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californiacorporate&securities 11/22/2017
Does ISS’ Voting Recommendations Reflect Analysis Or Consensus?

I always appreciate comments from readers of this blog.  One reader responded to yesterday’s post concerning ISS opposition to classified boards: “You seem to be under the impression that ISS comes up with its guidelines through academic research.  Although that CAN come into play, it is much more directly shaped by the policies of its customers.”…

The post Does ISS’ Voting Recommendations Reflect Analysis Or Consensus? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/21/2017
Is ISS A Board Declassification Denier?

Institutional Shareholder Services (aka ISS) recently published its 2018 Americas Proxy Voting Guidelines Update.  Among other changes, ISS will now recommend a vote against or withhold from the entire board of directors (except new nominees, who will be considered case-by-case) if the company has opted into, or failed to opt out of, state laws requiring a classified…

The post Is ISS A Board Declassification Denier? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/20/2017
Is Every Agent A Fiduciary?

In common parlance, a fiduciary is someone you can trust.  The word itself is related to the Latin word, fidere, meaning to trust.  We name our dogs “Fido” because dogs are trustworthy companions.  For example, a dog named Hachiko (忠犬ハチ公) faithfully returned every day for nine years to Shibuya Station in Tokyo to greet his master…

The post Is Every Agent A Fiduciary? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/17/2017
Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply?

Yesterday’s post discussed one aspect of the California Court of Appeal’s opinion in Central Laborers’ Pension Fund v. McAfee, Inc., 2017 Cal. App. LEXIS 1008.  The case arose from Intel Corporation’s acquisition of McAfee, Inc., a Delaware corporation.  Among other things, the plaintiff complained that David DeWalt, McAfee’s erstwhile president and CEO, in pursuit of his…

The post Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/16/2017
Court Of Appeal Finds No Right To Jury In Shareholder Class Action

In several blog posts, I have commented on the right to a jury trial under California law.  This may seem like an inapposite subject for a blog devoted to corporate and securities law issues.  Nonetheless, I have prognosticated that the right to a jury trial may be a basis for challenging a Delaware choice of law bylaw. …

The post Court Of Appeal Finds No Right To Jury In Shareholder Class Action appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/15/2017
California Securities Law Claims Founder On Personal Jurisdiction

Establishing personal jurisdiction may seem mundane, but without it a plaintiff may soon find itself out of court, as did the plaintiff in Marshall v. Galvanoni, 2017 U.S. Dist. LEXIS 185530. In Marshall, the plaintiff sued a half dozen companies and four individuals over failed investments.  Among other things, the plaintiff alleged violations of California…

The post California Securities Law Claims Founder On Personal Jurisdiction appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/14/2017
Judge Rules Internal Affairs Doctrine Governs California Insider Trading Statute

As I have mentioned on numerous occasions, California has its own insider trading statute – California Corporations Code Section 25402.  The statute is included in the California Corporate Securities Law of 1968.  In general, the jurisdiction of organization of an issuer is irrelevant to the application of the CSL.  Thus, in most instances, the operative issue will…

The post Judge Rules Internal Affairs Doctrine Governs California Insider Trading Statute appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/13/2017
Do You Have To Be Old To Be A Veteran?

On Saturday, the country honored its veterans.  November 11 was originally designated as “Armistice Day” in recognition of the date on which fighting in the First World War ended.  It became a legal holiday in 1938, only a few years before the United States’ entry into the Second World War in 1941.  52 Stat. 351;…

The post Do You Have To Be Old To Be A Veteran? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/10/2017
Judge Alex Kozinski On Debt Versus Equity

Judge Alex Kozinski succinctly frames the debt versus equity battle in this opinion issued yesterday: It’s a timeless and tiresome question of American tax law: Is a transaction debt or equity?  The extremes answer themselves.  The classic equity investment entitles the investor to participate in management and share the (potentially limitless) profits—but only after those…

The post Judge Alex Kozinski On Debt Versus Equity appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/9/2017
More On Disclosure Under SEC Rule 701(e)

As mentioned yesterday, Corporation Finance (often referred to as “Corp Fin”) recently issued a Compliance & Disclosure Interpretation with respect to the disclosure delivery requirements under Rule 701(e).  I find myself befuddled by the following statement in the C&DI: “Once access to the required information has been granted, however, the medium used to communicate the…

The post More On Disclosure Under SEC Rule 701(e) appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/8/2017
Corp Fin’s New Rule 701 C&DI And California’s Compensation Plan Exemption

Yesterday, Broc Romanek reported that Corp Fin has published a new C&DI addressing the permissibility of electronic delivery of disclosures under Rule 701(e).  Readers will recall that Rule 701 is an exemption from the registration requirements of the Securities Act for offer and sales of securities pursuant to compensatory benefit plans and contracts.  The rule is…

The post Corp Fin’s New Rule 701 C&DI And California’s Compensation Plan Exemption appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/7/2017
Does The California Finance Lenders Law Prohibit “Table Funding”?

A loan is “table funded” when at settlement it is contemporaneously assigned to the person that provides the funds.  Is table funding an illegal business practice under the California Finance Lenders Law?  The Fourth District Court of Appeal has its doubts: Preciado premises these claims on an assertion table funding is an illegal business practice…

The post Does The California Finance Lenders Law Prohibit “Table Funding”? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/6/2017
BrokerCheck – FINRA’s Dread Permanent Record

Many a school child has received the awful warning to be careful lest some offense be entered on his or her “permanent record”.  As required by statute (15 U.S.C. § 78o-3(i)), the Financial Industry Regulatory Authority, Inc. (aka FINRA) has maintained a sort of permanent record for securities professionals known as “BrokerCheck“.  See FINRA Rule 8312.  Just…

The post BrokerCheck – FINRA’s Dread Permanent Record appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/3/2017
What’s The Plural Of Condominium?

