NC Secretary of State Cracks Down on Cryptocurrency-Based Security

By Andrew Steffenson

As cryptocurrencies, blockchain technologies, and virtually all things containing the words “crypto” or “blockchain” continue to experience a meteoric rise in popularity, regulators face an abundance of issues related to the classification and regulation of cryptocurrencies and activities related to cryptocurrencies. Likewise, investors and consumers are besieged by an ever increasing number of fraudulent and exploitative individuals and companies attempting to defraud investors and consumers by capitalizing on the frenzied enthusiasm and excitement surrounding cryptocurrencies and blockchain technology. The North Carolina Secretary of State Securities Division (the “Division”) recently cracked down on one such company, which operated under the name Power Mining Pool. The Division found that Power Mining Pool was, among other things, selling securities in violation of the North Carolina Securities Act (N.C.G.S. §78A) (the “Act”).

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New Tools for Your Corporate Law Toolbox in Recent Changes to the North Carolina Business Corporation Act

By David B. Clement

The General Assembly of North Carolina recently approved changes to the North Carolina Business Corporation Act, Chapter 55 of the General Statutes (the “NCBCA”), which the Governor signed into law on June 22, 2018 and which will take effect on October 1, 2018.[1]

The bill enacted into law (the “Act”) makes significant enhancements to North Carolina corporate law, the net effect of which is to:

  • eliminate any perceived advantage certain jurisdictions may have over North Carolina as business-friendly jurisdictions;
  • attract and retain qualified businesspersons as officers or board members of North Carolina corporations;
  • facilitate the efficient discharge of board duties, particularly for public companies subject to the Sarbanes-Oxley Act;
  • facilitate efficient corporation reorganizations and acquisitions; and
  • protect the reasonable expectations of shareholders with respect to their investments.

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Shareholder Inspection Rights for Closely Held Corporations

By Peter Webb

The North Carolina Business Court recently strengthened the hands of minority shareholders in closely-held corporations.  N.C. Gen. Stat. § 55-16-02(b) affords qualified shareholders the right to “inspect and copy: (1) [r]ecords of any final action taken with or without a meeting of the board of directors . . . ; (2) [a]ccounting records of the corporation; and (3) [t]he record of shareholder.”  In the recent case of Sharman v. Fortran Corp., the Business Court not only enforced the minority shareholder’s right to inspect and copy corporate and accounting records, but also awarded attorneys’ fees and court costs to the shareholder plaintiff.[1]  The decision sends a strong message to the directors of closely held corporation: Shareholders have a right to know how you are running the corporation.[2]

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You May Want To Give Nondisclosure Provisions Another Look

By Anderson Ellis

Whether in the context of an M&A transaction or the hiring of a key employee, business attorneys often find themselves drafting three standard contractual provisions aimed at protecting the business interests of their clients: noncompetition, nonsolicitation, and nondisclosure. While noncompetition and nonsolicitation provisions have long been scrutinized because of their inherent effect as restraints on trade, nondisclosure provisions have generally been subject to less judicial prejudice. However, a recent North Carolina Business Court decision may cause practitioners to reconsider the purpose and usefulness of nondisclosure provisions as they relate to the business interests their clients wish to protect.

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Business Section Members: Welcome to Your New Blog

By Stephen Later

This announcement marks a major turning point for the Business Law Section as we transition from our traditional newsletter to our new blog.  Jim Beckwith edited our newsletter for many years and, with his retirement, we decided to switch to a vehicle that will, we hope, offer more frequent delivery of news including updates on caselaw and legislative developments, Section business, and other matters of interest to our members.

The board of editors of our blog—Ben Baldwin, Abbie Baynes, Dave Clement, Ryan Coffield, Jonathan Jenkins, Bob Saunders, Andrew Steffensen, Jennifer Weaver, and Peter Webb—will rotate two-week periods of responsibility for blogs content.  We welcome additions to the board of editors as well as blog posters, so, if you are interested in joining the rotation or contributing an article or have ideas for topics, please reach out to Abbie Baynes, the chair of the board of editors, at Our success will, of course, depend upon the support and engagement of our members, so, if your inner Hemingway is searching for an outlet for expression, please reach out to Abbie or any of the other editors.

Thank you for your membership in the Business Law Section and, again, we welcome and encourage your participation in the blog or on a committee.  Our Section depends upon its members, so we hope that you take the opportunity to participate, and you will not be disappointed.