Category Archives: Business Law

Martin LLP Welcomes Anne Marie Segal


STAMFORD, CT.  April 2014 – Martin LLP is pleased to announce that Anne Marie Segal has joined the firm as a Partner in its Corporate practice.  For over twelve years, Anne Marie has provided legal and business advice in the areas of fund formation and management, corporate transactions, finance, corporate governance, business and trading agreements, employment contracts and related matters.


Anne Marie was recently Principal of Law Office of Anne Marie Segal, at which she advised entrepreneurs, executives, investment fund managers, founders, business owners and other clients.  By joining Martin LLP, Anne Marie will continue and expand her range of services to new and existing clients, including those engaged in private equity and venture capital transactions. Says Anne Marie, “Martin LLP presented a unique opportunity to join a sophisticated law practice and entrepreneurial team based in Stamford, CT. I have been very impressed with the relationships and level of service that Martin LLP lawyers provide to their clients, as well as their general reputation in the legal and business communities.”

Previously, Anne Marie served for seven years as Deputy General Counsel to an investment adviser to private equity and hedge funds that managed over $6 billion in assets.

Martin LLP represents a wide range of local and national clients in corporate, litigation, and real estate matters. We are particularly valued for our representation of growth companies and their private equity and venture capital investors.

Our corporate lawyers represent clients in the areas of:

  • Private Equity
  • Venture Capital
  • Growth Companies
  • Mergers & Acquisitions
  • Start-Up Companies
  • General Corporate Matters

Corporate Christopher Martin, Managing Partner and Chair of the Business and Corporate Group and former CPA, has provided legal and business advice to growth companies and their key participants for over twenty five years.

Gloria Skigen, Partner in the Business and Corporate Group, advises venture capital funds, private equity funds, companies and executives on legal and business matters. Gloria formerly served as General Counsel to a venture capital firm and Partner at Battle Fowler.

Andrew Nelson, Partner in the Business and Corporate Group, provides legal and business advice to private equity funds and U.S. and non-U.S. companies. Andrew is a former Partner of Sidley Austin LLP and Morgan Lewis & Bockius LLP.

Real Estate

Kenneth DellaRocco, Real Estate Partner, has practiced in all areas of commercial real estate, including sales, acquisitions, development projects, financing and leasing, representing clients with a wide range of interests and needs. Ken has substantial experience handling a broad range of business issues for individuals, mortgage lenders, developers and public and private companies, including businesses with a local, regional, national, and international scope, emerging growth companies and closely-held family businesses.


Mark Gregory, Litigation Partner, represents businesses and corporate executives as lead counsel in a broad range of general commercial litigation matters, including complex contract interpretation, federal securities law matters, shareholder derivative claims, antitrust, intellectual property, brokerage, trade secrets, fraud, unfair competition, employment and real estate disputes. He has represented clients in federal and state lawsuits, arbitrations and other alternative dispute resolution forums. Prior to joining Martin LLP, Mark was a Partner at Kelley Drye & Warren LLP.

Below is Anne Marie’s new contact information:

Anne Marie Segal, Esq.

Martin LLP

One Landmark Square, 21st Floor

Stamford, CT 06901

Direct Dial: 203-973-5228


About Martin LLP:

Martin LLP is a trusted advisor to local and national clients on corporate, litigation, and real estate matters. As a sophisticated law practice, we are particularly valued for our relationships with growth companies and their private equity and venture capital investors. With a proactive approach, we partner with our clients, anticipating their needs and providing practical advice focused on maximizing the value of their business opportunities.


Copyright © Martin LLP 2014. All Rights Reserved.


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Joining Stamford Law Practice – Martin LLP

Hello blog readers. Time to publicly announce my next stop on the professional journey, hopefully a long and fruitful one:

I am joining Martin LLP as a partner in their corporate practice.

Located in Stamford, CT, Martin is a bit of an anomaly in the legal field – so I may fit right in – as a smaller firm, headquartered outside of New York City, yet with a strong and sophisticated client base. As they say on their website (, Martin represents a wide spectrum of clients in the corporate arena, including growth companies, start-up companies, private equity, venture capital and other investment firms, families and individuals. They also have tax, ERISA, real estate and litigation attorneys to round out their practice.

