Clerky and Rho are partnering to make life easier for startups

We're thrilled to announce a new partnership with Rho to make it as easy as possible for startups to get up and running.

Startups can now start a Rho application pre-filled with information from the legal paperwork they've done on Clerky. It just takes one click. Then once the Rho account is open, we'll store the wire instructions for pre-filling into seed financing paperwork.

Not only that, but Rho is offering qualifying Clerky startups a $1,600 cash bonus!1 That’s enough to cover incorporation on Clerky and much more. All you have to do is open an account with Rho through Clerky, then deposit $20k within 90 days.

Here's what startups can get with Rho: 

  • $0 monthly subscription fees
  • $0 fee, same-day ACH and wires with Rho checking
  • Up to 4.3% yield2 when you invest with Rho Treasury (see website for latest rates)
  • Up to 2% cashback3 on corporate cards, plus unlimited virtual cards for your team
  • Automated bill pay and spend approvals
  • 24/7 email, chat, and phone support + dedicated customer representatives

Want to bank with Rho and get your bonus? Just go to Banking for your team and select Rho to apply.

Thousands of startups like Perplexity, Cal.com, and Public.com use Rho, so we're excited to be making it easier for Clerky startups to get started with Rho. Clerky has long had the largest ecosystem of top banking platforms for startups — with the addition of Rho today, that ecosystem is now even better.

Rho is a fintech company, not a bank or an FDIC-insured depository institution. Checking account and card services provided by Webster Bank N.A., member FDIC. Savings account services provided by American Deposit Management Co. and its partner banks. International and foreign currency payment services are provided by Wise US Inc. FDIC deposit insurance coverage is available only to protect you against the failure of an FDIC-insured bank that holds your deposits and subject to FDIC limitations and requirements. It does not protect you against the failure of Rho or other third party. Products and services offered through the Rho platform are subject to approval.

The Rho Corporate Cards are issued by Webster Bank N.A., member FDIC pursuant to a license from Mastercard, subject to approval.

Investment management and advisory services provided by RBB Treasury LLC dba Rho Treasury, an SEC-registered investment adviser and subsidiary of Rho. Rho Treasury investments are not deposits or other obligations of Webster Bank N.A., or American Deposit Management Co.’s partner banks, are not FDIC insured, are not guaranteed and may lose value. Investment products involve risk, including the possible loss of the principal invested, and past performance does not future results. Treasury and custodial services provided through Apex Clearing Corp. and Interactive Brokers LLC, registered broker dealers and members FINRA/SIPC.

1 Eligible Clerky startups: Earn a $1,600.00 USD credit with $20,000.00 USD avg. daily balance/first 90 days and primary account usage. New customers only, subject to Rho's verification. Cannot combine offers. Rho may discontinue, suspend benefits or require repayment for misuse. See Rewards Terms for details. Rho is a fintech, not a bank.

2 This reflects the gross yield based on 90-day Treasury Bill rates as of 03/04/2025. The advertised yield does not include the annual fee, which ranges from 0.15% for deposits of $20M or more to 0.6% (the maximum annual fee) for deposits under $2M. Individual results may vary depending on the actual investment date and investment products selected. Past performance is not a guarantee of future performance results. The yield is variable and fluctuates without prior notice. The rate shown is before fees. Fees and costs may reduce the actual returns received. The amount of Treasury Bills available at a particular yield will depend upon the sellers’ offer size; any remaining cash balance after the purchase may not earn the same yield.

3 Up to 2% cashback; terms and conditions apply. See eligibility and complete Rho Cashback Rewards Program terms and conditions here.

