Reports and fees due on April 15, 2020 will not be considered delinquent until after June 15 (emphasis added). (This applies to corporate and some partnership entities with a fiscal year ending Dec. 31, 2019, and all LLCs).”

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Message from the Chair of the NCBA Business Law Section

By Ben Baldwin
Chair of the NCBA Business Law Section 

Dear Members of the Business Law Section:

Yesterday (Wednesday April 1, 2020) Governor Roy Cooper issued Executive Order 125 (“Authorizing and Encouraging Remote Shareholder Meetings During the COVID-19 State of Emergency”).

The Order, which is limited in effect to corporations holding shareholder meetings under the North Carolina Business Corporation Act (the “Act”), is intended to facilitate the holding of shareholder meetings against the backdrop of the Governor’s prior Executive Orders (and various municipal orders) limiting mass gatherings during the COVID-19 crisis.

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Small Business Lawyer’s Guide to CARES Act Funding

Ritchie Taylor

Bradley S. Wooldridge

By Ritchie Taylor and Bradley S. Wooldridge 

The Coronavirus pandemic has caused an unprecedented halt to our otherwise healthy economy. Senate Republicans and Democrats, along with Secretary Mnuchin and the Trump administration, have been working since late last week on what they have referred to as the Phase III of the COVID-19 legislation, which is largely a stimulus bill to provide much needed liquidity to both large and small businesses, as well as individuals, to assist in bridging the financial gap anticipated by this economic halt.

The Senate passed the stimulus bill, H.R. 748, the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” on the evening of March 25, the House passed the bill on March 27 and it was signed by President Trump into law the same day.

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The Art of Negotiating Working Capital in M&A Transactions

Kenneth H. Marks

John A. Howard

By Kenneth H. Marks and John A. Howard

The selling process for a privately held company has many nuances, including the analysis of the total value of a transaction.  For the experienced seller and their team, terms and conditions of the deal can be just as critical as the purchase price.  One of those key terms is called the working capital target.

In accounting terms, working capital is equal to current assets minus current liabilities. In middle market M&A transactions (those beyond the small, Main Street asset deals), the selling company is typically expected to deliver a normalized level of working capital (which is defined slightly differently from the accounting definition, as we discuss later) to support the operations of the business post-closing. Calculating the working capital and figuring the basis for the analysis is somewhat of an art and often changes depending upon the norms within a specific industry. Historical trends can be a sound baseline for establishing the target amount. The argument that a buyer can operate the seller’s company with less working capital than the seller is hard to defend without evidence. In growth financings, tightening the working capital cycle can provide a cheap and quickly accessed source of funding. In both M&A and growth financing, optimizing the working capital cycle and assuring efficient use of this capital will increase the value of the business by decreasing or minimizing the capital required to fund the operating cycle.

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The Secretary of State’s Office Will be Closed to the Public

The North Carolina Department of the Secretary of State will be closing its buildings to the public, effective March 20 at 4 p.m. until further notice in response to state and federal guidelines on social distancing to stem the spread of Coronavirus. This will affect the downtown Raleigh facility at 2 South Salisbury Street and the office at 4701 Atlantic Avenue in Raleigh.

“Given the small size of our lobby downtown and the large amount of foot traffic from the public, we’re closing the building to the public to comply with the Governor’s Executive Order prohibiting large group gatherings and protect the health of our staff and the public we serve,” said North Carolina Secretary of State Elaine F. Marshall on Thursday. “While we are physically closing our doors to in-person service for the time being, our staff will continue serving the public. Most of our services can be conducted online and over the phone. I urge our customers to submit their documents to us online at and continue calling us at 919-814-5400 with their questions.”

The public can also reach out to the North Carolina Secretary of State’s Office on social media, at @NCSecState on Facebook and Twitter, and can find specific division email addresses on the N.C. Secretary of State’s Office website at

Fight Hunger, Help Others in the COVID-19 Pandemic – Participate in the Legal Feeding Frenzy and Support Your Local Food Bank!

By Will Quick

Chair, Litigation Section Pro Bono Committee

Our section membership has a strong tradition of supporting and participating in pro bono and community service activities—both those planned and sponsored by the NCBA and those that you undertake on your own or with other organizations. We are in unprecedented times with COVID-19 (Coronavirus), and I am confident that each of you is doing your part.

