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californiacorporate&securities 7/28/2015
CalPERS Claims Success; Proxy Monitor Says CalPERS Success Leads To Lower Stock Prices

“Fair is Foul, and Foul is Fair” In this press release issued last week, CalPERS congratulated itself on the “success” of its proxy voting initiatives: The California Public Employees’ Retirement System (CalPERS) made significant progress during the 2015 proxy season, where it voted to improve the rights of shareholders to nominate corporate directors – commonly referred

The post CalPERS Claims Success; Proxy Monitor Says CalPERS Success Leads To Lower Stock Prices appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/27/2015
Court Declines To Declare “S” Corporation Shareholders’ Agreement Unenforceable

In general, shareholders of a corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code are taxed on corporate profits regardless of whether the corporation makes any distribution of those profits to its shareholders.  Obviously, paying taxes on income that isn’t actually received can be a problem for many shareholders.

The post Court Declines To Declare “S” Corporation Shareholders’ Agreement Unenforceable appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/24/2015
When It Comes To Director Compensation, California Is Not Delaware

Yesterday, I wrote about my disagreements with the approach to director compensation adopted by the Delaware Court of Chancery in Calma v. Templeton, 114 A.3d 563 (Del. Ch. 2015) and Seinfeld v. Slager, 2012 Del. Ch. LEXIS 139 (June 29, 2012).  In both cases, the Court ruled that the rigorous “entire fairness” standard of review applies to director’s who receive grants

The post When It Comes To Director Compensation, California Is Not Delaware appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/23/2015
No Calm In Delaware After Calma v. Templeton

In derivative suits, cases are essentially lost and won at the motion to dismiss stage.  Unless the defendants succeed in winning dismissal, they must confront an unhappy choice between continued litigation with all of its costs and risks or a settlement that “feeds the bulldog”.  Thus, the Delaware Court of Chancery’s rulings in Calma v. Templeton,

The post No Calm In Delaware After Calma v. Templeton appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
Social Media & Employment Law Blog for California Employers 7/22/2015
Surprise! NLRB Approves Employer’s Challenged Social Media Policy

In somewhat of a surprise, recently the NLRB affirmed an Administrative Law Judge’s decision, which had rejected the NLRB General Counsel’s challenge to a portion of an employer’s social media policy as unlawful. The employer, Landry’s Inc., which operates various enterprises, including Bubba Gump Shrimp Restaurants, Inc., had adopted a social media policy in its

The post Surprise! NLRB Approves Employer’s Challenged Social Media Policy appeared first on SOCIAL MEDIA & EMPLOYMENT LAW.

 
californiacorporate&securities 7/22/2015
Out-of-State M&A Lawyer Can Be Sued In California

Many M&A transactions are negotiated across state lines.  When an out-of-state lawyer misrepresents facts in a phone call and email to a lawyer in California, do those communications render the foreign lawyer amenable to suit in California?  In essence, that was the question presented to the Sixth District Court of Appeal in Moncrief v. Clark, Cal. Ct.

The post Out-of-State M&A Lawyer Can Be Sued In California appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/21/2015
Does The SEC Know How To Assess Risks And Rewards?

The Securities and Exchange Commission’s proposed rules governing stock exchange listing standards governing recovery of erroneously awarded compensation cause me to wonder whether the SEC understands how to assess risks and rewards. Proposed Rule 10D-1(b)(1)(iv) would require an issuer to recover such compensation in compliance with its recovery policy “except to the extent that it

The post Does The SEC Know How To Assess Risks And Rewards? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/20/2015
Implementation Issues Abound For The SEC’s Proposed Clawback Rules

When adopted, the incentive compensation clawback rules recently proposed by the Securities and Exchange Commission are likely to present issuers with a number of implementation challenges.  Some of these challenges have been discussed in prior posts.  Below is a brief outline of just a few of the many and multifarious headaches that I foresee for

The post Implementation Issues Abound For The SEC’s Proposed Clawback Rules appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/17/2015
Can The SEC Ignore Congress’ Plain Language?

