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California Corporate and Securities Law

Blogs 1 - 25 of 200
californiacorporate&securities 3/28/2017
Interstate Versus Intrastate Business – What’s The Difference?

Some words are easily confused such as hyperthermia and hypothermia.  In the case of the former, one is overheated and in the case of the latter, one is not warm enough.  The difference becomes more understandable when one knows the roots of these two words.  Both use “thermia” which is derived from the Greek word for heat –…

The post Interstate Versus Intrastate Business – What’s The Difference? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/27/2017
Improper Purpose Frustrates Member’s Assertion Of A Proper Purpose

The inspection rights of members of California nonprofit mutual benefit corporations mirror those of shareholders of corporations under the General Corporation Law. Section 8333 of the Corporations Code provides that the accounting books and records and minutes of proceedings of the members and the board and committees must be open open to inspection upon the…

The post Improper Purpose Frustrates Member’s Assertion Of A Proper Purpose appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/24/2017
Want To File A Derivative Suit? You May Soon Be Required To Read Statutes

I have been writing recently about SB 203, a bill that is now pending in the Nevada legislature.  As introduced, the bill would, among other things, require the following: In an action involving or relating to a domestic corporation that is subject to the provisions of NRS 41.520 or alleges a breach of a fiduciary duty by a director…

The post Want To File A Derivative Suit? You May Soon Be Required To Read Statutes appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/23/2017
Nevada Legislature Ponders Rejection Of Unocal And Revlon Standards

Thirty years ago, the Delaware Supreme Court issued two seminal opinions concerning how courts ought to review director decisionmaking in merger and acquisition transactions.  In the first case, Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), the Supreme Court imposed a heightened standard to board responses to hostile takeover attempts.  In the second case, Revlon, Inc. v.…

The post Nevada Legislature Ponders Rejection Of Unocal And Revlon Standards appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/22/2017
Even In Nevada, “Get It Writing” May Not Be Far From The Mark

A recent ruling by U.S. District Court Magistrate George Foley, Jr. serves as a reminder the “get it in writing” tends to be good advice.  The case involves a casino’s attempt to enforce a $3 million gaming debt incurred by one of its patrons.  This patron executed a credit agreement but the casino allowed him…

The post Even In Nevada, “Get It Writing” May Not Be Far From The Mark appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/21/2017
Court Finds Lawsuit By Corporation Against Minority Shareholder Is “Protected Activity”

SLAPP is the initialization of the phrase “strategic lawsuit against public participation”.  A more informative description of SLAPP suits is found in Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal.4th 12, 21 (2010): “A SLAPP is a civil lawsuit that is aimed at preventing citizens from exercising their political rights or punishing those who have done so.…

The post Court Finds Lawsuit By Corporation Against Minority Shareholder Is “Protected Activity” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/20/2017
Nevada Legislature Mulls Codification Of The Internal Affairs Doctrine

Delaware and Nevada are each in the business of marketing their corporate laws to businesses in other states.  Thus, it should surprise no one that these states don’t appreciate it when their legal offerings are undermined by other states.  One way to protect the franchise is by embracing the “internal affairs doctrine”. The internal affairs…

The post Nevada Legislature Mulls Codification Of The Internal Affairs Doctrine appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/17/2017
How The Proposed Fix To Delaware’s Stockholder Consent Statute Can Be Fixed

Earlier this week, I wrote about a proposed amendment to Section 228 of the Delaware General Corporation Law.  The amendment, which is proposed by The Corporate Council of the Corporation Law Section of the Delaware State Bar, would essentially condition the effectiveness of a stockholder consent upon the delivery of a sufficient number of consents with 60…

The post How The Proposed Fix To Delaware’s Stockholder Consent Statute Can Be Fixed appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/16/2017
Consumer Loan, Commercial Loan or Neither?

The California Finance Lenders Law imposes a licensing requirement on persons engaged in the business of a finance lender.  Cal. Fin. Code § 22100(a).  Chapter 2 of the CFLL imposes a host of requirements on “consumer loans” and Chapter 3 imposes a few requirements on “commercial loans”.  Thus, it is important for a finance lender…

The post Consumer Loan, Commercial Loan or Neither? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/15/2017
After 25 Years, Delaware Begins To See The Light

A quarter century ago, I wrote a brief piece criticizing how Delaware handled stockholder action by written consent: Another difficulty with section 228 arises from its focus on the date of the “earliest dated consent delivered” to the corporation.  The emphasis on the date of the consent in section 228 contrasts markedly with the focus…

The post After 25 Years, Delaware Begins To See The Light appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/14/2017
“And” Or “Or” – This Ninth Circuit Opinion Highlights The Difference

“And” and “or” are classified as conjunctions. They are classified as such because they yoke together words, phrases, clauses and sometimes even sentences.  They are not interchangeable, however, as illustrated by the recent opinion by the Ninth Circuit Court of Appeals in Zetwick v. County of Yolo, 2017 U.S. App. LEXIS 3260 (9th Cir. Cal. Feb.…

The post “And” Or “Or” – This Ninth Circuit Opinion Highlights The Difference appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/13/2017
Why Bassam Salman Should Not Have Been Convicted

A lot of ink has been spilt on the United States Supreme Court’s decision in Salman v. United States, 137 S. Ct. 420 (2016).  In that case, the Supreme Court upheld the criminal conviction of Mr. Bassam Salman who received lucrative trading tips from an in-law, who had received the information from his brother.  The legal issue in…

The post Why Bassam Salman Should Not Have Been Convicted appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/10/2017
Can It Be That California, “The Biggest Loser” Is Also Number One?

