Court Holds Promoters May Owe Fiduciary Duties To Non-Shareholder Investors And A Lamentable Example Of Notice
Yesterday, the California Court of Appeal issued an opinion addressing two important questions involving the liability of corporations and promoters Cleveland v. Johnson, Cal. Ct. of Appeal Case No. B233762 (Oct. 11, 2012). The facts of the case are somewhat complicated, but can be distilled to the following elements. The plaintiffs invested money in a proposed new business that was to Read more...
DOC Calls It Fair
Notes on the Facebook fairness hearing At the conclusion of a hearing held yesterday morning, the Department of Corporations approved the acquisition of Instagram, Inc. by Facebook, Inc. Technically, the Department approved the issuance of a permit to offer and sell the securities. The hearing was was held pursuant to Corporations Code Section 25142. See A Program Guide To The Facebook Read more...
1 For 3 Million Reverse Split Fraud Claim Survives Motion To Dismiss
Nancy Wojtas at Cooley LLP alerted me to an interesting ruling case decided last week by the U.S. District Court for the Eastern District of New York, Gardner v. Major Auto. Cos., 2012 U.S. Dist. LEXIS 118191 (E.D. N.Y. Aug. 21, 2012). According to a complaint, Bruce Bendell was the Chairman, Chief Executive Officer, and Chief Financial Officer of Major Automotive Read more...
No Surprises Here – California Court Won’t Enforce Non-Compete
Employers like covenants not to compete; California doesn’t. Anyone who doubts these two propositions should read the opinion issued last Friday by the Fourth District Court of Appeal in Fillpoint, LLC v. Maas, 2012 Cal. App. LEXIS 914 (Aug. 24, 2012). The facts of the case are relatively straightforward. When Michael Maas sold his stock in a corporation, he signed a three-year covenant Read more...
Bulk Sales Bill Gutted and Amended!
As we come down to the closing days of the current legislative biennium, the legislative process becomes frenetic and unpredictable. SB 12 (Corbett) started out repealing California’s Bulk Sales Act. As I wrote about earlier today, it was amended to maintain selected portions of the BSA. Now, the author has gutted the entire bill and amended it to add an exception Read more...
Facebook “Likes” California’s Fairness Hearing Process!
In this video from January 2011, I spoke about California’s fairness hearing procedure. California is one of only a handful of states that offer the opportunity to take advantage of the Section 3(a)(10) exemption from registration under the Securities Act of 1933. This exemption is most typically used by public issuers who wish to acquire a closely held companies in exchange Read more...
What Does The UCC Have To Do With M&A Anyway?
For several years, I taught a law school class covering sales, personal property leases, and documents of title – Uniform Commercial Code Articles 1, 2, 2A, and 7. At one time, the UCC was the big thing in American law. Now it has become workaday area of the law. Nonetheless, it remains an important, and I fear, often overlooked, subject. I suspect that many Read more...
Effecting A Short-Form Merger? Don’t Forget To Give Notice
Although California’s General Corporation Law is frequently criticized as overly restrictive, it does have one virtue. It is rationally organized. Thus, it begins with a long series of defined terms, starting with “acknowledged” and ending with “written”. It even provides a definition of “short-form merger”. Cal. Corp. Code § 187. In California, a short-form merger may either be “upstream” (a Read more...
California Bill Threatens Market Exception For Dissenters’ Rights
The California legislature is taking its summer recess and will reconvene on August 6. Joint Rule 51(b)(2). It will then sit until August 31 which is the last day for either the Senate or the Assembly to pass bills. Cal. Const. Art. IV, §10(c) and Joint Rule. 61(b)(17). One bill that has been somewhat of a sleeper is AB 1680 authored Read more...
Dissenters’ Rights And The Saddest Plaintiff
Dissenters’ rights statutes are intended to liberate minority stockholders from the tyranny of the majority. They accomplish this by allowing stockholders who object to specific transactions the opportunity to require the corporation to purchase their shares pursuant to a statutorily prescribed procedure. In Nevada, this procedure can be found in Chapter 92A of Nevada Revised Statutes which is modeled after the Read more...
