Welcome to the New Bar Year!

David, a white man with light brown hair, wears a pale blue shirt, pink tie and black jacket.By David Broughton

Dear Business Law Section Members,

I am looking forward to serving as Chair of the Business Law Section of the North Carolina Bar Association for a second year, and we are looking forward to another good year.

Below is a list of the Business Law Section Council members and officers for 2024-25.

 

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Business Considerations for Facing FTC Non-Compete Ban

By Nicholas E. Williams

On April 24, the Federal Trade Commission voted to enact Part 910 of Title 16 of the Code of Federal Regulations, banning employment-based non-compete provisions and requiring businesses to provide notice to affected employees.[1] While challenges to the FTC’s Part 910 already are underway,[2] if upheld, the regulations will supersede state law and vitiate otherwise valid employment-based covenants not to compete. Unless enjoined, Part 910 will take effect on September 4, 2024.[3] Thus, businesses that have utilized these contractual restrictions need to reevaluate their strategy to protect their businesses’ relationships and information. Businesses should (1) know whether their agreements fall within the scope of Part 910, (2) track challenges to Part 910, and (3) develop strategic plans to address Part 910.

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Thomas C. Watkins Receives the Business Law Section’s Distinguished Service Award

Andrew, a white man with brown hair, wears a white shirt, red tie and black suit.By Andrew Steffensen

Thomas C. Watkins recently received the North Carolina Bar Association Business Law Section’s highest honor, its Distinguished Service Award. The NCBA presents the Distinguished Service Award to recognize extraordinary service to the Business Law Section, the legal profession and the public.

In making the nomination, April Kight said of her colleague, “Tom Watkins is a wonderful teacher and leader. He is an excellent lawyer and advocate for his clients, with the best combination of knowledge and practical application. He has given much of his time to the management of our firm, the North Carolina Bar Association and the community. I can’t think of a more deserving recipient.”

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Catch Up on the Latest Trends and Updates at the 2024 Business Law Section Program

By Ed Chaney

The Business Law Section invites you to join its annual section program on February 8-9 in Winston-Salem and via live webcast. This year’s theme is “The Times They Are A-Changing for Business Lawyers,” and as the title suggests, we will be focusing on a number of important recent developments in the field of business law.

Presentation topics include the Corporate Transparency Act, corporate DE&I programs in the wake of recent judicial cases, artificial intelligence, a North Carolina legislative update, and the always popular case law update. We will also hear the latest trends in business succession, valuation, and employment relationships, among others.

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NCBA Business Law Section 2023 Legislative Update

The Business Law Section of the North Carolina Bar Association was active this past year in proposing certain changes to the North Carolina Business Corporation Act and the North Carolina Charitable Solicitation Statute. Below is a summary of the amendments that were adopted this year.

Legislative Update – North Carolina Business Corporation Act

Recent Amendments to the North Carolina Business Corporation Act

By Heyward Armstrong, Justin Truesdale and Nicholas Zanzot

The North Carolina General Assembly recently passed Senate Bill 477 (the “Act”), which was subsequently signed into law by Governor Roy Cooper on September 29, 2023. The Act provided substantive amendments to the North Carolina Business Corporation Act (the “NCBCA”) that became effective on October 1, 2023.

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Don’t Overlook Key Employment Agreement Provisions During Due Diligence

By Marc E. Gustafson

Having been involved in a fair number of due diligence reviews over the course of my career, I can’t imagine there is a single due diligence checklist that doesn’t include an examination of key employment agreements. And anyone tasked with performing that assessment would certainly check to ensure those agreements include post-employment restrictions for those key employees. Having litigated employment disputes for over 20 years, however, I’ve come to the realization that going just a few steps further than what may be found on the typical diligence list can prevent a lot of headaches, distractions, and costs that so often occur post-transaction.

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Amendments to the North Carolina Business Corporation Act Permanently Authorize Virtual-Only Shareholders’ Meetings

 Heyward Armstrong

Heyward Armstrong

David Clement

David Clement

Justin Truesdale

Justin Truesdale

By Heyward Armstrong, Dave Clement, and Justin Truesdale

In September 2021, the North Carolina General Assembly passed, and Governor Roy Cooper signed into law, Session Law 2021-162 (House Bill 320), Part I of which includes amendments to the North Carolina Business Corporation Act (NCBCA) to authorize North Carolina corporations to conduct shareholders’ meetings entirely by means of remote communication without any requirement that a meeting be held in a physical “place.”[1] The practical impact of these amendments is to provide North Carolina corporations with greater flexibility in how they conduct shareholders’ meetings by better conforming the NCBCA with the Delaware General Corporation Law and the Model Business Corporation Act.

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Recent Amendments to the North Carolina Business Corporation Act

 Heyward Armstrong

Heyward Armstrong

David Clement

David Clement

Justin Truesdale

Justin Truesdale

By Heyward Armstrong, Dave Clement, and Justin Truesdale

The North Carolina General Assembly recently approved Senate Bill 507 (the “Act”),[i] which makes a number of significant changes to the North Carolina Business Corporation Act (“NCBCA”), and the governor signed the Act into law on August 16, 2021.[ii] Certain provisions of the Act were effective immediately, and the remaining provisions of the Act became effective on October 1, 2021.

The bill resulting in the Act was drafted by the Business Corporations Committee of the Business Law Section (the “Committee”) and approved as “Association-sponsored legislation” by the NCBA Board of Governors in January 2021. The North Carolina Bar Association is grateful for the endorsement and support of the North Carolina Chamber and thankful to the bill’s primary sponsor Senator Amy Galey and Representative Destin Hall who ably shepherded the bill through the legislative process to enactment.

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The Corporate Transparency Act and the Implementation of New Beneficial Ownership Reporting Requirements

By Andrew Steffensen

Overview

The Corporate Transparency Act (CTA) was enacted into law on January 1, 2021, as part of the 2021 National Defense Authorization Act. The stated objectives of the CTA include the collection of certain beneficial ownership interest information from corporations, limited liability companies and similar entities “to (A) set a clear, Federal standard for incorporation practices; (B) protect vital United States national security interests; (C) protect interstate and foreign commerce; (D) better enable critical national security, intelligence and law enforcement efforts to counter money laundering, the financing of terrorism and other illicit activity; and (E) bring the United States into compliance with international anti-money laundering and countering the financing of terrorism standards.”

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When Minority Blocking Rights Can Impose Fiduciary Duties on Minority Members

By John W. Babcock

In Skye Mineral Investors, LLC and Clarity Copper, LLC v. DXS Capital (U.S.) Limited et al., C.A. No. 2018-0059-JRS (Del. Ch. Feb. 24, 2020), the Delaware Court of Chancery rejected a motion to dismiss breach of fiduciary duty claims brought against two minority members of Sky Mineral Partners, LLC (“SMP”), a Delaware limited liability company, stemming from their exercise of certain veto or “blocking” rights they had under SMP’s limited liability company agreement (the “LLC Agreement”).

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