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californiacorporate&securities 5/25/2016
Ninth Circuit Finds That Purpose Of Stock Rights Plan Matters

Most equity award plans that I come across include a statement of the plan’s purposes.  I haven’t tended to give these provisions a whole lot of thought, but an opinion issued yesterday by the Ninth Circuit Court of Appeal makes it clear that a plan’s purpose clause can be very important indeed.  The case arose from the retirement

The post Ninth Circuit Finds That Purpose Of Stock Rights Plan Matters appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/24/2016
Who Decides Whether A Shareholder Has Complied With An Advance Notice Bylaw?

UCLA Professor Stephen Bainbridge asked the following question concerning advance notice bylaw provisions in “The Professor is Stumped: Today’s Corporate Law Question“: When an incumbent board of directors claims that a potential proxy insurgent has failed to comply with an advance notice bylaw, who decides whether the bylaw has been satisfied? The board (subject to

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californiacorporate&securities 5/23/2016
How The Defend Trade Secrets Act Of 2016 Opens The Door To Disclosure Of Trade Secrets

François-Marie Arouet, better known as Voltaire, once famously wrote “Ce corps qui s’appelait et qui s’appelle encore le saint empire romain n’était en aucune manière ni saint, ni romain, ni empire (This body, which was, and is, titled the Holy Roman Empire was in no way holy, Roman, or an empire)”.  Essai Sur Les Moeurs, Ch. LXX.  A similar

The post How The Defend Trade Secrets Act Of 2016 Opens The Door To Disclosure Of Trade Secrets appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/20/2016
Did The SEC Staff Bypass The APA In Issuing New And Revised Non-GAAP Financial Measure C&DIs?

Earlier this week, the staff of the SEC’s Division of Corporation Finance issued several new, and rewrote several existing, Compliance and Disclosure Interpretations (“C&DIs”) relating to Non-GAAP Financial Measures.  Recently, the SEC has been signaling that it intends to crack down on company disclosures of Non-GAAP Financial Measures.  While some are likely to welcome additional guidance

The post Did The SEC Staff Bypass The APA In Issuing New And Revised Non-GAAP Financial Measure C&DIs? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/19/2016
Synecdoche And The California Corporations Code

Synecdoche is a literary trope by which one refers the whole by a component, or vice versa.  The word is derived from an ancient Greek word, σuνεκδοχή, which means understanding one thing with another.  Although I was first introduced to the term in High School, I don’t ordinarily employ synecdoche in my legal writing.  Thus,

The post Synecdoche And The California Corporations Code appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/18/2016
Does A Dissolved Corporation Have Officers And Directors?

It might be reasonable to assume that a dissolved corporation no longer has any officer and directors.  However, the California General Corporation Law seems to assume that dissolved corporations continue to have directors and officers.  California Corporations Code Section 2011(b) provides that summons and other process against a dissolved corporation “may be served by delivering

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californiacorporate&securities 5/17/2016
Does An LLC Maintain Its Records At Its Designated Office When They Are In The Cloud?

Section 17701.13 of the California Corporations Code requires that a limited liability company designate and continuously maintain in California both an office and an agent for service of process.  The office need not be a place of the LLC’s activity in California.  However, the LLC is required to maintain specified records at the designated office. 

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californiacorporate&securities 5/16/2016
Is A Blue Sky Exemption For Farms Sustainable?

Today, California regulates the offer and sale of securities more by exemption than qualification.  In addition, California and other states have lost authority over a significant amount of securities transactions due to federal preemption.  The Sustainable Economies Law Center nonetheless is sponsoring a bill, AB 2751 (Brown), to add two new exemptions to the California Corporate

The post Is A Blue Sky Exemption For Farms Sustainable? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/13/2016
“We Reserve The Right To Refuse Service To Anyone”, But What Would Blackstone Do?

“The common law of England, so far as it is not repugnant to or in conflict with the Constitution and laws of the United States, or the Constitution and laws of this State, shall be the rule of decision in all the courts of this State.” NRS 1.030. I’ve previously written about how both California

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californiacorporate&securities 5/12/2016
How To Revive A Suspended Corporation

Yesterday’s post concerned the circumstances that will cause the California Franchise Tax Board to suspend a corporation’s rights, powers, and privileges to conduct business in California.  Suspension, however, is reversible, although it isn’t necessarily easy.  First, is the matter of delinquent returns.  The Franchise Tax Board requires that all delinquent tax returns be filed.  Second,

The post How To Revive A Suspended Corporation appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/11/2016
Suspension By The Franchise Tax Board

Yesterday’s post concerned the two circumstances in which the Secretary of State might suspend a corporation.  The California Franchise Tax Board will suspend a corporation if it fails to pay taxes, penalties, fees or interest (Cal. Rev. & Tax. Code § 23301) or fails to file a return (Cal. Rev. & Tax. Code § 23301.5). These

The post Suspension By The Franchise Tax Board appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/10/2016
Corporate Suspension By The California Secretary Of State

In California, a corporation may find its powers, rights and privileges suspended by either the Secretary of State or by the Franchise Tax Board.  Today’s post discusses the two roads to suspension by the California Secretary of State. The most common cause for suspension is the failure to file the annual information statement required by Corporations Code Section 1502

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californiacorporate&securities 5/9/2016
Court Rules Attorney-Client Privilege Ceases To Exist When Corporation Ceases To Exist Without Successor

The LLC May Well Be The Platypus Of Business Organizations What happens to the attorney-client privilege when a corporation dissolves?  Magistrate Judge Sallie Kim recently answered that question in Virtue Global Holdings Ltd. v. Rearden LLC, 2016 U.S. Dist. LEXIS 53076 (N.D. Cal. April 5, 2016): When a corporation ceases to exist, “the corporate powers, rights and

The post Court Rules Attorney-Client Privilege Ceases To Exist When Corporation Ceases To Exist Without Successor appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/6/2016
Unilateral Disarmament, The Prisoners’ Dilemma And SEC Staff Comment Letters

In an arms race, each suffers the worst result if it disarms and the other side remains armed.  However, if both sides are armed, they are not as well off as when both sides are disarmed.  This is, of course, the classic “Prisoners’ Dilemma” game (see table below). Much the same logic applies to the SEC’s insistence

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californiacorporate&securities 5/5/2016
Has Your Promissory Note Been Outlawed?

