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CALIFORNIA CORPORATE & SECURITIES LAW

CalPERS’ Focus List – Results and Prospects

The CalPERS Focus List has been around for almost a quarter century.  Each spring, CalPERS “names names” by listing from 4 to 11 companies that it believes have records of poor economic and corporate governance performance.  Here is a flow-chart of the current Focus List process. Interestingly, CalPERS did not issue a Focus List this year. …

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Compensation Committees – Whom Do You Represent?

Amongst the many, many, changes wrought by the Dodd-Frank Wall Street Reform & Consumer Protection Act, is this requirement in Section 952(d)(1):   “The compensation committee of an issuer, in its capacity as a committee of the board of directors, may, in its sole discretion, retain and obtain the advice of independent legal counsel and other advisers”. …

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More on CalPERS’ Director Database Proposal

On Bastille Day, I posted this item about Gina Chon’s article in The Wall Street Journal about the plans of the California Public Employees’ Retirement System (aka CalPERS) to create a director database.   Today, Broc Romanek has posted an excerpt of an interview on this topic with Anne Sheehan, Director of Corporate Governance at the…

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Section 2115: Beware of Double Counting

Many practitioners both in and outside of California struggle with Section 2115 of the California Corporations Code.  That statute purports to apply a laundry list of California statutes to out-of-state corporations to the exclusion of the law of their state of incorporation.  An out-of-state corporation is subject to Section 2115 if: (i) more than 1/2 of its outstanding voting…

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The Alter Ego Doctrine Yields Conflict of Interest

American journalist Ambrose Bierce defined a corporation in his The Devil’s Dictionary as “an ingenious device for obtaining individual profit without individual responsibility”.  The alter ego doctrine is one tool that the courts use to address a perceived want of individual responsibility on the part of a corporate owner. In most cases, creditors try to use…

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Shareholder Approval of Political Contributions – Coming Soon?

On June 22, 2010, I posted an item concerning AB 919 (Nava), a California bill that would require corporations to report political contributions to shareholders and make refunds to those shareholders who don’t agree.  In today’s Proxy Season Blog, Therese Doucet writes about similar legislative efforts in New York, Massachusetts and even in Congress.  Broc…

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“‘Tis Well Consented” Vel Non

On July 19, 2010, I discussed action by written consent of the board pursuant to Corporations Code Section 307.  The statute is remarkably silent on some key points.  For example, while the statute clearly requires that consents be in writing (see Sections 8 and 195), the statute does not specifically require that the consents be…

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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…

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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…

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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…

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