Last week, I discussed the Court of Appeal’s consideration of whether the business judgment rule protects a director from claims based on breach of the corporation’s governing documents. See Does The Business Judgment Rule Protect Directors Who Violate Governing Documents? In Palm Springs Villas II Homeowners Ass’n, Inc. v. Parth, 2016 Cal. App. LEXIS 485, the corporation sued
Under the business judgment rule, a director will not be liable for a mistake in business judgment provided that certain conditions are met. In the case of a California nonprofit mutual benefit corporation, a director who performs her duties in accordance with Corporations Code Section 7231(a) and (b) has no liability based on any failure
Nevada’s private corporation law automatically exculpates directors and officers from individual liability from individual liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that: The director’s or officer’s
Because the power to manage a corporation’s affairs rests with the board of directors, it is normally up to the board to decide whether the corporation will pursue a claim. A shareholder who believes that the corporation should sue must therefore make a demand on the board. If the board decides against suing, then the
Who is family and how close are they? These aren’t questions that typically occupy the mind of a corporate lawyer. Occasionally, however, consanguinity matters even to a corporate lawyer. Thus, Section 308 of the California Corporations Code authorized the Superior Court to appoint a provisional director (or directors) when there is either a deadlock on the
This past April marked the 400th anniversary of the death of William Shakespeare. See Happy Birthday William Shakespeare! In 37 plays, Shakespeare wrote of kings, generals, lovers, and fools. He also made frequent mention of law. He uses the word “law” approximately 200 times in 176 speeches in 36 different works. But what about lawyers? By my count, Shakespeare
In “The Scope Of Stockholder Inspection In California And Delaware“, I wrote about what a shareholder is entitled to inspect under California’s shareholder inspection statute – Corporations Code Section 1601. I did not discuss where that inspection must occur, a question addressed yesterday by the California Court of Appeal in Innes v. Diablo Controls, Inc.
Four points to consider when drafting these often crucially important, but tiresome, documents: Distinguish among Shall/Will/Must. I often cite Bylaws as an example of how “shall” may sometimes mean “must” while other times may mean “may”. See When Shall/Will/Must/May We Meet Again? Remember the Articles! Occasionally, I come across bylaw provisions that are inconsistent with the articles of incorporation.
Congress told the SEC to adopt a resource extraction disclosure rule by no later than April 17, 2011. The SEC missed that statutory deadline by over a year. After the SEC belatedly adopted a rule in 2012, the U.S. District Court for the District of Columbia vacated it and sent it back to the SEC.
In a posting yesterday, Professor Stephen Bainbridge poses the question “When an acquirer spots red flags: Should Microsoft’s board beware?” He points out: Numerous Delaware cases (mostly arising in the oversight context, of course) hold that independent directors will be liable for acting in bad faith only when they ignore alleged “red flags” that are “either waved