Even in the best of times, however, over 1.5 Million North Carolinians struggle with hunger—of those, nearly half a million are children. With public schools and many religious and nonprofit organizations that traditionally serve the food insecure in our communities being closed for indefinite periods, and government leaders calling for social distancing to help limit the spread of Coronavirus, that need is never more pressing than now.

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Message from the Chair of the NCBA Business Law Section

By Ben Baldwin

Message from the Chair of the NCBA Business Law Section

Dear Members of the Business Law Section:

On Thursday, February 13, the Business Law Section held its annual Business Law Institute CLE, which was followed the next day by its Annual Meeting and CLE (which was held in conjunction with the Annual Meeting and CLE of the Bar’s International Law Section), all at the Pinehurst Resort.

I am happy to report that these events were well-attended, and that the CLE programs were once again of the very high standard that our section has come to expect over the years. Again, I would like to thank Kristina Schwartz (Womble Bond Dickinson, LLP [U.S.]) and Jonathan Jenkins (Jenkins Haynes PLLC), and all of the members of their planning committee, for all of their hard work in putting together such a fine program.

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Purrington Award Nominations

By Ben Baldwin

The Business Law Section of the North Carolina Bar Association seeks nominations for the Alfred L. Purrington III Memorial Public Service Award. This award (which was established earlier this year and would now be given for the very first time) honors the memory of Alfred L. Purrington III, a distinguished member of the North Carolina Bar Association and a founder of the Business Law Section, who served his community freely and quietly in multiple capacities including leadership roles in the United Way of Wake County, United Way of North Carolina, Triangle Land Conservancy, Raleigh City Museum, vestry of Christ Church, Episcopal Church Foundation, North Carolina Literary and Historical Association Endowment Trust, Wake County Phi Beta Kappa, and Penick Village in Southern Pines.

The intent behind the award is to recognize outstanding public service by a member of the Business Law Section. The award may be given to an attorney who, through application of his or her professional skills, has given freely and selflessly of his or her time and energy in public service, through charitable and service organizations, for the benefit and betterment of his or her community.

If you wish to nominate a candidate for the Alfred L. Purrington III Memorial Public Service Award, the deadline for nominations is the close of business on Friday, January 24, 2020. Nominations received after Friday, January 24, 2020, will not be considered.

The award ceremony, if a candidate is selected, will take place during the Annual Meeting of the Business Law Section of the North Carolina Bar Association, to be held on Friday, February 14, 2020, at the Carolina Hotel in Pinehurst, North Carolina.

You can access the nomination form by clicking here.

Nominations must be submitted no later than close of business on Friday, January 24, 2020.

North Carolina Bar Association, Business Law Section – Julianne Dambro – 8000 Weston Parkway – Cary, NC – 27513 or via EMAIL at

Charlotte Volunteers Needed: October 18

NC LEAP Ask-A-Lawyer Day Pro Bono Clinic Seeks Volunteers
The North Carolina Bar Foundation is looking for attorney volunteers to meet one-on-one with passionate, local, low-wealth entrepreneurs who have legal questions related to their start-up or existing businesses.

This Ask-A-Lawyer Day Clinic will be held on Friday, October 18, from 1 p.m.-4:30 p.m. at the Latin American Chamber of Commerce of Charlotte. For more information and to sign up, click here.

Business Funding 101: Key Considerations When Funding a Business

By Doug Colvard

BUSINESS FUNDING 101: Key Considerations When Funding a Business

Pursing funding for a business is an exciting process, but can often be intimidating to even the most experienced founders. Although most businesses are initially funded by the personal assets of their founders, most businesses will require some form of outside funding in order to thrive. While there are pros and cons to outside funding, being adequately informed about the different types of financing is crucial, as it will ultimately help a business make the most informed choice on what is right for its specific enterprise.

Ultimately, while there are multiple mechanisms businesses utilize in order to achieve their funding goals, most of them can be condensed into two primary categories: Debt Financing and Equity Financing. Debt financing involves injecting capital into the business by obtaining loans, lines of credit or convertible debt, while equity financing involves selling some form of ownership of the business in exchange for capital. Each of these forms of funding are explained below in further detail.

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