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californiacorporate&securities 1/17/2017
Calling All Stock Certificates

Last week, Broc Romanek’s Mentor Blog addressed the question of what to do about outstanding stock certificates following a reverse stock split.  Today, I’ll weigh in with a California perspective. Section 422 of the California Corporations Code invests a corporation’s board of directors the authority to order any holders of outstanding share certificates to surrender and exchange them for…

The post Calling All Stock Certificates appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/13/2017
O Frabjous Day! Court Holds Passive Member Is Not “Doing Business”

The State of California imposes its franchise tax on every corporation (other than a bank, financial corporation or exempt corporation) that is “doing business” in California.  Cal. Rev. & Tax Code § 23151.  This tax is imposed without regard to whether the corporation is incorporated in California.  This makes the name of the tax somewhat misleading…

The post O Frabjous Day! Court Holds Passive Member Is Not “Doing Business” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/12/2017
Do Outsiders Have Standing?

One of the essential elements of a contract is the consent of the parties.  Cal. Civ. Code § 1550(2).  When a party is a corporation, there is always a question of whether the person or persons signing the contract have the authority to do so on behalf the entity.  There is also the question of who can…

The post Do Outsiders Have Standing? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/11/2017
Should California Employers Be Insecure About California’s State-Run Retirement Savings Program?

Last September, California Governor Jerry Brown signed into law SB 1234 (De León) which implements the California Secure Choice Retirement Savings Program.  2016 Cal. Stat. ch. 804. If you haven’t heard of the program, California State Treasurer John Chiang describes it as the “most ambitious push to expand retirement security since the passage of Social Security in the…

The post Should California Employers Be Insecure About California’s State-Run Retirement Savings Program? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/10/2017
Five Gnostic Exemptions From The Qualification Requirements Of The Corporate Securities Law

When looking for exemptions from the qualification requirements of the California Corporate Securities Law of 1968, a good place to start is Chapter 1, Part 2, Division 1 of Title 4 of the Corporations Code.  Cal. Corp. Code § 25100 et seq.  If you don’t find an usable exemption there, another promising place to look is the rules of the Commissioner…

The post Five Gnostic Exemptions From The Qualification Requirements Of The Corporate Securities Law appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/9/2017
Is This SEC Claim False And Misleading?

Last week, the Securities and Exchange Commission announced yet another whistleblower award.  According to the SEC, the award totals more than $5.5 million dollars.  Tellingly, we don’t, and won’t, know the exact amount.  The headline to the SEC’s press release pegs the number at $5.5 million while the order itself reads: Claimant shall receive an award of [Redacted] percent [Redacted]…

The post Is This SEC Claim False And Misleading? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/6/2017
Must A Security Be Written?

In yesterday’s post, I covered some of the differences between the laundry lists of securities found in the California Corporate Securities Law of 1968 and the Securities Act of 1933.  Both lists seem to contemplate instruments that are written.  But what does it mean to be “written”?  Before the advent of computers, email and electronics,…

The post Must A Security Be Written? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/5/2017
Making A List Of Securities And Checking It Twice

California Corporations Code Section 25019 defines “security” not by saying what a security is but by providing examples of numerous types of securities.  In this respect, Section 25019 is reminiscent of Section 2(a)(1) of the Securities Act of 1933.  The two statutory lists, however, are not identical.  Below is a brief summary of some of the differences: Securities listed…

The post Making A List Of Securities And Checking It Twice appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/4/2017
Annotate This – The United States Code

Anyone who has studied legal research will recognize that some codes are annotated and some are not.  An annotated code includes the text of the statute and summaries of judicial decisions, regulations and other related material.  In federal court, the “official” codification is the United States Code: The matter set forth in the edition of…

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californiacorporate&securities 1/3/2017
This Definition Of A Factor May Surprise You

The creditable H.W. Fowler described “factor” as “one of those words . . . which are so popular as thought-saving reach-me-downs that all meaning is being rubbed off them by constant use.”  Fowler’s Modern English Usage (2d ed. p. 184). When I think of factoring in the legal sense, I think of someone who is engaged…

The post This Definition Of A Factor May Surprise You appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/29/2016
10th Circuit Holds SEC ALJs Are Holding Office Unconstitutionally

In March 2015, I posed the following question: But if you were hailed before an unconstitutional tribunal with the ostensible authority to fine you and bar you from working, would you want a “real” court to step in and consider the constitutionality of the proceedings? Since raising that question, several respondents in administrative proceedings brought by…

The post 10th Circuit Holds SEC ALJs Are Holding Office Unconstitutionally appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/28/2016
When Partnership “Members” Are Employees

Last week, I wrote about how AB 2883 changes the definition of “employee” vis-a-vis corporate directors.  See Is A Corporate Director An Employee Subject To Workers’ Compensation?  AB 2883 also rewrites the definition of “employee” for purposes of partnerships and limited liability companies.  Effective January 1, 2017, an “employee” for purposes of California’s workers’ compensation law…

The post When Partnership “Members” Are Employees appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/27/2016
California Secretary Of State Upgrades Business Searches

For some time, the California Secretary of State’s office has offered a business search application on its website.  Although the function provided only limited information, the application received more than 5 million views per month.  On St. Lucia’s day, the Secretary of State announced a new and improved search application. From my perspective, one of the…

The post California Secretary Of State Upgrades Business Searches appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/22/2016
Has The SEC Paid Millions In Whistleblower Bounties To “Friends And Family”?