10
March
2025
Exclusive Mercury bonus, revamped banking, and more perks

What's new:

Even more new perks for your startup:

  • Retool — $25,000 in free credits for 1 year, plus 25% off paid plans the following year
  • Supabase — $300 of free Supabase credits over 12 months
  • Zeni — 20% off the annual price for 1 year, and 10% off after that
  • Pilot — free DE franchise tax filing, plus you can now choose between 20% off Pilot Core for 6 months or 1 free year of cash-basis bookkeeping
  • Avalara — 20% off your first year

Plus, our first ever personal perk for startup founders. Founders of Clerky startups are now eligible to skip the waitlist and get 6 free months of Mercury Personal, Mercury's new personal banking product! We already have a vast selection of perks for your startup at Clerky, but this is our first ever perk for your personal life ✨

07
January
2025
Federal Court Temporarily Suspends FinCEN BOI Report Requirement

Filing a FinCEN BOI report is no longer required (for now) — though your startup may still want to file one anyway. 

Here's what you need to know: 

FinCEN BOI reports are not currently required, as of December 26, 2024. A court ruling suspended the BOI report requirement on December 3, 2024. A subsequent court ruling removed that suspension on December 23, but another court ruling reinstated the suspension on December 26.

Here's what FinCEN says:

"In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

More information is available on FinCEN's website at https://www.fincen.gov/boi"‍‍

Your startup could suddenly be required again to file a BOI report with little notice. There are several active lawsuits challenging FinCEN's BOI reporting requirement. As we saw on December 23, developments in these lawsuits could lead to BOI reports suddenly being required again.

Some startups are filing BOI reports even though they're not required. A reason to do this is to avoid the chance of a late filing, which can occur if the BOI report requirement is reinstated and you either don't notice it or don't have enough time to meet the deadline. It can also make sense to voluntarily file a BOI report if you determine the benefit of not having to pay attention to the situation outweighs the cost of potentially disclosing BOI information to FinCEN for no reason.

If you decide not to file a BOI report for now, be prepared to file at a moment's notice. Many startup attorneys are recommending being prepared to file the BOI report at a moment's notice if you choose not to file one for now. When the December 23 court ruling led to the BOI reporting requirement being reinstated, FinCEN extended deadlines for many businesses, but not all. A small number of businesses were required to file an initial BOI report by the next day, on December 24.

Want to proceed with voluntarily filing a BOI report? If you decide to file a BOI report even though they're not required, you can file directly with FinCEN. While Clerky has a tool for filing BOI reports, FinCEN has temporarily suspended API submissions for everyone, including Clerky.

Here are the latest deadlines FinCEN published prior to the BOI report requirement being suspended again:

  • For startups incorporated before January 1, 2024
    • Deadline: January 13, 2025
  • For startups incorporated January 1 through September 3, 2024
    • Deadline: 90 days after incorporation
  • For startups incorporated September 4 through September 24, 2024
    • Deadline: January 13, 2025
  • For startups incorporated September 25 through December 2, 2024
    • Deadline: 90 days after incorporation
  • For startups incorporated December 3 through December 23, 2024
    • Deadline: 111 days after incorporation
  • For startups incorporated December 24 through December 31, 2024
    • Deadline: 90 days after incorporation
  • For startups incorporated January 1, 2025 or later
    • Deadline: 30 days after incorporation

If the BOI report requirement is reinstated, FinCEN may extend some or all of these deadlines, though there's no guarantee that they will.

Never heard of BOI reports before? Check out this help center article to learn more about them.

The above reflects our understanding of the situation as of December 26, 2024. We'll continue to monitor ongoing lawsuits regarding the FinCEN BOI report requirement closely.

26
December
2024
You can now file your startup's BOI report through Clerky

We're thrilled to announce our new BOI reporting tool! You can now submit all your startup's beneficial ownership information to FinCEN without ever leaving Clerky. 

In case you hadn't heard, most startups formed in the US now need to submit ownership information to FinCEN, a government bureau that helps detect financial crimes. This new requirement is a consequence of the Corporate Transparency Act (CTA), which went into effect in January 2024. 

