Section 307 – No More Sunset
Some readers may have noticed that there are currently two Section 307s in the Corporations Code. One version of Section 307 provides in subdivision (d) that it remains in effect only until January 1, 2011. This is commonly referred to as a “sunset provision”. Subdivision (d) of the other Section 307 provides that it will become operative on January Read more...
CalPERS and the DDD
A few weeks ago, The Wall Street Journal reported that California’s largest public pension plan is planning to create a database of directors, which is being referred to as the “Diverse Director Database” or DDD. Interestingly, a director registry has been part of the Corporations Code for 17 years. In 1993, former Senator Lucy Killea authored legislation that created a Read more...
Counting Votes – Not As Easy As It May Seem
Determining whether shareholder approval of a proposal has been obtained can be tricky. This is all the more difficult in California because the Corporations Code includes a variety of voting rules. One of these is Section 153 which defines “approval by (or approval of) the shareholders” in part as follows: approved or ratified by the affirmative vote of a majority Read more...
Wasting Trees in California
More than a decade ago, the Securities and Exchange Commission adopted rule amendments that allow for the delivery of a single set of proxy materials to shareholders who share a single address. This is often referred to as “householding”. Many publicly traded companies have relied upon these rules to reduce their costs of printing and postage. From an environmental perspective, Read more...
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 Bylaws included a right of Read more...
Appellate Court Finds Triable Issues of Fact in Alter Ego Claim
The Sixth District Court of Appeal recently addressed what it takes for someone to beat an alter ego claim on a motion for summary judgment. In Zoran Corp. v. Chen, the plaintiff sued several companies and an individual for amounts owed to the plaintiff for equipment that it had sold. A central theory of the complaint was that the individual directly Read more...
Court of Appeal Applies Delaware Law to Sustain Demurrer to California Action
In the last few weeks, the various appellate districts of the Court of Appeal have been pumping out corporate law opinions. The most recent, Fox v. JAMDAT Mobile, Inc., involves a stockholder lawsuit against a Delaware corporation, JAMDAT, and its directors for breach of fiduciary duty. Unlike Kruss v. Booth (See June 22, 2010 Blog), the issue was not whether the court Read more...
California Legislature Takes On Citizens United by Proposing to Require Refunds to Shareholders Objecting to Political Expenditures
The California legislature has reacted to the Supreme Court’s decision in Citizens United v. Federal Election Commission, 558 U.S. 50 (2010) by gutting and amending AB 919 (Nava). That bill started out life last year as a “spot” bill. A “spot” bill is a bill that makes a very inconsequential change to a statute and then is later amended. Read more...
When Is A Director’s Inspection Right Not Absolute?
California Corporations Code Section 1602 provides that every director “shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind . . .”. While the statute seems to brook no exceptions, the California Court of Appeal last year held that a director can lose his “absolute” right of inspection if Read more...