In proposing executive incentive compensation clawback rules, the Securities and Exchange Commission departs materially from the plain words of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Section 954 (codified at Section 10D of the Securities Exchange Act of 1934) states that an issuer will recover incentive-based compensation received during the

The post Can The SEC Ignore Congress’ Plain Language? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/16/2015
Some California General Corporation Law Nonsense

Recently, I gave a brief presentation concerning various provisions of the California General Corporation Law that could apply to corporations incorporated outside of California.  I emphasized that the CGCL defines the terms “corporation”, “domestic corporation”, “foreign corporation” and “foreign association” and that it is important to pay attention to these definitions when reading the CGCL.

The post Some California General Corporation Law Nonsense appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/15/2015
The SEC’s Unconvincing Case Against Indemnification

The Securities and Exchange Commission’s proposed rules take a hard line against issuers indemnifying executives against clawbacks: We believe that indemnification arrangements may not be used to avoid or nullify the recovery required by Section 10(D).  Section 10D’s listing standard requirement that “the issuer will recover” is inconsistent with indemnification because a listed issuer does not

The post The SEC’s Unconvincing Case Against Indemnification appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/14/2015
SEC Clawback Proposal Overlooks Contract Law Fundamentals

In proposing the clawback rules for stock exchanges mandated by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Securities and Exchange Commission evinces little regard for contrary provisions in existing contracts: Further, we do not view inconsistency between the proposed rule and rule amendments and existing compensation contracts,

The post SEC Clawback Proposal Overlooks Contract Law Fundamentals appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/13/2015
The SEC’s Clawback Proposal – An Unconstitutional Taking?

In proposing incentive compensation clawback rules, the Securities and Exchange Commission studiously ignored any constitutional restraints on its actions.  Buried in the 198-page proposal is this chilling assertion: Issuer compliance would be required whether such incentive-based compensation is received pursuant to a pre-existing contract or arrangement, or one that is entered into after the effective

The post The SEC’s Clawback Proposal – An Unconstitutional Taking? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/10/2015
What The SEC Pretermitted In Proposing Clawback Policy Rule

The Securities and Exchange Commission began the month by issuing proposed rules that would direct national securities exchanges and associations to establish listing standards requiring companies to adopt policies that require executive officers to pay back incentive-based compensation that was awarded erroneously.  Five years ago, Congress ordered the SEC to adopt these rules in Section 954 of the

The post What The SEC Pretermitted In Proposing Clawback Policy Rule appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
Social Media & Employment Law Blog for California Employers 7/9/2015
Top Five Social Media Tips for Employers

With new social media apps and platforms arriving seemingly daily, and employees spending increasing amounts of time on social media, employers are well advised to consider the potential ramifications for the workplace. Here are 5 key tips for employers to consider in this constantly changing environment: Implement an effective and enforceable employee social media policy

The post Top Five Social Media Tips for Employers appeared first on SOCIAL MEDIA & EMPLOYMENT LAW.

 
californiacorporate&securities 7/8/2015
Paralepsis: Mentioning The Unmentionable

This blog is devoted to corporate and securities law issues.  Therefore I refrain from venturing into other are topics even though they touch upon lawyers and lawyering.  Lawyers, however, can learn a lot about trial conduct by reading Justice William W. Bedsworth’s recently published opinion in Martinez v. State, Cal. App. Case No. G048375 (June 12, 2015, certified

The post Paralepsis: Mentioning The Unmentionable appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/7/2015
Court Rules Unincorporated Association Aided Director’s Breach Of Fiduciary Duty

Nearly four years ago, I devoted this post about California’s Unincorporated Association Law.  Typically, an unincorporated association is a club, church, or other social organization.  A criminal street gang might also be an unincorporated association.  People ex rel. Totten v. Colonia Chiques, 156 Cal. App. 4th 31 (2007).  In a ruling handed down last week,