Most Clerky startups now need to file a BOI report, with limited exceptions. Please refer to the chart below for information about deadlines:

Date Incorporated Deadline
Prior to January 1, 2024 January 1, 2025
January 1, 2024 to December 31, 2024 90 days after incorporation (making March 31, 2024 the first possible due date)
On or after January 1, 2025 30 days after incorporation

The penalties for failing to file by these deadlines can be severe. That's why we've made staying compliant as easy as possible. As you approach your deadline, we'll send you reminder emails and in-app notifications. We'll also remind you to submit an updated report if we detect that you've changed any of your information, like your startup's name, address, or beneficial owners. 

When the time comes to file, you can submit your information directly from Clerky. We'll pre-fill the report with information we already have from your legal paperwork to make things as easy as possible. 

It's worth noting that a recent court decision in Alabama found the Corporate Transparency Act unconstitutional. The ruling won't affect most startups, only members of the plaintiffs in that particular lawsuit, but we're closely monitoring the development of any cases that may impact this requirement more broadly.

Do you still have questions about your startup's BOI report? Are you wondering whether you should get a FinCEN ID to make the process easier? You can find answers to these common questions and more in our help center article What is a BOI report?.

25
March
2024
EINs, integrations, and perks

What's new in our software:

We've also added new perks, plus a limited-time offer:

  • Efficient Capital Labs  – 25 basis point discount on ECL's financing fees
  • Pulley – 15% off your first year when you sign up through Clerky
  • Limited-time offer! Mercury — $1,000 cash for eligible Clerky startups that open a Mercury account (minimum deposit required)
11
March
2024
Delaware, Elon Musk, and Compensation

Delaware's Court of Chancery recently ordered that Elon Musk’s $55.8 billion compensation package from Tesla be undone. On the surface, the decision can be confusing since Elon Musk has contributed so much to Tesla. Can a court even get involved with compensation?

Since there's a lot of interest in this ruling, we thought it'd be helpful to provide startup founders with a summary of the legal reasoning behind the outcome. So we read through the entire 200-page opinion to make the outline below for you. Enjoy!

What was the logic of the opinion?

Background

  • A Tesla stockholder sued Elon Musk and Tesla, saying that the Tesla board breached its fiduciary duties by awarding Musk an unusually large compensation package.
  • By default, Delaware courts don’t question business decisions like compensation.
  • An exception is when there is a conflict of interest (i.e. a risk of self-dealing).
    • This can happen when a company sets compensation for someone who controls the company, since they might try to give themselves more compensation at the expense of other stockholders.
    • The court found Elon Musk to have control of the company with respect to his compensation because the majority of the compensation committee were Musk's friends or beholden to him in some way.

"Entire Fairness" Standard

  • If there is a conflict of interest, Delaware courts use a standard known as "entire fairness" instead of the "business judgment rule".
    • The "entire fairness" standard is well-established case law.
    • The standard has two aspects: "fair price" and "fair dealing" (whether a "fair process" was followed in making the decision).
  • If the decision was approved by fully-informed, disinterested stockholders, the plaintiff has the burden of proof to show that the "entire fairness" standard was not met.
    • The plaintiff in this case was the stockholder suing Elon Musk.
    • To fully inform the stockholders, the company needs to tell the stockholders if any of the decision-makers had a conflict of interest.
    • The company also needs to tell the stockholders important details about the process it followed in making the decision.
  • Tesla got consent from disinterested stockholders, but the court found it wasn't fully informed.
    • Tesla didn't tell stockholders about conflicts of interest with the compensation committee. Instead, Tesla told stockholders that the compensation committee was fully independent.
    • Tesla also didn't disclose that the compensation committee had not actually tried to negotiate the compensation or do any customary benchmarking.
  • As a result, the burden of proof was on Elon Musk's lawyers to prove the "entire fairness" standard had been met.

