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CALIFORNIA CORPORATE & SECURITIES LAW

ICC – Requiescat in Pacem

The Interstate Commerce Commission was created in 1887 when Grover Cleveland was president.  Over the years, Congress greatly expanded the ICC’s authority.  At one time, the ICC had thousands of employees.  In 1995, President Clinton signed legislation abolishing the ICC and it has disappeared from the regulatory scene.  Strangely, however, the ICC lives on in…

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It Really Isn’t Too Late

As noted in yesterday’s post, the deadline for comments on the Commissioner of Corporation’s proposal to adopt a rule to address the Court of Appeal’s holding in People v. Cole, 156 Cal. App. 4th 452 (2007) was yesterday.  Yesterday, however, the Commissioner extended the comment period until July 20, 2010.  The opportunity for comment is…

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It’s Not Too Late

As a reminder, the comment period ends today on the Department of Corporation’s proposal to add a new rule, 260.004.1, to address concerns about the Court of Appeal’s holding in People v. Cole, 156 Cal. App. 4th 452 (2007).  In that case, the court upheld the criminal convictions of two individuals for engaging in unregistered broker-dealer…

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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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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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Dividends: Sale or No Sale?

When a corporation distributes its own securities to its existing shareholders, there is no sale – correct?  Well, maybe not. Corporations Code 25017(f) does exclude from the definition of “sale” any “stock dividend payable with respect to common stock of a corporation solely (except for cash or script paid for fractional shares) in shares of common stock,…

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Commissioner DuFauchard Proposes Broker-Dealer Safe Harbor Rule

In 2007, a California Court of Appeal held that corporate officers and directors may be subject to licensure as broker-dealers unless they receive a commission for the sale of securities.  People v. Cole, 156 Cal. App. 4th 452 (2007).  Although the court’s holding should be viewed in the context of the unique facts of that…

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CalPERS’ Proposed Placement Agent Disclosure Rule Likely to be Amended

Last year, the California legislature enacted AB 1584 as an urgency measure. That legislation required the retirement boards of each public pension or retirement system to develop and implement, on or before June 30, 2010, a policy requiring the disclosure of payments to placement agents. CalPERS had previously adopted a disclosure policy but had not…

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