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CALIFORNIA CORPORATE & SECURITIES LAW

California Judge Troubled By Trulia Refuses To Approve Settlements

Kevin LaCroix recently tackled the question Is Deal Litigation in Delaware Done?  According to Kevin, “deal litigation has been shifting from Delaware Chancery Court to courts in other states and to federal courts”.  He attributes this shift to decisions by the Delaware courts, including Chancellor Andre G. Bouchard’s refusal to approve a disclosure-only settlement of a merger lawsuit.  In…

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More On Revlon Duties In California

Following yesterday’s post concerning the status of Revlon duties in California, I received a note from Suzanne Weakley, an attorney at the California Continuing Education of the BAR (aka the CEB).  For those readers not familiar with the CEB, it is a self-supporting program of the University of California that is cosponsored by the State Bar…

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Is There A “Revlon Duty” In California?

There are certain seminal Delaware corporate law cases that are so well known that corporate lawyers are wont to assume that they have been adopted and followed everywhere.  One such case is Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (1986).  In that case, the Delaware Supreme Court famously proclaimed that once…

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Knowledge Of Loan Extensions Precludes Exoneration

The California Civil Code devotes several sections to the subject of the exoneration of sureties.  Section 2819, for example, intones: “A surety is exonerated, except so far as he or she may be indemnified by the principal, if by any act of the creditor, without the consent of the surety the original obligation of the…

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Buying Assets? Have You Considered This Secretary’s Certificate?

California Corporations Code Section 1001 requires approval by the outstanding shares (Corp. Code § 152) of the principal terms of a sale of all or substantially all of a corporation’s assets (unless the transaction is in the usual and regular course of business).  Presumably, corporate sellers are in a good position to determine whether Section 1001…

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I Deliver Some Round Observations About California’s Rounding Rule

Yesterday’s post concerned various actions that a California corporation may pursue in lieu of issuing fractional shares.  I left for today the subject of rounding.  Section 407 of the Corporations Code expressly permits rounding to the nearest whole share if the fraction of a share that any person would otherwise be entitled to receive is less than .005…

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Breaking Up Is Not Hard To Do – Fractions, Scrip And Scrippage

The California General Corporation Law explicitly authorizes a corporation to issue fractional shares.  Cal. Corp. Code § 407.  A corporation, however, is not required to do so.  Id.  In lieu of issuing fractions, a corporation may in connection with the original issuance: arrange for the disposition of fractional interests by those entitled to receive them;…

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How California Made Mergers Potentially More Difficult

The last two sentences of Section 1101 of the Corporations Code can be an unwonted surprise to some practitioners.  They are intended to ensure fair treatment of shareholders in a merger by imposing two requirements: Each share of the same class or series of any constituent corporation must be treated equally with respect to the distribution of…

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Court Decides Successor In Merger May Enforce Arbitration Clause

Can a party to written agreement that does not include an arbitration clause enforce an arbitration provision in another agreement to which it is not a party?  Boiled down to the essentials, this is the question decided yesterday by the Court of Appeal in Jenks v. DLA Piper Rudnick Gray Cary US LLP, Cal. Ct. of Appeal Case No.…

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How Many Signatures Are Required For An Agreement of Merger?

Corporations Code Section 313 generally provides that a contract, note or other instrument will not be invalidated as to a corporation by any lack of authority if it is signed by the corporation’s chairman of the board, the president or any vice president and the secretary, any assistant secretary, the chief financial officer or any assistant treasurer.  See If You’re Relying On The…

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