Failure to Prove "Entire Fairness"

  • The court found that Elon Musk's lawyers proved neither "fair dealing" nor "fair price", the two aspects of the "entire fairness" standard.
  • The court found "fair dealing" hadn't been proved in part because there was no real negotiation of the compensation package. The compensation committee members testified that they were just cooperating with Musk.
  • Musk's lawyers tried to prove "fair price" seven different ways but didn't persuade the court with any of them.
    1. The compensation package Tesla gave to Elon Musk was worth the increased alignment and commitment Tesla got from him.
      • The court wasn't persuaded that what Tesla gave was necessary to get Musk's alignment and commitment.
        • Musk's large ownership stake in Tesla already aligns him with Tesla.
        • Other founders like Zuckerberg, Bezos, Gates, etc. with large ownership stakes in their companies didn't need additional compensation to remain aligned and committed to their companies.
        • Musk testified he would have stayed with Tesla even without the compensation package.
        • There was evidence at trial that the size of the compensation package was based on goals Musk had that weren't related to Tesla.
    2. It was a precarious time for Tesla, and Musk required "dopamine hits" to be incentivized to stay at the helm.
      • The court was not convinced by this because the compensation package terms didn't require Musk to spend any particular amount of time or energy working on Tesla, weakening the argument that the board was worried about incentivizing Musk to focus on Tesla.
    3. The structure of the compensation package contained provisions and stockholder protections that resulted in only upside for stockholders.
      • The court agreed that the compensation package's structure had some value as far as protecting stockholders, but this wasn't enough to prove fair price.
    4. The milestones Musk had to accomplish were "audacious" and "extraordinarily ambitious".
      • The court wasn't convinced by this argument because, at the time of the grant, three of the milestones were projected to be achieved anyways, and others were estimated at the time to have a 70% chance of being achieved.
    5. The compensation was similar to what a CEO would get when hired for a VC or PE-backed company.
      • The court didn't find this persuasive because Tesla wasn't a VC or PE-backed company, and Musk already owned a large percentage of the company.
    6. The package was approved by a majority disinterested stockholder vote.
      • As the court determined earlier, the stockholders weren't fully informed. As a result, the stockholder consent couldn’t be used as evidence of "fair price".
    7. Because Tesla thrived as a result of the compensation package, the price was fair in hindsight.
      • The court couldn't find proof that the compensation package was solely or directly responsible for Musk's efforts, so did not find this argument to prove a fair price.

Outcome

  • Because the court found that Elon Musk's lawyers didn't prove either "fair dealing" or "fair price", the two aspects of the "entire fairness" standard, it ruled in favor of the plaintiff.
  • The plaintiff had asked for rescission of the grant, which was supported by case law as a valid remedy. Elon Musk's lawyers hadn't proposed any viable alternative, so the court ordered full recission of the grant.

Hopefully this gives you a clear understanding of how the case was decided! We've done our best to distill the opinion down to the essence of its logic. If you want to get into the details, you can read the full opinion on the Delaware Court of Chancery's website.

What are startup attorneys saying?

In case it's helpful, we've put together a list of commentary on this case by well-regarded startup attorneys and law firms:

Subject to any changes that might happen if the case is appealed, the key takeaways from these attorneys and law firms are:

  • Make sure that stockholders are given relevant information when having them approve decisions involving conflicts of interest.
  • Compensation committees should ideally be comprised of directors that don't have a conflict of interest.
  • If compensation for a controlling stockholder is unusually large, it should ideally be negotiated, benchmarked, and in service of company objectives.

None of this is new to competent corporate attorneys, but this case provides a high-profile reminder of how Delaware corporate law works.

These takeaways are more likely to be relevant for large companies like Tesla, because most early-stage startup founders aren't giving themselves above-market compensation. In addition, litigation about compensation is very uncommon with early-stage startups, unless there's a scheme to defraud investors or co-founders. This is in part because litigation can easily kill an early-stage startup, which would be counterproductive for stockholders.

07
March
2024