Although I am not officially transferring my practice for a full four weeks ahead, on April 22, 2014, I expect that my blog posts here may be winding down as I wrap up, ramp up and continue to serve clients in the meantime. Feel free to contact me for more information, and I will post my new address, phone and email here once it is available. Thanks again for your support as readers, clients and friends!

-Anne Marie


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Outside General Counsel Arrangements: Is 2014 the Year?


An out-of-the-box New Year’s Resolution: engaging outside General Counsel.

Is 2014 the year?

If you have ever worked for a company or organization with a General Counsel, you know the positive results that an effective one can bring. Successful General Counsels (GCs) not only offer legal advice but also give helpful business input based on their experience structuring relationships and transactions. If your company or organization has grown to the level that it would benefit from ongoing legal advice but you cannot afford a full-time, internal GC, this may be the year to consider an outside general counsel arrangement.

For a corporate-minded, outside GC, here are examples of matters that could be included in the arrangement:

- Review of contract provisions with your business partners.

- Advice on corporate and website/social media policies, corporate governance matters, board of directors policy and practice.

- Routine filings as requested.

- Consultation on employment issues and review of associated agreements.

- Review of subpoenas, summonses, complaints, or claims served upon you and advising you on the same; advise regarding potential legal actions you may contemplate taking. (This is where the phrase “I’ll call my lawyer” originated.)

- Consultation on purchase or sale of business assets or real estate, negotiating and reviewing the same.

Outside GCs can be hired on a retainer arrangement, whereby you engage the attorney for some amount of time each month (for example) for a flat fee, which can prove economical than an hourly rate. Additional work, as needed, can be provided as and when agreed.

Think of all the times in the life of your business that you have said, “I wish I had a lawyer to look at this.” If there have been enough of those times in the past year, it may be that you have reached a tipping point: a level of growth that should be applauded and corporate responsibility that should be reviewed. This is not a short-term investment; it is an intelligent one for a business or organization that intends to stay current and compliant over the long term.

Law Office of Anne Marie Segal is located in Stamford, Connecticut, provides legal counsel to businesses and individuals in Connecticut and New York and advises select national and international clients. Please visit for more information.

None of the information posted on this site constitutes legal advice or forms an attorney-client relationship, and there may be facts not discussed here that are relevant to your situation. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site.

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Section 83(b) Election for StartUp Founders

So they don’t get hit with a tax crunch that could be entirely avoided with timely planning, founders of U.S. startups should be aware of Section 83(b) of the Internal Revenue Code. Here’s a post about what Section 83(b) does, when it should be elected and why it is important.

Corporate founders generally enter restricted stock purchase agreements that provide for their stock to vest over a number of years. Under a vesting schedule, the company has the right to repurchase any unvested stock at cost upon the founder’s separation from the company. The right to repurchase generally lasts for a period of three to five years, provided that the founder continues to provide services to the company.

One common arrangement is a four-year vesting period with a one year cliff. In this case, at the end of the first year a founder would receive 1/4 of the shares, and the remaining 3/4 vest monthly in equal portions over the remaining 36 months. However, founders can mix and match such grants to reflect each founder’s relative investment in and importance to the organization.

Whether it is a “four year with one year cliff” arrangement or another milestone or time-based vesting trigger, restricted stock keeps the founders engaged and involved, since they do not acquire certain rights in the stock, such as the right to sell, until the stock vests. As a result of such vesting restrictions, the IRS views the acquisition of the stock for tax purposes as the date it is released from the restrictions.

shutterstock_161329046 (tax vice)

No/Minimal Tax Upon Purchase; Tax Upon Vesting

In a typical startup, the founder purchases “cheap stock” at a low fair market value, which minimizes taxes at stock issuance. A common pre-money valuation is, for example, five million shares at $0.001 per share (one tenth of a penny), with the founders contributing a total of $5,000.00 for the shares issued to them. This assumes that there is no need for a significant cash investment to fund operations.

