I frequently come across corporations with the wrong number of authorized directors. California, unlike other states, has some very precise rules and these frequently seem to be missed. The Bylaws of many California corporations establish a minimum and maximum number of directors and permit the board to fix the exact number within that range. For example, the Bylaws might provide Read more...
Punitive Bill Proposes Giant Step Backwards On Capital Formation
The California Corporate Securities Law of 1968 forbids the offer and sale in this state of any security in an issuer transaction unless the sale has been qualified or the security or transaction is exempt or not subject to qualification. Cal. Corp. Code Section 25110. This important principle is the same whether it is the initial sale of securities by Read more...
Bill Seeks To Mandate Corporate Political Disclosures
The fallout from the U.S. Supreme Court’s decision in Citizens United v. Federal Election Com’n, 130 S. Ct. 876 (2010) continues. Earlier this week, 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 for the previous fiscal year. The report must include the following: Read more...
There’s Something About Section 800 And ISS Adds Panelist
What’s So Different About Section 800? California Corporations Code Section 800 governs derivative lawsuits. Yesterday, I wrote about the fact that the California legislature has made Section 800 expressly applicable to foreign corporations (as defined in Section 171). Is this an academic point or can it matter? One key difference may be that Section 800(c) allows the corporation or any Read more...
Choice Of Law And Derivative Suits
The California Corporations Code carefully defines the the terms “corporation” (Section 162), “domestic corporation” (Section 167), “foreign corporation” (Section 171); and “foreign association” (Section 170). For example, when the legislature provided in Section 1500 that “[e]ach corporation shall keep adequate and correct books and records . . . “, the legislature imposed a mandatory obligation (See Section 15 as to Read more...
Stop SOPA? Hey, It’s Already The Law!
The Stop Online Piracy Act (SOPA), H.R. 3261, has been attracting a lot of attention lately. However, here in California, we’ve been living under the SOPA for better than half a century. The California SOPA is the Securities Owners Protection Act (or Law) which can be found at Corporations Code Section 27000 et seq. The law is generally intended to protect security owners from fraud Read more...
Has ISS Moved From Advice To Advocacy?
Last November, I joined Professor Stephen Bainbridge (UCLA Law School) and James Copland (Director, Center for Legal Policy at the Manhattan Institute) in submitting this comment letter opposing ISS’ proposal to change its case-by-case approach to stockholder proposals with respect to disclosure of corporate political spending. Much like Captain Louis Renault, I was “shocked, shocked” when ISS ignored our advice and decided that it Read more...
Enforcing Form D Filings – A Misguided State Policy
The American Bar Association’s Committee on State Regulation of Securities publishes The Blue Sky Bugle, a newsletter for lawyers who deal with the state regulation of securities. In a column for the December issue, Alan Parness of Cadwalader, Wickersham & Taft LLP wrote about the enforcement report issued last October by the North American Securities Administrators Association (aka NASAA). Alan Read more...
Governor Proposes To Consolidate The DFI And DOC
Article IV, Section 12(a) of the California Constitution requires the Governor to submit to the legislature a proposed budget for the ensuing fiscal year within the first ten days of the calendar year. Governor Jerry Brown met this deadline by announcing his proposed budget on January 5, 2012. I was surprised and dismayed to see that Governor Brown is reviving the Read more...
Court Rules That Section 25400 Requires That Manipulative Conduct Occur Within California
Overstock.com, Inc. filed a lawsuit in the San Francisco Superior Court alleging that various investment firms had caused the price of its shares to decline by manipulating the securities markets. Earlier this week, Judge John E. Munter granted summary judgment to four of the defendants. Overstock.com, Inc. v. Morgan Stanley & Co., Inc., Superior Court Case No. CGC-07-460147 (Jan. 10, 2012). Read more...
