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CALIFORNIA CORPORATE & SECURITIES LAW

Directors May Be Invested With Super Powers In Nevada But Not California

Directors With Super Powers

Sometimes investors would like to endow one or more directors with greater voting powers.  This is possible with a Nevada corporation by virtue of NRS 78.330(3) which provides ” The articles of incorporation may provide that the voting power of individual directors or classes of directors may be greater than or less than that of any other individual directors or classes of directors, and the different voting powers may be stated in the articles of incorporation or may be dependent upon any fact or event that may be ascertained outside the articles of incorporation if the manner in which the fact or event may operate on those voting powers is stated in the articles of incorporation.”

It’s a different story in California.  According to a filing tip posted on California Secretary of State’s website, there “is no legal authority for the Articles of Incorporation to grant greater authority or special powers over Board decisions to one or more specific directors”.  

New Corporate Forms Meet Tepid Reception

Last year, there was quite a bit of buzz about two new types of corporate entities – the flexible purpose corporation and the benefit corporation.  See California’s Two New Corporate Forms – And The Winner Is . . . .  Despite the initial excitement, interest in actually using either of these forms appears to be quite tepid.  I’ve heard (unofficially) that only 82 benefit corporations and 25 flexible purpose corporations have been incorporated since these two new laws took effect last year.

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