In February, I published a post entitled Is California “The Biggest Loser”.  My reference was to Professor Lynn LoPucki’s finding that “California, home to 1,210 [public] companies but state of incorporation for only 112, is the biggest loser”.  However, California is not last in all things.  SEC economists Drs. Vladimir I. Ivanov and Anzhela Knyazeva recently issued a…

The post Can It Be That California, “The Biggest Loser” Is Also Number One? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/9/2017
Exactly What Part Of “To The Commission” Is Ambiguous?

The Dodd-Frank Act gave us many things, including Section 21F of the Securities Exchange Act of 1934.  Section 21F, prohibits employers from retaliating against a “whistleblower”.  15 U.S.C. § 78u-6(h)(1)(A).  We need not guess about the definition of “whistleblower” because Congress conveniently provided the following definition: . . . any individual who provides, or 2 or more…

The post Exactly What Part Of “To The Commission” Is Ambiguous? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/8/2017
Does Whistleblower Protection Extend To Disclosures To Your Mom Or The Press?

California and federal law establish ample protections for whistleblowers.  These protections can be found in numerous laws, including the Sarbanes-Oxley Act, the Dodd-Frank Act, and Section 1102.5 of the California Labor Code.  Whistleblowing typically involves the disclosure of someone else’s confidential information and that disclosure may constitute the breach of a confidentiality agreement.  Thus, a…

The post Does Whistleblower Protection Extend To Disclosures To Your Mom Or The Press? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/7/2017
Professor Bainbridge On My “Beef” With Gantler v. Stephens

Professor Stephen Bainbridge yesterday provided a well considered assessment of my “beef” with the Delaware Supreme Court’s holding in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  To the extent that Professor Bainbridge is saying that officers are not agents “pure and simple”. …

The post Professor Bainbridge On My “Beef” With Gantler v. Stephens appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/6/2017
Finance Lenders Annual Report Deadline Is Nigh

Lenders and brokers licensed under the California Finance Lenders Law must file an annual report by the Ides of March (i.e., March 15) of each year.  Cal. Fin. Code § 22159.  This is a hard deadline and the Department of Business Oversight does not grant extensions.  The consequences of failure to the file the report can…

The post Finance Lenders Annual Report Deadline Is Nigh appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/3/2017
Why An Understanding Of Officers As Agents May Be Important

In several recent posts, I have noted that officers, unlike directors, are agents of the corporation.  Recognizing the agency status of officers can affect the legal analysis in a number of significant ways, including: Choice of law.  California Corporations Code Section 2116 explicitly provides that the law of the jurisdiction of incorporation applies to the…

The post Why An Understanding Of Officers As Agents May Be Important appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/2/2017
Can The Board Remove A Director?

Can a board of directors remove one of its own?  In the case of a California corporation, the answer is no.  The power to remove directors is vested in the shareholders and the superior court pursuant to Corporations Code Section 303 and 304.  While technically not a removal, one option may be available to a…

The post Can The Board Remove A Director? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/1/2017
What The Delaware Supreme Court Overlooked In Gantler v. Stephens

I have never been reconciled to the Delaware Supreme Court’s pronouncement in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  Officers are, as I’ve previously noted, agents of the corporation while directors are not.  This means that an officer’s duties are…

The post What The Delaware Supreme Court Overlooked In Gantler v. Stephens appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/28/2017
Should Corporate Law Preserve The Honor Of Salmon Or Fairness To Meinhard?

Should corporate law be concerned with the sinner or the sinned against?  In the venerable case of Meinhard v. Salmon, 249 N.Y. 458, 464 (1928), Benjamin Cardozo penned these now famous lines: A trustee is held to something stricter than the morals of the market place.  Not honesty alone, but the punctilio of an honor the…

The post Should Corporate Law Preserve The Honor Of Salmon Or Fairness To Meinhard? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/27/2017
Why Some Delaware Corporations May Be Concerned With California’s Supermajority Vote Requirements

Section 710(b) of the California Corporations Code defines a “supermajority vote” as a requirement set forth in a corporation’s articles of incorporation (or certificate of determination) that specified actions be approved by a larger proportion of the outstanding shares than a majority, or by a larger proportion of the outstanding shares of a class or series than…

The post Why Some Delaware Corporations May Be Concerned With California’s Supermajority Vote Requirements appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/24/2017
Officers And The Business Judgment Rule

Last weekend, I attended a symposium at the UCLA School of Law entitled “Can Delaware Be Dethroned? Evaluating Delaware’s Dominance of Corporate Law”.  The event, organized by ever erudite Professor Stephen Bainbridge, featured presentations by leading scholars and practitioners from around the country.  I was therefore surprised when the discussion turned to whether Delaware applies the business…

The post Officers And The Business Judgment Rule appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/23/2017
Court Finds Promissory Notes Are Not Securities

Yesterday’s post concerned the Court of Appeal’s decision in People v. Black, 2017 Cal. App. LEXIS 130 (Cal. App. 6th Dist. Feb. 16, 2017).  The case involved the criminal prosecution of an individual for making false statements in connection with the offer and sale of a security in violation of Corporations Code Section 25401.  The trial…

The post Court Finds Promissory Notes Are Not Securities appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/22/2017
Silver Hills Doesn’t Mute Howey

Anyone who has studied securities regulation since 1946 should be familiar with the U.S. Supreme Court’s definition of a “security” as enunciated by Justice Frank Murphy in S.E.C. v. Howey Co., 328 U.S. 293 (1946).  That test asks “whether the scheme involves an investment of money in a common enterprise with profits to come solely from the…

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Blogs 1 - 25 of 200