Earlier this month, the Securities and Exchange Commission announced yet another large whistleblower bounty.  See SEC Awards Nearly $1 Million to Whistleblower.  This brings to $136 million the total amount awarded to date by the SEC to whistleblowers.  That is a lot of money, especially since it went to only 37 individuals! Were any of those awards made to…

The post Has The SEC Paid Millions In Whistleblower Bounties To “Friends And Family”? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/21/2016
Pay By Another Name Might Be Salt

Yesterday’s post concerned the classification of directors and officers as employees for purposes of California’s workers’ compensation law. Effective January 1, 2017, California Labor Code Section 3351(c) will define “employee” to include all “officers and members of boards of directors of quasi-public or private corporations while rendering actual service for the corporations for pay” (read…

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californiacorporate&securities 12/20/2016
Is A Corporate Director An Employee Subject To Workers’ Compensation?

  Corporate lawyers tend to believe that directors and officers are not ineluctably employees.  Thus, it may come as a surprise that California’s workers’ compensation law has for some time defined an “employee” to include officers and directors: All officers and members of boards of directors of quasi-public or private corporations while rendering actual service…

The post Is A Corporate Director An Employee Subject To Workers’ Compensation? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/19/2016
SEC Takes Action Because Issuer Did Not Effect A Public Offering

Until the addition of paragraph (c) to Rule 506 three years ago, securities lawyers spent a lot of time advising their clients on how to avoid a public offering of their securities.  Thus, I found it somewhat ironic to read that the Securities and Exchange Commission had taken enforcement action against a California lawyer for not conducting…

The post SEC Takes Action Because Issuer Did Not Effect A Public Offering appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/16/2016
Congress Voids Form Contract Provisions That Impede Consumer Reviews

To paraphrase William Somerset Maugham’s Of Human Bondage, businesses may ask you for a review, but they only want praise.  Indeed some businesses have tried to ensure only good reviews by including non-disparagement clauses in their consumer contracts. Two years ago, I wrote about a new California law intended to protect reviews of consumer products…

The post Congress Voids Form Contract Provisions That Impede Consumer Reviews appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/15/2016
What Are Protestants Doing In The California Water Code?

The California Water Code makes numerous reference to “protestants”.  Secularists need not fear.  The reference isn’t to adherents of the reformation theologies of Martin Luther, John Calvin or Huldrych Zwingli.  These are small “p” protestants, that is persons who are pursuing a protest. Section 1333, for example, provides “The protestant and the applicant shall make…

The post What Are Protestants Doing In The California Water Code? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/14/2016
There’s Still Time For Congress To Void The SEC’s Resource Extraction Rule

Last June, the Securities and Exchange Commission belatedly adopted a rule requiring disclosure of resource extraction payments by issuers.  As I wrote at the time: Congress had ordered the SEC to adopt a rule by April 17, 2011.  After belatedly adopting a rule, the U.S. District Court vacated the rule and sent it back to the SEC.  American…

The post There’s Still Time For Congress To Void The SEC’s Resource Extraction Rule appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/13/2016
Commissioner Finds Funding Is Not A Sine Qua Non For Lender Status

The California Department of Business Oversight administers and enforces the California Finance Lenders Law, Cal. Fin. Code § 22000 et seq.  The CFLL prohibits any person from engaging in the business of a “finance lender” without a license, unless otherwise exempt.  Cal. Fin. Code § 22100(a).  The CFLL provides the following definition of “finance lender”:…

The post Commissioner Finds Funding Is Not A Sine Qua Non For Lender Status appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/12/2016
Happy New Biennium!

“Biennial” is a confusing word.  The Nevada legislature meets biennially, i.e., every other year while the California legislative session is biennial, i.e., lasting two years. “Biennial” should not be confused with “biannual” which normally means twice a year. The California legislature meets annually but the legislative session is biennial.  Last Monday, for example, the California legislature convened for the…

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californiacorporate&securities 12/9/2016
How Does One Know When A Corporation Is Antagonistic?

When a shareholder files a derivative suit in state court, the defendants often will try to have the case removed to the federal district court. Federal courts, however, are courts of limited jurisdiction and not every plaintiff can make a “federal case” out of their complaint.  When federal court jurisdiction is based on diversity (28 U.S.C.…

The post How Does One Know When A Corporation Is Antagonistic? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/8/2016
When A Majority Won’t Suffice

For California corporations, the general rule is that an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board.  Cal. Corp. Code § 307(a)(8).  This general rule is not without its exceptions.  Two of these…

The post When A Majority Won’t Suffice appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/7/2016
Who Votes As Proxy For Shares Standing In The Name Of Another Corporation?

The Proxy Season blog yesterday discussed the following question from the Q&A Forum of TheCorporateCounsel.net: Under Delaware law, can a Board of Directors authorize a person who is not an officer of the company to act as agent and vote shares of stock for the Company that it holds in another entity? John Jenkins responded…

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Blogs 1 - 25 of 200