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CALIFORNIA CORPORATE & SECURITIES LAW

Court Finds Lawsuit By Corporation Against Minority Shareholder Is “Protected Activity”

SLAPP is the initialization of the phrase “strategic lawsuit against public participation”.  A more informative description of SLAPP suits is found in Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal.4th 12, 21 (2010): “A SLAPP is a civil lawsuit that is aimed at preventing citizens from exercising their political rights or punishing those who have done so.…

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How The Proposed Fix To Delaware’s Stockholder Consent Statute Can Be Fixed

Earlier this week, I wrote about a proposed amendment to Section 228 of the Delaware General Corporation Law.  The amendment, which is proposed by The Corporate Council of the Corporation Law Section of the Delaware State Bar, would essentially condition the effectiveness of a stockholder consent upon the delivery of a sufficient number of consents with 60…

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After 25 Years, Delaware Begins To See The Light

A quarter century ago, I wrote a brief piece criticizing how Delaware handled stockholder action by written consent: Another difficulty with section 228 arises from its focus on the date of the “earliest dated consent delivered” to the corporation.  The emphasis on the date of the consent in section 228 contrasts markedly with the focus…

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Professor Bainbridge On My “Beef” With Gantler v. Stephens

Professor Stephen Bainbridge yesterday provided a well considered assessment of my “beef” with the Delaware Supreme Court’s holding in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  To the extent that Professor Bainbridge is saying that officers are not agents “pure and simple”. …

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Why An Understanding Of Officers As Agents May Be Important

In several recent posts, I have noted that officers, unlike directors, are agents of the corporation.  Recognizing the agency status of officers can affect the legal analysis in a number of significant ways, including: Choice of law.  California Corporations Code Section 2116 explicitly provides that the law of the jurisdiction of incorporation applies to the…

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Can The Board Remove A Director?

Can a board of directors remove one of its own?  In the case of a California corporation, the answer is no.  The power to remove directors is vested in the shareholders and the superior court pursuant to Corporations Code Section 303 and 304.  While technically not a removal, one option may be available to a…

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What The Delaware Supreme Court Overlooked In Gantler v. Stephens

I have never been reconciled to the Delaware Supreme Court’s pronouncement in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  Officers are, as I’ve previously noted, agents of the corporation while directors are not.  This means that an officer’s duties are…

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Should Corporate Law Preserve The Honor Of Salmon Or Fairness To Meinhard?

Should corporate law be concerned with the sinner or the sinned against?  In the venerable case of Meinhard v. Salmon, 249 N.Y. 458, 464 (1928), Benjamin Cardozo penned these now famous lines: A trustee is held to something stricter than the morals of the market place.  Not honesty alone, but the punctilio of an honor the…

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Why Some Delaware Corporations May Be Concerned With California’s Supermajority Vote Requirements

Section 710(b) of the California Corporations Code defines a “supermajority vote” as a requirement set forth in a corporation’s articles of incorporation (or certificate of determination) that specified actions be approved by a larger proportion of the outstanding shares than a majority, or by a larger proportion of the outstanding shares of a class or series than…

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Officers And The Business Judgment Rule

Last weekend, I attended a symposium at the UCLA School of Law entitled “Can Delaware Be Dethroned? Evaluating Delaware’s Dominance of Corporate Law”.  The event, organized by ever erudite Professor Stephen Bainbridge, featured presentations by leading scholars and practitioners from around the country.  I was therefore surprised when the discussion turned to whether Delaware applies the business…

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