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californiacorporate&securities 7/31/2014
Delaware Likes Garner/California Not So Much

In 1970, Richard Nixon was president, the 26th Amendment was still not part of the Constitution, and the Fifth Circuit Court of Appeals issued its opinion in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970).  In that case, Judge Godbold wrote: The attorney-client privilege still has viability for the corporate client.  The corporation is not barred from asserting it […]

The post Delaware Likes Garner/California Not So Much appeared first on California Corporate & Securities Law.

 
californiacorporate&securities 7/14/2014
Why Doesn’t The SEC Post SubCommittee Recommendations?

Last Thursday, the Investor Advisory Committee held another meeting.  The agenda included this rather vague agenda description: Discussion of Definition of Accredited Investor (which may include a recommendation of the Investor as Purchaser Subcommittee) The actual meeting did in fact include a discussion of the recommendation of the subcommittee.  The recommendation, however, was (and as of July 13 was still) not posted. [...]

 
California Wireless Law Blog 7/9/2014
Nokia Buys SAC Wireless To Increase U.S. Business

Nokia has acquired indoor wireless specialist SAC Wireless to help boost its network deployment business and wireless network infrastructure in the U.S. SAC Wireless specializes in deploying small cells and using antenna systems to improve wireless coverage in densely-populated, public places. The acquisition should help Nokia expand into the growing small cell market, as mobile network providers have increased their […]

 
diversity&community 6/30/2014
Rachel’s Women’s Center Provides Support for San Diego Homeless Women

porters Mark Hattam and Heather Riley share how the Rachel’s Women’s Center helps homeless and very low-income women in San Diego get back on their feet. The center provides a safe, supportive, sober environment for women with few or no resources to gather, begin and continue self-help efforts. [...]

 
californiacorporate&securities 6/24/2014
How Confused Is This? California Defines LLCs Subject To New Law To Include Foreign LLCs

The California Revised Uniform Limited Liability Company Act. which took effect on January 1 of this year, provides the statutory framework for the formation and operation of limited liability companies.  The law appears to distinguish between a “limited liability company” and a “foreign limited liability company”.  As might be expected, a “limited liability company” is defined (except in the phrase “foreign [...]

 
californiacorporate&securities 6/17/2014
This Legislative Lacuna Looms Large In RULLCA

I expect that most limited liability company operating agreements specify how profits and losses are to be allocated among members.  Sometimes, they may not.  The now repealed Beverly-Killea Act provided a default provision for just this contingency, former Corp. Code § 17202.  A similar default rule can be found in the California Revised Uniform Limited Partnership Act of 2008, Cal. Corp. [...]

 
californiacorporate&securities 6/16/2014
Commissioner Rings Pension Fund Tocsin

In a speech given late last month, SEC Commissioner Daniel M. Gallagher warned that “for years, state and local governments have used lax governmental accounting standards to hide the yawning chasm in their balance sheets.”  According to Commissioner Gallagher, pension funds have been committing two fundamental errors.  First they are overstating investment returns.  He noted that many funds assume a return [...]

 
californiacorporate&securities 6/12/2014
Nevada Exculpation Statute Leads To Dismissal Of Claims Against Erstwhile Officer

Nevada, unlike either California or Delaware, exculpates corporate officers from liability to the corporation for any damages as a result of “any act or failure to act” in his or her capacity as an officer unless it is proven that (i) the officer’s action or failure to act constituted a breach of his or her fiduciary duties as an officer; [...]

 
californiacorporate&securities 6/11/2014
How A Public Records Act Request Can Be Better Than A Subpoena Duces Tecum

The California counterpart to the Freedom of Information Act (aka FOIA) is the Public Records Act, Government Code Section 6250 et seq.  In a recent unpublished decision, the Court of Appeal succinctly explains why submitting a Public Records Act request may yield more comprehensive results than a subpoena: Generally, a California Public Records Act request is more beneficial to the requesting party [...]

 
California Wireless Law Blog 6/9/2014
Bay Area Residents Want More Wireless Towers

A 2014 Bay Area Council Poll found overwhelming support among residents for installation of new antennae, cell towers and fiber optic cables in their city.  According to over 1,000 residents surveyed, a whopping 74 percent say it’s time to upgrade and modernize communications systems to ensure faster mobile and Internet services. Such widespread support isn’t surprising — a majority of […]

 
californiacorporate&securities 6/6/2014
Do You Want Your Lawyer To Be Horatius Or Atticus Finch?

I was profoundly disheartened by these recent remarks by SEC Commissioner Kara M. Stein: Are we treating lawyers differently from other gatekeepers, such as accountants?  I think we should carefully review the role that lawyers play in our markets, with a view towards how they can better help deter misconduct and prevent fraud. We should be considering attestations in new areas.  [...]

 
californiacorporate&securities 6/5/2014
What Good Can Come From Letting The Indifferent and Undecided Hold Sway?

