No Voting Rights?
In this recent post, I wrote about California’s definition of “common shares” in Corporations Code § 159. These are shares that have no preference over any other shares with respect to distribution of assets on liquidation or with respect to payment of dividends. Is it possible to have common shares with no voting rights? In California, the answer is yes. California Read more...
Meeting Over? Hold On To That Voting Record!
In 1988, California enacted a statute to provide a means for beneficial owners of stock to obtain information about the voting of their shares from the persons with the power to vote those shares. Cal. Stats. 1988, ch. 1360. Unfortunately, the statute is no clearer than the waters of Loch Ness. In general, the statute requires that “every person possessing the power Read more...
Court Rules Choice Of Law Provision Takes Precedence Over Internal Affairs Doctrine
To say that the Delaware courts and bar are very fond of the internal affairs doctrine is about as controversial as wearing white before Labor Day. If you have any doubts about the sacred status of the doctrine in Delaware, I refer you to the Delaware Supreme Court’s decision in Vantagepoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (2005). Read more...
Welcome To Jan Owen, California’s Newest Commissioner Of Corporations!
Yesterday I was very pleased to read that California’s Governor Jerry Brown had announced the appointment of Jan Owen to fill the Commissioner’s seat that Preston DuFauchard will be leaving at the end of the year. I’ve known Jan since my days at the California Business, Transportation & Housing Agency. At that time, she was serving as Chief Committee Consultant for the California Senate. Read more...
Commissioner Proposes Successor To Rule 260.204.9
With the enactment of the National Securities Markets Improvement Act of 1996, Congress divided registration authority over investment advisers between the Securities and Exchange Commission and state securities regulators. In general, large advisers (i.e., those with at least $25 million in assets under management) were required to register with the SEC and smaller advisers were subject to state registration. Fund advisers, however, Read more...
The Legacy Of The Commissioner Who Was Indicted
In an earlier post, I wrote about Edwin M. (“Mike”) Daugherty who served as California’s Commissioner of Corporations from 1922 until 1926 and then from 1931 to 1954. He was succeeded by interim Commissioner Clifford J. MacMillan. Then in March 1927, Governor Clement C. Young appointed Los Angeles City prosecutor Jack Friedlander to the post. Within two months of taking office, the Read more...
Securities Law Doppelgängers
Over the years, I’ve noted that a number of evil twins have walked the corporate securities law stage. Other People’s Money O.P.M. Leasing Services, Inc. was a large computer leasing company that crashed into bankruptcy on March 11, 1981. Eventually, O.P.M.’s two founders were each sentenced to prison for a financial fraud that reportedly involved over $200 million. One of Read more...
Felonious Filings
In October, I wrote about a warning from the Secretary of State regarding business theft. One way to steal a corporation’s identity is to make a false filing with the Secretary of State listing yourself as an officer. While this can be an initial step in an even bigger crime, such as grand theft, the filing itself is a crime (even Read more...
Should/Must Corporate Minutes Be Signed?
Corporations Code Section 1500 establishes the basic rules governing corporate minutes. The statute requires California corporations to ”keep minutes of the proceedings of its shareholders, board and committees of the board”. It also requires that minutes be kept in “either [sic] in written form or in another form capable of being converted into clearly legible tangible form or in any combination of the foregoing”. Nowhere does the statute Read more...
Commissioner DuFauchard To Leave At Year’s End
A Job Well Done Yesterday, I received word that Commissioner Preston DuFauchard plans to leave at the end of this year. Former Governor Arnold Schwarzenegger appointed Preston in June 2006 and he continued to serve under Governor Jerry Brown. Notably, Preston’s service began before the collapse of the economy and the ensuing turmoil in the mortgage lending industry. Many securities lawyers Read more...
