Basic Limited Partnership Structure
In a basic limited partnership, there are several passive investors (known as "Limited Partners" or "LPs") and the manager of the fund, (known as the "General Partner" or "GP").  The diagram below illustrates this basic structure.

The Wall Street Journal has two articles today that are of interest to shareholders of startup companies, primarily former employees who hold shares of these startups.  The articles "Startup Employees Invoke Obscure Law to Open Up Books" and "Own Startup Shares? Know Your Rights to Company Financials" discuss laws that may require some startup companies to deliver certain financial data to shareholders which may help these shareholders value their stock.  

Specifically, the articles reference Section 220 of the Delaware General Corporations Law, Section 1501 of the California Corporations Code and Rule 701 of the Federal Securities Act of 1933.  These provisions may provide certain shareholders of some private companies the ability to obtain selected financial statements.

Links:
http://www.wsj.com/articles/startup-employees-invoke-obscure-law-to-open-up-books-1464082202

http://www.wsj.com/articles/own-startup-shares-know-your-rights-to-company-financials-1464082203

The NY Times has an interesting article "Ruling on Pension Fund Debt Could Shake Up Private Equity Industry" that is worth a read.  A federal District Court in Massachusetts has held that two separate private equity funds were jointly liable for the pension fund debt of one of their portfolio companies Scott Brass.  The case revolves around some unique facts and some interpretations of ERISA, the law governing these retirement plans, but it could deter private equity firms from acquiring companies with unfunded pension liabilities.  Time will tell.

Links:
NY TImes (general overview):
http://www.nytimes.com/2016/04/22/business/dealbook/ruling-on-pension-fund-debt-could-shake-up-private-equity-industry.html

White & Case article (legal analysis):
http://www.whitecase.com/publications/alert/private-equity-funds-held-liable-pension-obligations-portfolio-company

New rules relating to fundraising take effect today.  These rules were issued by the Securities and Exchange Commission ("SEC") as required by the Jumpstart Our Business Startups Act ("JOBS Act") that was enacted last year.

My advice to companies and entrepreneurs: Talk with a corporate securities attorney before you start any fundraising activity.  The rules are complex and it would be easy to violate them.  Violating these rules could carry pretty significant consequences, including possibly unwinding the fundraising after it is completed, civil lawsuits, SEC penalties, and potential criminal punishment.

Here are links to two articles covering these new rules.
The Wall Street Journal: 
http://blogs.wsj.com/venturecapital/2013/09/23/startups-vcs-now-free-to-advertise-their-fundraising-status/

Forbes: 
http://www.forbes.com/sites/tanyaprive/2013/09/23/general-solicitation-ban-lifted-today-three-things-you-must-about-it/

Here's a link to the SEC press release relating to the rules: 
http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539707782#.UkBkOoYsk_Y

Link to the rules:  http://www.sec.gov/rules/final/2013/33-9415.pdf

There's an interesting opinion piece in today's The Wall Street Journal "David Skeel: Facing Up to America's Pension Woes" that explores the argument that Chapter 9 federal bankruptcy law does not permit any changes to pension benefits.  The author concludes that this argument is most likely wrong, and spells out the legal case made in support and opposed to the argument.  The author David Skeel teaches bankruptcy law at the University of Pennsylvania Law School.

Link:  http://online.wsj.com/article/SB10001424127887324110404578625904218607438.html?

The Jumpstart Our Business Startups (JOBS) act was passed earlier this year, with the intent of making it easier for "emerging growth companies" to raise money in an initial public offering and through private placements.  The peHUB article "The Unexpected Outcomes of the JOBS Act" provides some insight as to the unexpected consequences of the Act.  The article identifies the following:

• Special purpose acquisition vehicles are taking advantage of the confidential S-1 filing provisions of the Act.  The Act was meant to help emerging growth companies, not SPAVs.
• Registration statements will add risk factors to address the reduced financial disclosures required by the Act.  Basically, reduced disclosure means greater risk that some investors may not find the stock an attractive investment.
• The "testing the waters" provision of the Act, which allows companies to talk to investors prior to publicly filing an IPO registration statement, has mixed results so far.