Founders/employees then earn their equity over time in exchange for their longevity with and services to the company. When the stock is released from restrictions (i.e., becomes fully vested), there is a taxable event. At this point, if the company is successful, the value of company stock on a post-money valuation may have significantly increased. For example, those five million shares may later be worth $1.00 per share, for a total fair market value of $5,000,000.00. If the founders’ equity contributions were diluted by, for example, a Series A preferred stock round of $4,000,000.00, the total increase in value to the founders’ shares would be $995,000.00 (i.e., the then-current $1,000,000.00 value of the founders’ stock less their $5,000.00 initial investment).

If the founders’  restricted shares all vest as of a single $5,000,000.00 vesting date in the example above, taxes would be owed collectively by the founders on the full amount of $995,000.00. Of course, if the shares vest over time, the valuation of the company will fluctuate over time, resulting in an accounting headache. In either case, it is a potential tax nightmare. This may be true even if transfer restrictions (other than vesting) or market forces dictate that the founder cannot liquidate his or her shares.

What is an 83(b) Election?

To know what purpose Section 83(b) serves, you first need to understand Section 83(a) of the tax code. Under 83(a), if an individual receives property in exchange for services, he or she pays tax on the excess of the fair market value of the property over the purchase price. This makes sense in the context of a consultant, for example, who may be wholly or partially compensated in kind (i.e., other than cash) by means of a stock grant or discounted purchase price.

A founder who has to earn his or her shares over time is also treated by the IRS as a service provider under 83(a). In other words, if the ownership of the shares must be forfeited when the founder’s relationship to the startup terminates, the IRS views the shares as having been granted in exchange for services.

Section 83(a) does not impose an immediate tax. Instead, such grants of restricted shares are only taxed when they are no longer subject to “a substantial risk of forfeiture”.

Under 83(b), a special, one-time irrevocable tax election may be filed within 30 calendar days (with no exceptions) of the date of the initial stock grant with respect to shares that have a substantial risk of forfeiture. The founder or other service provider thereby elects to pay tax (if any) upfront on the difference between the fair market value at issuance and the purchase price. This difference, often called the “spread”, is usually at or close to zero.

Note that 83(b) elections are not applicable to stock grants that are unrestricted or in those special cases where the company has the right to buy back a founder’s shares at fair market value (rather than the purchase price).

In the absence of an 83(b) election for restricted stock, a founder is liable for taxes on the increase of any vested stock – the difference between the purchase price and the fair market value on the vesting date. If shares vest over a number of months, this means there is a taxable event in each month that shares vest, tied to the fair market value as of the vesting date. This is true even if the shareholder continues to hold the shares. In addition, the holding period for long term capital gains does not begin until the shares are vested.

By contrast, with an 83(b) election in place, the founder incurs no taxable income as the shares vest over time. Only capital gains tax (on the gain) would be payable upon sale, with a holding period commencing on the date of the stock issuance.

83(b) Not For Everyone in All Situations

Elections under Section 83(b) do not benefit all holders of restricted stock. For example, an employee in a mature startup may be issued restricted stock at a steeply discounted price and will likely not want to take an immediate tax hit on the spread between the market value of the stock and the discounted price paid. If the company then fails, a substantial tax was then paid for no actual benefit. Second, there are tax complications that can arise if some of the founders contribute property (such as IP) in addition to cash.

Timing of an 83(b) Election

83(b) elections must be made in the 30-day time period following the stock grant. The election should be mailed via certified mail to the IRS Service Center where an individual normally files his or her tax returns. There are a number of formalities that need to be followed, including reporting the election on an end-of-year return, that are outside the scope of this blog post.

Founders or others holding restricted stock should consult a tax advisor or business attorney to fully understand the pros and cons of unvested stock and the 83(b) election as well as the procedures for making one.

Law Office of Anne Marie Segal is located in Stamford, Connecticut, provides legal counsel to businesses and individuals in Connecticut and New York and advises select national and international clients. Please visit for more information.

None of the information posted on this site constitutes legal advice or forms an attorney-client relationship, and there may be facts not discussed here that are relevant to your situation. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site.

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