The post Court Rules Unincorporated Association Aided Director’s Breach Of Fiduciary Duty appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/6/2015
Court Rules Shareholders May Be Sued In De Facto Dissolution

California Corporations Code Section 2011 provides that causes of action against a dissolved corporation, whether arising before or after dissolution, may be enforced against its shareholders if any of the assets of the corporation have been distributed to the shareholders. Enforcement is limited to the extent of the shareholders’ pro rata share of the claim or to

The post Court Rules Shareholders May Be Sued In De Facto Dissolution appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/2/2015
Professor Bainbridge Takes On S.B. 75 And The Delaware Bar

UCLA Law Professor Stephen Bainbridge recently posted an article calling Delaware’s recently enacted S.B. 75 a “self-inflicted wound”.   SB 75, which was signed into law late last month, limits the ability of Delaware stock corporations to adopt so-called “fee shifting” bylaw provisions. What I find particularly interesting is Professor Bainbridge’s thesis that the Delaware legislature

The post Professor Bainbridge Takes On S.B. 75 And The Delaware Bar appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/1/2015
Why Foreign Corporations Might Not Care Where You Live

I noticed the following description of California’s principal “pseudo-foreign” corporation statute in a recently filed registration statement: Section 2115(b) of the California Corporations Code imposes certain requirements of California corporate law on corporations organized outside California that, in general, are doing more than 50% of their business in California and have more than 50% of

The post Why Foreign Corporations Might Not Care Where You Live appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 6/30/2015
Unwaivable Statutes May Doom Forum Selection Provision

Nearly four years ago, I wrote this post asking whether California’s anti-waiver statute voids choice of forum agreements.  The statute in question was California Corporations Code Section 25701 which provides: Any condition, stipulation or provision purporting to bind any person acquiring any security to waive compliance with any provision of this law or any rule

The post Unwaivable Statutes May Doom Forum Selection Provision appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
Social Media & Employment Law Blog for California Employers 6/29/2015
Magistrate Judge Rules LinkedIn’s “Reference Search” Does Not Violate Fair Credit Reporting Act

As we discussed in a previous post, a class action lawsuit (Sweet, et al. v. LinkedIn) was filed last year against LinkedIn in California based on allegations that the reference reports LinkedIn generates for premium subscribers, including many employers, violate the Fair Credit Reporting Act (“FCRA”). Ruling on LinkedIn’s motion to dismiss, Northern District Magistrate

The post Magistrate Judge Rules LinkedIn’s “Reference Search” Does Not Violate Fair Credit Reporting Act appeared first on SOCIAL MEDIA & EMPLOYMENT LAW.

 
californiacorporate&securities 6/29/2015
New LLC Is Not Delivered By Sale Membership Interests

Readers of this blog should be well aware of California’s general antipathy to covenants not to compete.  See The Point Of An Unenforceable Noncompete May Be Very Sharp Indeed,Covenants Not To Compete – Fourth DCA Considers A New Fine Question (Or Two), TRO Issued Enjoining Breach Of Non-Compete Agreement Clauses, No Surprises Here – California Court

The post New LLC Is Not Delivered By Sale Membership Interests appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 6/26/2015
Court Of Appeal Holds “May” Does Not Mean “May Only”

California requires persons who are engaged in the business of making consumer loans or commercial loans to be licensed under the Finance Lenders Law, unless exempt.  Cal. Fin. Code § 22100.  The CFLL includes the following: A licensee may sell promissory notes evidencing the obligation to repay loans made by the licensee pursuant to this

The post Court Of Appeal Holds “May” Does Not Mean “May Only” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 6/25/2015
Another Dubious Assertion Concerning Section 2115

I have often written about numerous provisions of the California Corporations Code that expressly apply to foreign corporations meeting specified tests.  The most famous, but not the only, statute of this breed is Section 2115.  Although Section 2115 entraps many foreign corporations, I continue to be surprised by corporations that mistakenly claim to be subject

The post Another Dubious Assertion Concerning Section 2115 appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
Blogs 1 - 25 of 931