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CALIFORNIA CORPORATE & SECURITIES LAW

The Case Of The Wholly Owned, But Not Totally Held, Subsidiary That May Or May Not Be 100% Owned

When someone says that a subsidiary is “wholly owned”, I believe that the common understanding is that the parent company owns all of the issued and outstanding equity of the subsidiary.  What if the statement is that the subsidiary is “totally” or “100%” owned?  I suspect that most people would not intuit a different understanding. …

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Court Declines To Impose Alter Ego Liability On LLC’s President

In general, the debts, obligations, or other liabilities of a California limited liability company do not become the debts, obligations, or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager for the LLC.  Cal. Corp. Code § 17703.04(a).  An important exception to this…

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When “The Check Is In The Mail” Extinguishes A Debtor’s Obligation

Most creditors likely assume that they have not been paid unless and until they receive checks from their debtors.  In many cases that assumption may be correct, but in some cases it won’t be.  Section 1476 of the California Civil Code provides: If a creditor, or any one of the two or more joint creditors, at any…

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California Finders Exemption Regulations Are Now Effective

The Commissioner of Business Oversight’s final regulations implementing a new exemption for finders from the broker-dealer provisions of the Corporate Securities Law took effect on June 21, 2017.  See 10 CCR §§ 260.211.4, 260.211.5, 260.211.6 and 260.211.7.  The Commissioner adopted these new regulations in response to the enactment of AB 667 (Wagner) in 2015.  AB 667 added…

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CalPERS And Securities Lending – Waiting For Godot?

California Government Code Section 7603 is short and unambiguous: All loans of securities shall be made pursuant to one of the standardized security loan agreement forms, as developed by the administrators of the State Pooled Investment Account (as authorized by Section 16481 of the Government Code) or the Public Employees Retirement System or the State…

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California Judge Honors Delaware Forum Selection Bylaw

In May, I wrote about Judge Peter H. Kirwan’s ruling in Drulias v. 1st Century Bancshares, Inc., (Cal. Super. Ct. Case No. 16-CV-294673, Nov. 18, 2016).  As readers may recall, Judge Kirwan declined to approve a disclosure only settlement based on In re Trulia, Inc. Stockholder Litig., 129 A.3d 884 (Del. Ch. Jan. 22, 2016).  Recently, Judge Brian C. Walsh…

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California’s Regulation A Notice Filing Requirement

Two years ago, I posed the question: Will California Require Notice Filings For Regulation A Offerings?   Corporations Code Section 25102.1(a) provides that offers and sales of to “qualified purchasers”, as defined by the Securities and Exchange Commission pursuant to Section 18(b)(3) of the Securities Act, are not subject to qualification under the Corporate Securities Law.  However,…

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Investment Companies And Intrastate Offerings

Recently, my eye caught the following statement in the SEC’s Intrastate Offering Exemptions: A Small Entity Compliance Guide for Issuers: Issuers registered or required to be registered under the Investment Company Act of 1940 are not eligible to conduct offerings pursuant to Section 3(a)(11), Rule 147 or Rule 147A. This seemed accurate enough with respect to…

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A Field Guide To Distinguishing Directors From Officers

A colleague who is not a corporate lawyer recently noted that in common parlance directors and officers are often simply lumped together as the “same thing”.   He suggested that I devote a post to a primer on the differences between directors and officers.  As requested, here is my take on the subject: Directors can not act alone…

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California Lags Behind The SEC In Permitting Testing Of The Waters In Regulation A Offerings

In 2015, the Securities and Exchange Commission adopted amendments to Regulation A and other rules and forms to implement Section 401 of the Jumpstart Our Business Startups (JOBS) Act.  One significant enhancement to Regulation A was to permit issuers and persons acting on their behalf to “test the waters” with all potential investors and to use solicitation…

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