Eureka! Bill Introduced To Homologate Finders

Questions about the use of finders have bedeviled transactional lawyers for years.  The need for finders is the unintended consequence of the federal and state securities law exemptions that are conditioned on the absence of a general solicitation.  Most start-ups don’t have preexisting relationships with rich people (aka accredited investors).  Thus, they are sorely tempted

Are There Silver Hills In Other States?

In Silver Hills May Tarnish Crowdfunding, I wrote about Justice Roger J. Traynor’s alternative definition of “security” under the predecessor to the Corporate Securities Law of 1968.  Silver Hills Country Club v. Sobieski, 55 Cal. 2d 811 (1961)  Justice Traynor’s definition may cause problems for crowdfunders who are relying on the fact that their arrangements don’t meet the

Bill Would Mandate Indemnification Of LLC Agents

California’s current limited liability act permits indemnification of any person (including any manager, member, officer, employee, or agent of the limited liability company) against judgments, settlements, penalties, fines, or expenses of any kind incurred as a result of acting in that capacity.  Cal. Corp. Code § 17155(a).  The statute excepts indemnification against liability for a manager’s

Supreme Court Holds California’s Survival Statute Inapplicable To Delaware Corporation

Section 278 of the Delaware General Corporation in effect limits suits against dissolved corporations to a period of three years from dissolution.  In contrast, Section 2010 of the California Corporations Code sets no time limitation for suing a dissolved corporation.  As the Supreme Court explained in Peñasquitos, Inc. v. Superior Court, 53 Cal. 3d 1180,

When Is A Gift A Sale?

According to Black’s Law Dictionary, a “gift” is a “voluntary transfer of property to another made gratuitously and without consideration”.  Thus, it would seem that a gift could not be a sale.  The California Corporations Code, however, takes a different view in at least three different circumstances. First, Section 25017(c) provides that any security that

Brazilian Noteholder Sues Brazilian Guarantor – What Does New York Law Have To Do With It?

At the opening of the Los Angeles aqueduct on November 5, 1913, William Mulholland famously declared “There it is. Take it!”  Much the same could be said of Civil Code Section 1646.5.  The statute provides that the parties to a contract relating to a transaction involving at least $250,000, including a transaction covered by Commercial

Judge Puts Off Decision On Whether Receiver’s CalPERS Benefits Are Unconstitutional

Did CalPERS Make A Gift Of Public Funds? On January 23, 2008, the federal court appointed J. Clark Kelso as a receiver for California’s prison health care system.   In 2011, a taxpayer filed a petition for writ of mandamus challenging Mr. Kelso’s membership in the California Public Employees’ Retirement System (CalPERS).  According to the taxpayer, Mr. Kelso is not

Silver Hills May Tarnish Crowdfunding

Both Section 2(1) of the Securities Act of 1933 and Section 25019 of the Corporate Securities Law of 1968 provide extensional definitions of the term “security”. That is, they each list everything within the term being defined.  See Why the Word “Includes” Conflates the Separation of Powers“.  In each statute, the twelfth item listed is

Would You Be Annoyed If Your Neighbor Installs A Wind Turbine?

In 2009, the Nevada legislature enacted a statute intended to remove private barriers to landowners’ harnessing of wind energy: Any covenant, restriction or condition contained in a deed, contract or other legal instrument which affects the transfer or sale of, or any other interest in, real property and which prohibits or unreasonably restricts the owner

California And Rule 10b5-1

In October of 2000, the Securities and Exchange Commission adopted Rule 10b5-1, which among other things, created an “affirmative defense” for pre-planned trading provided that specified conditions were met.   At the time, I pointed out that California has its own insider trading prohibition, Corporations Code Section 25402 and urged the adoption of a conforming state rule.  In