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CALIFORNIA CORPORATE & SECURITIES LAW

Why The Location Of The Principal Executive Office Matters

The California General Corporation Law does not require that a California corporation have a principal executive office located in California.  In fact, Section 177 explicitly contemplates that a corporation’s PEO may be located elsewhere or that the corporation may have no PEO at all.  The location of the PEO is not without significance, however.  Numerous provisions of the GCL establish venue based on the location of the corporation’s PEO, including the following:

  • Section 305(c) (order for a special meeting of shareholders to elect entire board);
  • Section 308(a) (appointment of a provisional director);
  • Section 419(b) (order requiring issuance of replacement certificate);
  • Section 601(c) (order giving notice of special meeting of shareholders);
  • Section 709(a) (determination of validity of election);
  • Section 1304(a) (dissenting shares);
  • Section 1501(e) (enforcement of obligation to furnish reports); and
  • Section 1800(a) (complaint for involuntary dissolution).

Each of these statutes refers to the “proper county” which is defined in Section 177 as “the county where the principal executive office of the corporation is located or, if the principal executive office of the corporation is not located in this state, or the corporation has no such office, the County of Sacramento”.

How does one determine the location of a corporation’s PEO?  The Statement of Information filed annually with the Secretary of State pursuant to Section 1502 requires disclosure of the street address of the corporation’s PEO.  Sometimes the Articles of Incorporation, Bylaws or a resolution of the board of directors establish the location of the corporation’s PEO.

How to get sued in the County of Sacramento

Venue under the above statutes will be in the County of Sacramento in three circumstances: when the corporation’s PEO is located in the County of Sacramento, when the corporation’s PEO is located outside of California, and when the corporation does not have a PEO.

 

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