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CALIFORNIA CORPORATE & SECURITIES LAW

New York Judge Considers Meaning Of “Voting Power” In California Contract

Chapter 1 of the California General Corporation Law includes a large number of definitions, beginning with “Acknowledged” (Section 149) and ending with “Written, in writing” (Section 195).  It is easy to gloss over these terms as the balance of the CGCL doesn’t use initial capitals or italics to identify defined terms.  I suspect that many lawyers…

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Professor Bainbridge Precises Corporate Philanthropy

Earlier this week, UCLA Law School Professor Stephen Bainbridge precised the question of corporate philanthropy.  He notes “Virtually all states have adopted statutes specifically granting corporations the power to make charitable donations, which eliminates the ultra vires issue.”  Several years back, I compared California’s and Delaware’s statutes: Delaware’s statute appears to be more limited than California’s…

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California And Virtual Annual Meetings

Seventeen years ago, Delaware amended Section 211 of the Delaware General Corporation Law to permit corporations to hold electronic meetings of stockholders.  72 Del. Laws, c. 343, §§ 7, 8.  In the ensuing years, an increasing number of corporations have elected to conduct their meetings either entirely (a “virtual meeting”) or partially (a “hybrid meeting”) through electronic…

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What Kind Of California Corporation Must Include A Salary Limitation In Its Articles Or Bylaws?

I suspect that at least a few California corporate lawyers are unaware of a provision in the California Corporations Code requiring the articles or bylaws of certain corporations to contain a limitation on the salaries paid to the persons operating or employed by the corporation, including officers and directors.  If you are guessing that this provision is included…

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“Lead Independent Director” Or “Presiding Director”?

Neither California nor Nevada require that a corporation have either a “lead independent director” or “presiding director” and yet many corporations state that they have such a position.  Why? Item 407(h) of Regulation S-K requires that if one person serves as both principal executive officer and chairman of the board, a company must disclose whether it has a “lead…

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Bylaws And Supermajority Board Voting Requirements

Yesterday’s post concerned various provisions that, although not required to be included in the articles of incorporation, must be included if they are to be effective.  One of these provisions relates to supermajority voting requirements: A provision requiring, for any or all corporate actions (except as provided in Section 303 [removal of directors without cause],…

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Putting These Provisions In Bylaws Won’t Be Sufficient

Section 202 of the California Corporations Code lists those provisions that must be included in a California corporation’s articles of incorporation in order for them the be accepted by the Secretary of State for filing.  There are a number of other provisions that although not required to be included in the articles won’t be effective…

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Still More On Suing The CEO For Social Activism

Last week, I devoted several posts to the question of suing the CEO for social activism.  The catalyst for the discussion was an August 17, 2017 Op-Ed piece by Jon L. Pritchett and Ed Tiryakian in The Wall Street Journal.  That piece cited recent CEO resignations from the White House’s Council on Manufacturing and Target’s adoption…

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Shareholder Derivative Suit Or Derivative Action?

I have long puzzled over the question of which is correct – “derivative suit” or “derivative action”?  Historically, the term “suit” was used for proceedings in equity.  California courts have generally regarded shareholder derivative claims as equitable.   Nelson v. Anderson, 72 Cal. App. 4th 111, 127, 84 Cal. Rptr. 2d 753, 763 (1999).  Thus, one might…

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More On Suing The CEO For Social Activism

The last few days, I’ve been writing about the legal issues raised by Jon L. Pritchett and Ed Tiryakian in a recent opinion piece published by The Wall Street Journal.  To sum up the discussion so far, Professor Stephen Bainbridge responded to Messrs. Pritchett and Tiryakian by arguing that the business judgment rule should bar…

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