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CALIFORNIA CORPORATE & SECURITIES LAW

Did A Non-Existent Committee Move To Update Corporations Code?

In April, I kvetched about numerous outdated references in the California Corporations Code.  For example, several provisions of the Code continue to refer to the “Internal Revenue Code of 1954” more than three decades after the enactment of the Internal Revenue Code of 1986.  Other sections refer to federal agencies and laws that no longer…

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Can Pseudo-Foreign Corporations Exonerate Their Directors?

Corporations Code Section 2115 is not an easy read.  Fortunately, California Supreme Court Chief Justice Tani Cantil-Sakauye has provided a more digestible overview of the statute: Section 2115 was enacted as part of a comprehensive revision of the Corporations Code in the mid-1970s.  The section addressed so-called pseudoforeign corporations—entities incorporated outside California, but that meet two…

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California Judge Troubled By Trulia Refuses To Approve Settlements

Kevin LaCroix recently tackled the question Is Deal Litigation in Delaware Done?  According to Kevin, “deal litigation has been shifting from Delaware Chancery Court to courts in other states and to federal courts”.  He attributes this shift to decisions by the Delaware courts, including Chancellor Andre G. Bouchard’s refusal to approve a disclosure-only settlement of a merger lawsuit.  In…

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Officers Of Foreign Corporations And The California Courts

Yesterday’s post concerned Section 2116 of the California Corporations Code.  Courts sometimes describe Section 2116 as codifying the internal affairs doctrine.  See, e.g., Vaughn v. LJ Internat., Inc., 174 Cal. App. 4th 213, 223 (2009) and Voss v. Sutardja, 2015 U.S. Dist. LEXIS 8795 (N.D. Cal. Jan. 26, 2015).  To the extent that Section 2116 codifies the…

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Enforceability Of Exclusive Forum Bylaw May Hinge On The Meaning Of “May”

No California appellate court has yet addressed the validity of forum selection bylaws in a published decision.  When the question comes before a California appellate court, the outcome may turn on the meaning of “may” in California Corporations Code Section 2116.  The statute in its entirety provides: The directors of a foreign corporation transacting intrastate…

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More On Revlon Duties In California

Following yesterday’s post concerning the status of Revlon duties in California, I received a note from Suzanne Weakley, an attorney at the California Continuing Education of the BAR (aka the CEB).  For those readers not familiar with the CEB, it is a self-supporting program of the University of California that is cosponsored by the State Bar…

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Is There A “Revlon Duty” In California?

There are certain seminal Delaware corporate law cases that are so well known that corporate lawyers are wont to assume that they have been adopted and followed everywhere.  One such case is Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (1986).  In that case, the Delaware Supreme Court famously proclaimed that once…

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Did The Harvard Shareholder Rights Project Prove Itself Wrong?

In December 2014, Stanford Law School Professor Joseph A. Grundfest and Daniel M. Gallagher incited an academic titanomachy when they released a draft of an academic paper provocatively entitled “Did Harvard Violate Federal Securities Law?  The Campaign Against Classified Boards of Directors“.  In this case, “Harvard” was the Harvard Shareholder Rights Project which described itself as “a clinical program operating at…

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California And Liquidated Damage Clauses

California Civil Code Section 1671(b) provides that “a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made”.  There are several key exceptions to this standard.  First,…

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Partnership Dissolution And A Chief Judge’s Lament

Decisions by U.S. District Court judges typically begin with an identification of the parties, an explanation of the procedural posture of the case, or a description of the dispute.  Chief Judge Lawrence J. O’Neill, however, chose to begin a recent opinion with an invitation to the parties and their attorneys to write their Senators: Judges in the…

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