Invited to be officer on the board—flattering or dangerous?
Officer and director liability is staggering. If a friend of yours is starting a company or charity and she asks you to sit on the board, carefully make your decision to accept or decline the position.  If a mistake happens and the shareholders file a lawsuit, you could be named in the lawsuit because you’re a director or officer of the company; you are also personally liable for the salary of any salaried employees (if you’re an officer of a company). Before you casually accept an offer to become an officer or director of a company, make sure you have insurance, which is called “director of liability policy.” If you’re not pursuing the position and it’s something you’re invited to accept, you may want to ask them to pay the premiums on your insurance.

• Limited partnership vs. general partnerships
• Limited partnership: Your liability is limited to the amount of your investment
• General partners: You have unlimited liability. Because you have the day-to-day control of the company, the trade off is more liability.

Smile. Some debt can be great
Good debt verses bad debt is another way to say credit verses debt. Not all debt is bad. Credit that entitles you to invest is good, such as your home mortgage (assuming your house has appreciated), starting a business, or purchasing investment properties. What determines if it’s good or bad is what you do with it. If you’re buying depreciating assets, you’re not incurring good debt.

Question : In your last column, you discussed Entrex and its creation of a private investment marketplace with public market standards and disciplines. As an investor in several private companies in my community, can I sell my shares and cash out my gains?
Answer : Just imagine if investors had a vehicle for buying and selling shares in private companies-a type of entrepreneurial exchange. Currently, alternative investors face two obstacles in realizing their earnings: time and exposure.

Time is a factor because most accredited investors buy restricted stock under Rule 144. The good news is that this stock may be freely traded after two years of ownership. But it’s up to the company to remove this restriction. Assuming this is accomplished, it then becomes a question of exposure.

Think back to when you purchased the stock. You were probably exposed to the company through some type of relationship or publicity which provided the credibility you needed to decide to invest.

It’s the same process when you’re ready to sell – the company’s credibility must be effectively communicated to alternative investors. On the plus side, trillions of dollars are earmarked by alternative investors. The problem? It’s up to you to find them.

Investors should know that company leadership drives the process toward wider exposure. It requires providing information to the financial community and cultivating an atmosphere of transparency. Private company leaders need to make alternative investors understand who and what they’re investing in – and why now is the time to buy.

The alternative market is ready and waiting to invest. When private companies follow established reporting standards, your shares will be seen, valued and increasingly liquid.

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