A-Corp OK for you?
Colorado recently passed the Colorado Artist Company Act which created a new type of corporation for artists to organize themselves into a business. They are referred to as A-Corp and if it finds success in Colorado other states may adopt similar forms to help their own artists in the same way.
Key aspects of the law are as follows:
Artists must own 51% of voting shares. This is set by statue and cannot be contracted away.
Intellectual Property transferred to the corporation cannot be transferred to a non-artist investor or 3rd party. If the corporation is dissolved, the Intellectual Property reverts back to the artist who created it. In Waite v. UMG Recordings, Inc. (2020) a group of musicians tried file termination claims (demanding their intellectual property back) under 203 of the copyright act and UMG denied those claims under the reasoning that the artists had assign those intellectual property rights to carve out corporations. If those corporations had this protection afford to A-Corporations, this would not have happened.
Economic governance can be separated from artistic control. Artists can give non-artist investors rights of economic distribution or royalties while retaining complete creative control over the creation of their art.
Members and Managers have fiduciary duty to preserve the artists mission while balancing it with financial interests.