The modern understanding of the term “outlaw” is someone who has broken the law and has not been captured and brought to justice.  There is, however, another sense of the term.  A note is said to be “outlawed” when the statute of limitations no longer permits its enforcement.  Fleury v. Ramacciotti, 8 Cal. 2d 660,

The post Has Your Promissory Note Been Outlawed? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/4/2016
Is Forced Speech In Responding To Staff Comment Letters Inaccurate Speech?

In 2014, the Securities and Exchange Commission announced that all comment letters would request that the issuer include the so-called “Tandy Letter”.  Thus, all staff comment letters include a request for a written statement in haec verba: The company is responsible for the adequacy and accuracy of the disclosure in the filing; Staff comments or

The post Is Forced Speech In Responding To Staff Comment Letters Inaccurate Speech? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/3/2016
Simple Majority Voting And The Magna Carta

Some activists are continuing to submit stockholder proposals seeking the implementation of “simple majority voting”.  For example,  Morgan Stanley’s 2016 proxy statement includes the following proposal from Newground Social Investment, SPC: RESOLVED: Shareholders of Morgan Stanley hereby request the Board to take or initiate the steps necessary to amend the Company’s governing documents to provide that all non-binding matters presented

The post Simple Majority Voting And The Magna Carta appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 5/2/2016
Why Delaware Corporations Should Worry About California Law When Making Dividends

When paying a dividend to shareholders, California corporations are subject to Chapter 5 of the California Corporations Code.  Corporations incorporated in Delaware and other states may also be subject to Chapter 5 if they meet the conditions of Corporations Code Section 2115, California’s pseudo-foreign corporation statute.  Section 2115 excepts companies with outstanding companies listed on

The post Why Delaware Corporations Should Worry About California Law When Making Dividends appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/29/2016
Plaintiffs Find California Courts Congenial To Section 11 Actions

Muttering About Mottoes The official motto of the State of California is “Eureka”.  Cal. Gov’t Code § 420.5.  The word is a transliteration of the Greek word εὕρηκα which is first person, singular, indicative active form of verb “find”.  Thus, it translates into “I have found it”.  The motto, which appears on the state’s seal,

The post Plaintiffs Find California Courts Congenial To Section 11 Actions appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/28/2016
Inspecting Foreign Corporation Shareholder Lists

Recently, I’ve written about the “absolute” right of shareholders to inspect the shareholders list pursuant to California Corporations Code Section 1600.  Readers at, or representing, foreign corporations may have skipped these posts as inapposite to their circumstances.  That could be a mistake. A foreign corporation may be subject to Section 1600 if it meets the conditions set

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californiacorporate&securities 4/27/2016
Federal Court Rules “Mere Affiliation” Is Insufficient To Establish Personal Jurisdiction

Nearly four years ago, I wrote about a Nevada Supreme Court decision holding that Nevada courts can exercise personal jurisdiction over nonresident officers and directors who directly harm the corporation.  Consipio Holding, BV v. Carlberg, 282 P.3d 751 (2012).  At the time, Nevada did not have an implied consent statute similar to Del. Code tit. 10,

The post Federal Court Rules “Mere Affiliation” Is Insufficient To Establish Personal Jurisdiction appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/26/2016
More On Inspecting The Shareholder List And The Regulation Of Alien Implants

Yesterday’s post discussed California’s “absolute” right of shareholders to inspect the shareholder list established by Section 1600 of the California Corporations Code.  Some additional points are briefly worth noting: Neither the articles of incorporation or bylaws may limit this statutory inspection right.  Cal. Corp. Code § 1600(d). The right to inspect the shareholder list is

The post More On Inspecting The Shareholder List And The Regulation Of Alien Implants appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/25/2016
Inspecting The Shareholder List

Section 1600(a) of the California General Corporation Law establishes the “absolute right” of a shareholder or shareholders to inspect the shareholder list.  To be eligible to exercise this right, the shareholder or shareholders must hold at least: 5% in the aggregate of the outstanding voting shares of the corporation; or 1% of those voting shares and

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californiacorporate&securities 4/22/2016
Happy Birthday William Shakespeare!

Tomorrow will be the anniversary of William Shakespeare’s birth in 1564.  He died on the same date in 1616, making this the 400th anniversary of his death.  Actually, the exact date of his birth is unknown, but it is traditionally given as the same date of the month as his death. Below are just a

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californiacorporate&securities 4/21/2016
The Statue And Statute Of The Three Lies

The Statue of Three Lies In Harvard Yard, there is a prominent bronze statue of a man sitting on a chair.  The statue is the work of the prolific American sculptor Daniel Chester French.  The statue is vaguely reminiscent of French’s more famous depiction of a sitting President Abraham Lincoln in the Lincoln Memorial.  (Does it really make sense to call a

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Blogs 1 - 25 of 200