Link to the article:  http://www.pehub.com/161586/the-unexpected-outcomes-of-the-jobs-act/

The Wall Street Journal article "Lawmakers Push for Overhaul of IPO Process" reports that lawmakers are calling on the SEC to overhaul the initial public offering process in the wake of the Facebook IPO.  The crux of the letter seems to be that underwriters are able to "dictate" the price at which IPO shares are first sold to investors.

In my opinion, this is incorrect.  The purpose of the IPO roadshow is to market the issue to institutional investors and to build the order book.  Building the book is a process whereby the institutional investors give orders for a number of shares at a certain price.  It is this process that the book-running underwriter determines the "market" price for the IPO.  At the beginning of the roadshow, the underwriters establish a pricing range for the IPO, but this initial range is often shifted higher or lower depending on road show demand, and the final pricing is dictated by supply and demand.  It is true that the price at which institutional investors buy IPO shares usually contains an "IPO discount" but this discount provides an incentive to all IPO investors to invest in these risky propositions.  Also, in my view, investors purchasing stock in an IPO once it starts trading are basically bettors and are gambling that the stock price will go up.  Stock prices are typically very volatile after an IPO and so these IPO speculators should bear the risks of their bet.

I believe the IPO process generally works well, and my thoughts on how to improve it relate to disclosure.  I'm a big believer in disclosure as it helps the markets operate more efficiently.  The more information, the better.  To improve the IPO process, I would have all of the underwriting syndicate's  projected revenue and earnings estimates for the company disseminated publicly so that all institutional and retail IPO investors are working with the same information.  In addition, if the company revises guidance during the IPO process, this information should also be made public.  Finally, while I'm on a roll, I believe that every IPO should disclose at least five years of annual and three years of quarterly financial and operating data, and that the metric "free cash flow" should be a required reporting metric.

Link to The Wall Street Journal article:  
http://online.wsj.com/article_email/SB10001424052702304441404577479024205961592-lMyQjAxMTAyMDIwMTEyNDEyWj.html#project%3DSECIPO%26articleTabs%3Darticle 

The letter from Congress to the SEC can be found here:  
http://online.wsj.com/article_email/SB10001424052702304441404577479024205961592-lMyQjAxMTAyMDIwMTEyNDEyWj.html#project%3DSECIPO%26articleTabs%3Dinteractive 

As a former corporate lawyer, it pains me to see esteemed law firms crumble.  Dewey & LeBoeuf has filed for bankruptcy, in what is apparently the largest law firm bankruptcy in history.  According to the press release, Dewey will wind down as opposed to restructuring.  According to Bloomberg, the firm had debts of $245 million and assets of $193 million.  After the 2007 merger of Dewey Balantine and LeBoeuf, Lamb, Green & McRae, the firm had over 1,300 attorneys in 12 countries.

Link to press release:  http://www.prnewswire.com/news-releases/dewey--leboeuf-llp-files-for-chapter-11-protection-seeks-orderly-wind-down-of-business-155192345.html 

LInk to Bloomberg article: 
http://www.bloomberg.com/news/2012-05-29/dewey-leboeuf-files-for-bankruptcy-fails-to-save-firm.html 

"Aqui-Hires" are acquisitions where the acquiring company (usually a larger company) is primarily acquiring the talent at the smaller company, usually a start-up.  Michael Arrington, the founder of TechCrunch and now the founder of venture fund Crunch Fund, has written a very good article that is posted on From the Crowd discussing a component of Aqui-Hires, being stock grants issued by the acquiring company to the key employees of the start-up at values that are often much greater than the acquisition price.  The issue is whether the stock grants should be considered part of the overall price of the acquisition.

Why is this an issue?  Because these Aqui-Hires often end in losses to investors of the start-up, and the start-up's investors may feel that they should share in the value of these stock grants.

It's an interesting issue, and Mr. Arrington's column explains it well.  Here's the link:  http://finance.fortune.cnn.com/2012/04/25/startup-investors-may-request-acqui-hire-protections/