The process for converting rice sounds like some medieval torture. Rice is soaked, steamed under pressure, and then dried. While not pleasant, conversion can, and does, occur. The same may not be true for converting a corporation into a flexible purpose corporation. Flexible purpose corporations are corporations formed under Title I, Division 1.5 of the California Corporations Code, Section 2500 et Read more...
Pension Funds And Fund Sponsors Promote Agenda To SEC
In Wood v. General Motors Corp., 865 F.2d 395 (1st Cir. 1988), Judge Levin Campbell gave this definition of “agency capture” “Agency capture,” as explained by legal scholars, is the undesirable scenario where the regulated industry gains influence over the regulators, and the regulators end up serving the interests of the industry, rather than the general public. While it is true that Read more...
California Corporate Contribution Initiative Cleared For Circulation
Opponents of the Supreme Court’s decision in Citizens United v. Federal Election Commission, 130 S. Ct. 876, 558 US 50, 175 L. Ed. 2d 753 (2010) are fighting back in California on numerous fronts. Last month, California State Senator Noreen Evans introduced a bill, SB 982, to require corporations to issue a report on planned political spending as well as expenditures Read more...
Everything’s [Even More] Up-To-Date In Kansas City!
Last summer, I wrote about a new stock exchange – “New U.S. Exchange – It’s Better Than A Magic Lantern Show“. What Next? What Next? In January, the Securities and Exchange Commission adopted an amendment to Rule 146 under Section 18 of the Securities Act of 1933 to designate certain securities listed, or authorized for listing, on BATS Exchange, Inc. as Read more...
C&DIs And The APA
On Monday, Broc Romanek wrote that the SEC’s Division of Corporation Finance has issued a new Compliance & Disclosure Interpretation clarifying how say-on-pay proposals should appear on the proxy card. Many may welcome additional guidance from the staff. I’m concerned. C&DIs reflect the views of the Corp Fin staff. Although the SEC’s website claims that C&DIs are not rules, regulations, or statements of Read more...
Is A Director An “Official At The Highest Level Of Corporate Management”?
Liberty Mutual Ins. Co. v. Superior Court, 10 Cal. App. 4th 1282 (1992) involved an attempt by a plaintiff to depose the president of an insurance company. In response, the First District Court of Appeal adopted what is known as the “apex doctrine” – holding: when a plaintiff seeks to depose a corporate president or other official at the highest level of Read more...
Forming A Benefit Or Flexible Purpose Corporation? Some Pitfalls To Avoid
In previous blogs, I’ve noted the appearance of two new types of California corporations – the flexible purpose corporation and the benefit corporation. Because the laws creating both of these forms took effect on January 1, organizers have been forced to draft on a tabula rasa. Here are a few drafting pitfalls that have come to my attention. Benefit Corporations Section 14602 of Read more...
Ninth Circuit Strikes Down Choice Of State Of Incorporation Law
No one puts a choice of law provision at the beginning of a contract. They are nearly always relegated to the boilerplate provision at the end. This placement often belies their critical importance. Cases are lost or won on the basis of the choice of law. It’s no secret that a great many corporations located in California are incorporated in Delaware. Is the fact of Delaware incorporation sufficient to uphold a Read more...
Is California’s Economic Impact Analysis Requirement “Illusory And Ineffective”?
Recent court decisions have faulted the Securities and Exchange Commission for failing to assess adequately the economic impact of proposed regulations. Last year, the U.S. Circuit Court of Appeals spared no words in its assessment of the SEC’s performance: We agree with the petitioners and hold the Commission acted arbitrarily and capriciously for having failed once again—as it did most recently Read more...
APA Amendments Cause Extension Of Rule 260.204.9 Comment Period
Last December, I wrote this post concerning the Commissioner’s proposed amendments to Rule 260.204.9. This rule provides an exemption from registration for investment advisers to certain private funds. The rule as currently in effect was adopted as an emergency regulation. As required by the California Administrative Procedure Act, the Commissioner mailed notice of the proposed rule amendments in December of last year. However, Read more...
