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CALIFORNIA CORPORATE & SECURITIES LAW

CalPERS and Cumulative Voting

California has a strong historical bias in favor of cumulative voting in the election of directors.  In fact, California’s 1879 Constitution enshrined cumulative voting as a constitutional right.  Cal. Const. of 1879, Art. XII, § 12 (repealed).  The 1931 California General Corporation Law continued mandatory cumulative voting.  When the current California General Corporation Law was introduced,…

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Don’t Be a Dummy – Measuring Shareholder Voting Power

John F. Banzhaf III is a law professor who in the 1960s became interested in voting and voting power.  See Weighted Voting Doesn’t Work: A Mathematical Analysis, 19 Rutgers Law Review 317 (1965).  In ensuing years, Professor Banzhaf has attracted controversy for his anti-smoking and anti-obesity activism. Determining voting power is key to knowing where…

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There Is No Alter Ego Liability When The Creditor Knows There Is No Corn In the Husk

Ok, I admit Fusion Capital Fund II, LLC v. Ham, 2010 U.S. App. LEXIS 15962 (Aug. 2, 2010) does not deal with California law.  The case caught my eye because it isn’t all that often that you see an opinion interpreting Nevada corporate law written by Chief Judge Frank Easterbrook and joined by Judges Richard A. Posner and Michael…

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Proxy Access and Majority Voting

According to TheCorporateCounsel.net yesterday, the Security and Exchange Commission’s proxy access rules were published yesterday in the Federal Register – thereby starting the clock on the effectiveness of the rules. In complying with proxy access, California companies should think about the interplay between Corporations Code § 708.5  and proxy access.   Section 708.5 was added to the Code a few…

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Will the “Real” Directors Please Take Your Seats?

As discussed in this earlier post, the Securities and Exchange Commission’s new proxy access requirements will likely bring attention to director qualification requirements.   The California General Corporation Law does not require that a person satisfy any particular qualification requirements to hold office as a director.  The bylaws may, however, impose qualification requirements.  Cal. Corp. Code § 212(b)(4).   These qualifications…

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Want to Nominate a Director Today? Here’s How

The Securities and Exchange Commission’s new proxy access requirements are garnering a great deal of attention even though those rules have yet to take effect.  In the meantime, you can still nominate a candidate for election as a director by sending an email to: DiverseDirectorDatabase@calpers.ca.gov. No, this won’t necessarily get your candidate in any company’s…

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Director Qualification Requirements, Nominations & Proxy Access

As discussed in this earlier post, the SEC’s proxy access rule amendments will soon require many publicly traded companies to include shareholder nominees in their proxy statement and proxy cards.  This rule may reignite old questions about how to handle director qualification requirements. Some 131 pages into the 451 page adopting release, the SEC makes…

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“Cooked Dividends” Leads to Bloody Massacre

Cooking dividends is the practice of declaring a false or “cooked” dividend for the purpose of raising the value of a company’s shares.   Apparently, this was a serious problem in the early days of both California and Nevada.  The practice is still illegal under the California General Corporation Law.  Section 2254, among other things, makes…

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“Extracts from the SEC’s Proxy Access Amendments, With Some Remarks Upon Them”

James McRitchie at Corpgov.net recently made reference to a forthcoming law review article by J.W. Verret at George Mason University School of Law.  Professor Verret posits in various strategems for discouraging shareholder nominations.  He writes from a Delaware perspective (he was a law clerk to Vice Chancellor John W. Noble) and as someone who has worked under the…

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Proxy Access and Director Qualification Requirements

Last week, the Securities and Exchange Commission adopted its final changes to the federal proxy rules.  These new rules will require public companies, under specified circumstances, to include in their proxy materials information about, and the ability to vote for, a shareholder’s (or shareholder group’s) nominee(s) for director.  In adopting these rule changes, the SEC expressly…

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