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CALIFORNIA CORPORATE & SECURITIES LAW

Stock Option Exercise – Sale or No Sale?

The Corporate Securities Law prohibits the offer and sale of a security in an issuer transaction “in this state” unless the sale is (a) qualified; (b) the security is exempt from qualification; (c) the transaction is exempt from qualification; or (d) not subject to qualification.  The term “sale” is defined in Corporations Code Section 25017(a) to include every…

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Yes, There is no “S” in California

Regulation S has been available for two decades.  The rule establishes nonexclusive safe harbors for offers, sales and resales of securities outside the United States.   Over the years, many foreign and domestic issuers have relied upon the rule to conduct offshore offerings without complying with the registration and prospectus delivery requirements of the Securities Act of 1933.  As servicable…

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The DOC’s Fiscal State

Last week, I mentioned that the Department of Corporations’ source of money is a special fund in the state’s budget. This special fund is known as the “State Corporations Fund” and it typically receives the bulk of its cash inflows from licensing and permit fees. Unlike the General Fund with its current zero cash balance,…

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A California Take on the SEC’s Pay-to-Play Rule

Earlier today, the Securities and Exchange Commission issued its final pay-to-play rule.  Among other things, the rule prohibits investment advisers from providing advisory services for compensation to a government client for two years after the adviser or certain of its executives or employees makes a contribution to specified elected officials or candidates. Because this blog…

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How to Avoid a Filing Fee

When forming a subsidiary corporation, many lawyers rely on the exemption contained in Corporations Code Section 25102(f) or upon federal preemption via Corporations Code Section 25102.1(d).  Both of these sections require the filing of a notice with the Commissioner of Corporations (although the failure to file a notice of exemption under Section 25102(f) does not affect the availability…

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Will DOC Employees be Reduced to Minimum Wage?

As noted in a post last Friday, employees at the Department of Corporations have returned to working on the first three Fridays of each month.  This is good news for state employees because they will now get paid for those days.  However, this good news is tempered by the fact that Governor Schwarzenegger has ordered…

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Happy New Year!

California began a new fiscal year on July 1 without a budget (again).   The California Constitution (Art. IV, Sec. 12(c)(3)) is very clear:  “The Legislature shall pass the budget bill by midnight on June 15, of each year.” In order for the state to spend money, two conditions must be satisfied.  First, there must be legal…

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It’s Gut AND Amend (GANDA) Time and Your Bar Card May be at Risk!

In recent blogs, I’ve attempted to explain the reasons for a phenomenon that we’ll be seeing from now until August 31.  Why August 31?  We are in the second year of the biennium of the legislative session.  Under the California Constitution (Art. IV, Sec. 10(c)), no bill may be passed on or after September 1…

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Will Your Next Construction Contractor be an LLC?

Speaking of professional services, the Beverly-Killea Limited Liability Company Act generally does not authorize domestic and foreign limited liability companies to engage in professional services.  Consequently, a limited liability company cannot obtain a license as a construction contractor in California.  Last year, Senator Florez introduced SB 392 to permit LLCs to obtain a contractor’s license. …

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Bylaw Violation is also a Breach of Fiduciary Duty

Le v. Pham, 180 Cal. App. 4th 1201 (2010) dates all the way back to January of this year but is still worth noting.  In this case, the Court of Appeal held that the shareholders in a professional corporation had a fiduciary duty to the other shareholder even though the shareholders were not majority shareholders. The corporation’s…

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