Wednesday’s post was entitled “Condominiums And The California Corporate Securities Law“.  Today’s post concerns whether I used the proper plural form of “condominium”. “Condominium” is derived from the Latin words, cum and dominium.  Cum means with or together and dominium means right of ownership.  Dominium is a neuter noun in the Latin Second Declension, meaning that its plural form is formed by…

The post What’s The Plural Of Condominium? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/2/2017
Promoters And California’s Limited Offering Exemption

I was admitted to the bar the same year that the legislature completed its parturition of a new limited offering exemption under the Corporate Securities Law of 1968 – California Corporations Code Section 25102(f).  AB 1518, Cal. Stats. 1981, ch. 1120.  Section 25102(f) exempts the offer and sale of securities from the issuer qualification requirement established by…

The post Promoters And California’s Limited Offering Exemption appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/1/2017
Condominiums And The California Corporate Securities Law

Some four years ago, I wrote about the Ninth Circuit Court of Appeals’ holding in Salameh v. Tarsadia Hotel, 726 F.3d 1124 (9th Cir. 2013).  For those readers who don’t remember the post or the case, the Court of Appeals held that the plaintiffs had failed to allege the sale of a security under federal or California…

The post Condominiums And The California Corporate Securities Law appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/31/2017
Post No Bills

Planning for a congregational picnic this Sunday past, a local Lutheran church sought permission to use the neighboring Catholic church’s parking lot.  The Catholic church graciously agreed to allow the use of its lot provided that the Lutherans refrain from posting anything on their church door.  The Catholic’s proviso, of course, was a reference to an event…

The post Post No Bills appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/30/2017
A Corporate Law Takeaway From Judge Nelson’s Ruling In Talcum Powder Case

Mg3Si4O10(OH)2 After a three week trial that included extensive expert testimony, a Los Angeles jury returned a $417 million verdict against Johnson & Johnson ($68 million non-economic and $340 million punitive damages) and its subsidiary Johnson & Johnson Consumer, Inc. ($2 million non-economic and $7 million punitive damages).  Johnson & Johnson Talcum Powder Cases, Los Angeles…

The post A Corporate Law Takeaway From Judge Nelson’s Ruling In Talcum Powder Case appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/27/2017
What Every Delaware Unicorn Needs To Know About The California General Corporation Law

Recently, I came across a list of unicorns.  These are private companies with valuations of $1 billion or more.  I can’t vouch for the accuracy of the list, but I did recognize many of the names.  Many of the companies on the list shared two characteristics – they are incorporated in Delaware and headquartered in…

The post What Every Delaware Unicorn Needs To Know About The California General Corporation Law appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/26/2017
Valid Reasons May Exist For Reincorporating In Delaware, But This Isn’t One Of Them

I am always interested in the reasons that corporations give when seeking approval to reincorporate from California to Delaware.  One company in a recently filed proxy statement made the following claim (among others): Enhanced Flexibility to Engage in Stock Repurchase Programs. The Company will have an enhanced ability to make distributions to its shareholders (i.e.,…

The post Valid Reasons May Exist For Reincorporating In Delaware, But This Isn’t One Of Them appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/25/2017
“Person And Its Affiliates” – Can “And” Be A Disjunctive Conjunction?

Yesterday, I wrote about New York Judge Marcy Friedman’s opinion in Special Situations Fund III QP, L.P. v Overland Storage, Inc., 2017 N.Y. Misc. LEXIS 3878, 2017 NY Slip Op 32125 (Oct. 10, 2017).  The case involved a contract provision requiring a multimillion dollar payment in the event of a “specified transaction”.  The contract defined…

The post “Person And Its Affiliates” – Can “And” Be A Disjunctive Conjunction? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/24/2017
New York Judge Considers Meaning Of “Voting Power” In California Contract

Chapter 1 of the California General Corporation Law includes a large number of definitions, beginning with “Acknowledged” (Section 149) and ending with “Written, in writing” (Section 195).  It is easy to gloss over these terms as the balance of the CGCL doesn’t use initial capitals or italics to identify defined terms.  I suspect that many lawyers…

The post New York Judge Considers Meaning Of “Voting Power” In California Contract appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/23/2017
Court Rules LLC Members May Be “Fiduciaries In Fact”

U.S. District Court Judge Tena Campbell’s ruling in Strong v. Cochran, 2017 U.S. Dist. LEXIS 170073, is a reminder that sometimes what you do matters more than what you say.  The case involved claims by the liquidating trustee for a failed real estate firm, Castle Arch Real Estate Investment Company, LLC, a California limited liability company (“CAREIC”). …

The post Court Rules LLC Members May Be “Fiduciaries In Fact” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/20/2017
Professor Bainbridge Precises Corporate Philanthropy

Earlier this week, UCLA Law School Professor Stephen Bainbridge precised the question of corporate philanthropy.  He notes “Virtually all states have adopted statutes specifically granting corporations the power to make charitable donations, which eliminates the ultra vires issue.”  Several years back, I compared California’s and Delaware’s statutes: Delaware’s statute appears to be more limited than California’s…

The post Professor Bainbridge Precises Corporate Philanthropy appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 10/19/2017
California And Virtual Annual Meetings

Seventeen years ago, Delaware amended Section 211 of the Delaware General Corporation Law to permit corporations to hold electronic meetings of stockholders.  72 Del. Laws, c. 343, §§ 7, 8.  In the ensuing years, an increasing number of corporations have elected to conduct their meetings either entirely (a “virtual meeting”) or partially (a “hybrid meeting”) through electronic…

The post California And Virtual Annual Meetings appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
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