I’ve written many posts on the subject of voting because it seems so straightforward and yet turns out to be complex.  In tackling any voting problem, it is important to know and understand the applicable voting rule.  An example of a voting rule can be found in Section 708(c) of the California Corporations Code which prescribes the rule for director elections.  Unfortunately, [...]

 
californiacorporate&securities 6/4/2014
Oracular Utterances From California’s Civil Code

In prior posts, I’ve mentioned the Etruscans who were the northern neighbors of the Latins and the erstwhile kings of Rome.  The last of these kings was Tarquinius Superbus, also known as Tarquin the Proud.  According to the ancient sources, Tarquinius Superbus was induced, or tricked, into buying a set of books (actually scrolls) from the Sybil (prophetess) of Cumae.  These books, [...]

 
californiacorporate&securities 6/3/2014
Federal Court Applies California Privilege Law To Delaware Corporation

Lawyers often speak of the attorney-client privilege in the singular as if there is only one privilege.  Given the multiplicity of fora in which actions may be brought, it is best to think in the plural.  There are many versions of the attorney-client privilege and the one that is applied to your case may not be the one that you expect.  Such was the [...]

 
californiacorporate&securities 6/2/2014
Fee Shifting Bylaw Provisions May Face Constitutional Limitation

The corporate governance world has been disquieted by Delaware Supreme Court Justice Carolyn Berger’s recent opinion that upheld the validity of a fee-shifting bylaw provision in the bylaws of a Delaware non-stock corporation.  ATP Tours, Inc. v. Deutscher Tennis Bund (No. 534, 2013, May 8, 2014).  Even though the ink has barely dried on the opinion, the Delaware legislature is considering [...]

 
californiacorporate&securities 5/30/2014
This International Shoe Doesn’t Fit: Subsidiary May Not Be Parent’s Agent

Is a wholly-owned subsidiary per se an agent of the parent?  In an opinion issued yesterday, the Nevada Supreme Court answered “not necessarily”.  The legal issue was whether the German parent of a Delaware corporation doing business in Nevada was subject to the jurisdiction of the Nevada courts.  Viega GMBH v. Eighth Judicial Dist. Court, 130 Nev. Adv. Op. 40 (May [...]

 
californiacorporate&securities 5/28/2014
CalPERS Allowed To Continue Rating Agency Suit

In 2009, the California Public Employees’ Retirement System filed a lawsuit alleging negligent misrepresentation and negligent interference with prospective economic advantage against Moody’s Investors Services, Inc., Moody’s Corporation and The McGraw-Hill Companies, Inc.  The defendants filed a special motion to strike the complaint under California’s anti-SLAPP statute, Cal. Code Civ. Proc. § 425.16.  The trial court denied the motion and [...]

 
californiacorporate&securities 5/27/2014
An Epic Question: Is This Pay Ratio Too Large, Too Small or Just Right?

California’s corporate tax rate is currently 8.84%.  According to the California Taxpayer’s Association, only nine states (Alaska, Connecticut, Illinois, Iowa, Maine, Minnesota, New Jersey, Pennsylvania and Rhode Island) have a higher top rate.  Nonetheless, a bill that could increase the corporate tax rate for some publicly traded corporations by over 47% continues to move through the California legislature, passing out of [...]

 
californiacorporate&securities 5/23/2014
Delaware Court Rules Nevada Law Governs But Applies Delaware Law

Although there are many significant differences between the corporate laws of Nevada and Delaware, the Nevada Supreme Court has often looked across the country to Delaware.  Thus, the Nevada high court has adopted Delaware’s test for demand futility articulated in Aronson v. Lewis, 473 A.2d 805 (Del. 1984) (overruled in part on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000)).  [...]

 
californiacorporate&securities 5/22/2014
Looking For The List Of OTC Margin Stocks? You’ll Find It In California’s New LLC Act

When originally enacted, the Securities Exchange Act of 1934 banned brokers and dealers from extending margin credit on over-the-counter (OTC) securities.  This changed in 1969 when the Exchange Act was amended.  The Federal Reserve determined which stocks could be margined and it began publishing in the Federal Register the Official List of OTC Margin Stocks.  However, if you look today for the Official [...]

 
californiacorporate&securities 5/21/2014
Are Proper Names In A Language?

My last name is Bishop.  In Spanish, it would be Obispo.  If I included Obispo in a corporate name, would that be acceptable to the Secretary of State? Nevada has a statute, NRS 78.028 that provides “No record which is written in a language other than English may be filed or  submitted for filing in the Office of the Secretary of [...]

 
californiacorporate&securities 5/20/2014
This Volte-Face Might Prove Problematical For LLCs

Under the Beverly-Killea Limited Liability Company Act, the articles of organization prevailed over conflicting provisions of a written operating agreement.  Cal. Corp. Code § 17005(f) (repealed).  The drafters of the California Revised Uniform Limited Liability Company Act marched to the beat of their own drummer.  In Corporations Code Section 17701.12(d) they provided that in the case of a conflict between the articles [...]

 
californiacorporate&securities 5/19/2014
Some Things That The Corporations Code Doesn’t Tell You About Annual Meetings

Annual meetings of shareholders are important.  If a corporation fails to hold one for a period of 60 days after the designated date or, if no date is designated, for 15 months, then the superior court may summarily order a meeting.  Cal. Corp. Code § 600(c) (compare Section 211(c) of the Delaware General Corporation Law in which the periods are only [...]

 
californiacorporate&securities 5/16/2014
Internal Affairs Doctrine May Not Control Alter Ego Liability

The internal affairs doctrine “is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation’s internal affairs — matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders — because otherwise a corporation could be faced with conflicting demands.” Edgar v. MITE Corp., 457 [...]

 
californiacorporate&securities 5/15/2014
Legitimate Interests Provide No Immunity For Intentional Interference Claims

In law school we study contract law and we study torts.  We don’t study contracts and torts as a single subject (e.g., “contorts”).  Why?  Because they are generally regarded as fundamentally different areas of the law.  They involve different issues – contracts is all about consent while torts is all about the lack of consent.  There are also significant differences [...]

 
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