Why Incorporation May Be Unconstitutional
Section 25018 of the California Corporations Code provides a definition of several of the better known federal securities laws: “Securities Act of 1933,” “Securities Exchange Act of 1934,” “Public Utility Holding Company Act of 1935,” “Investment Advisers Act of 1940,” and “Investment Company Act of 1940” mean the federal statutes of those names as amended before or after the effective Read more...
If You Did This, It Would Be Fraud!
All fees, reimbursements, assessments, and other money or amounts charged and collected by the Department are required to be deposited into the the State Corporations Fund. Cal. Gov’t Code § 13978.6(b). The legislature created the fund to “effectively support the Department of Corporations” in its administration of the laws subject to its jurisdiction. Id. In this recent post, I lamented Read more...
California Bill Would Expand Liability For Securities Fraud, Impose New Fees, Expand Commissioner’s Powers
In late February, Senator Jerry Hill introduced a bill, SB 538, to substantially amend the Franchise Investment Law. A few days later, the bill was read for the first time and set for hearing by the Senate Banking and Financial Institutions Committee on April 3. Then something very fishy happened. Two days before the hearing, Senator Hill gutted the bill and Read more...
California’s Revised Uniform LLC Act – Countdown To Disaster?
Previously, I’ve written about the constitutional problem arising from the legislature’s attempt to bring all existing LLCs under the newly enacted Revised Uniform Limited Liability Company Act (aka RULLCA). See California’s New LLC Act – Call Me Laocoon, But I Foresee A Mess! In today’s post, I discuss just a few other reasons why practitioners would be well advised to avoid Read more...
Is An Immoral Contract Unlawful?
Last week, I wrote about a proposal by the Nevada Secretary of State to ban the establishment of a corporation for an ”illicit purpose“. Currently, Nevada specifically authorizes the formation of corporations to transact any “lawful” business and for “legitimate” purposes, NRS 78.030(1), while California permits corporations to be formed for “lawful” purposes, Cal. Corp. Code § 202(b)(1). “The illegality of contracts Read more...
Court Of Appeal Sends Spot Trailer Bills To The Dog House
For some time, I’ve been critical of that bit of legislative legerdemain known as the “spot bill”. See See Spot Run. A spot bill is a bill that is essentially empty of any content, usually because the bill makes some minor, non-substantive change such as changing “a” to “the” in the text of a statute. I’ve been frustrated by the Read more...
Proposed “Homeless Person’s Bill Of Rights And Fairness Act” Will Have Huge Impact On Government And Business
California’s Unruh Civil Rights Act, Civil Code Section 51, generally provides that all persons within California are free and equal, regardless of their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation, and are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every Read more...
I’ve Been Thinking About Conversion, But I Haven’t Decided To Convert
Conversion can be a sensitive subject for some. In California, corporate conversions are a relatively new phenomenon, having made their first appearance with legislation enacted in 2002 (SB 399 (Ackerman)). The General Corporation Law (GCL) rather unhelpfully defines a “conversion” as “a conversion pursuant to Chapter 11.5 . . . [of the Corporations Code]“. Cal. Corp. § 161.9. Fundamentally, Chapter 11.5 Read more...
Move Over Hester Prynne: If Your Company Is Delinquent, You May Also Be Wearing A Scarlet Letter
In 2006, then Assembly Member Jerome Horton authored AB 1418 to require the Board of Equalization and the Franchise Tax Board to make publicly available lists of the 250 largest tax delinquencies in excess of $100,000. In California, the BOE collects sales and use taxes and the FTB collects personal and corporate taxes. Last year, the legislature enacted AB 1424 (Perea), Read more...
A Bad Bill Becomes Law When There Is More Interest In Enacting A Fix Than Fixing the Problem
In 2002, the Legislature enacted AB 55 creating the victims of corporate fraud fund. Since the fund was created, it has collected about $15 million and nearly 800 claims have been submitted. In a devastating article published last fall by the Sacramento Bee, Dan Morain reported that only 10 people had been paid with a total payout of $112,496. His verdict Read more...
