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CALIFORNIA CORPORATE & SECURITIES LAW

Nevada Enacts Changes To Business Records and Notice Requirements

Apparently, the State of Nevada takes seriously Judge Gideon J. Tucker’s observation that “no man’s life, liberty, or property are safe while the legislature is in session.” 1 Tucker (N.Y. Surr.) 249 (1866) quoted in Lucas v. Mercantile-Safe Deposit & Trust Co., 29 Md. App. 633, 644 (Md. App. 1975).   You can read more about…

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Court Decides Buy-Out Claims Are Derivative

When a shareholder sues corporate officers and directors, she must decide whether to bring a direct action (which may be a class action) or a derivative suit.  The consequence of making the wrong decision may be dismissal of the shareholder’s suit as was the case recently in Sweeney v. Harbin Electric, Inc., 2011 U.S. Dist.…

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A Reason To Reincorporate In Nevada (Or California Or Delaware)?

Why read the papers when you can watch the video? In this month’s issue of California Lawyer magazine, Thomas Brom writes about an unusual opportunity to watch an arbitration proceeding between a Canadian gold mining company, PacRim Cayman LLC, and the Republic of El Salvador.  The proceeding was held at the World Bank’s International Centre for Settlement of…

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Nevada Supreme Court Pragmatically Rules On Delivery Of Dissenters’ Rights Notices

Last week, the Nevada Supreme Court answered the question of whether notice of dissenters’ rights must be delivered to both stockholders of record and beneficial owners. NRS 92A.410(2) provides that when a merger is effected without stockholder approval under NRS 92A.180, the Nevada corporation “shall notify in writing all stockholders entitled to assert dissenters’ rights…

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Are Reverse Mergers A Nevada Problem?

Yesterday, the Securities and Exchange Commission issued this bulletin on the risks of investing in reverse merger companies.  In this post from the week before, I wrote about a recent article that found that Nevada is second only to Delaware in attracting out-of-state publicly traded corporations.  The article by Professors Michal Barzuza and David C. Smith looked at the…

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Nevada’s Share of Corporate Charters Leads 48 Other States!

Recently, I came across this blog posting by Professor Larry Ribstein at the University of Illinois College of Law that discusses the role of Nevada in the market for corporate charters.  He discusses this this article in Boardmember.com and a more scholarly article by Professors Michal Barzuza and David C. Smith. Professors Barzuza and Smith…

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“Fair Is Foul, And Foul Is Fair”, But Are “Fair Value” And “Fair Market Value” Synonymous?

Last Friday, I wrote in this post about a recent Nevada Supreme Court decision that provides a modicum of guidance on how “fair value” is to be determined for purposes of Nevada’s dissenters’ rights law. California’s dissenters’ rights law doesn’t refer to “fair value”.  Rather, California uses the term “fair market value”.  According to Professor…

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Nevada Supreme Court Adopts Delaware Approach To Fair Value Burden Of Proof

Recently, the Nevada Supreme Court answered several questions concerning how to determine the “fair value” of shares under Nevada’s dissenters’ rights statutes (found in NRS Chapter 92A).  American Ethanol, Inc. v. Cordillera Fund, L.P. (May 5, 2011).    Nevada’s dissenters’ rights statutes are primarily based on the Model Business Corporation Act (MBCA), which is in turn based…

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Ahistorical Bedfellows: The California Corporations Code And The Common Law

Unlike New York or Virginia, the State of California was never an English colony (although Francis Drake named it New Albion and claimed it for England on June 17, 1579).   Rather than English, California’s European historical roots are Spanish.  Spain and then Mexico ruled what was to become California before it was ceded to the…

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Straining The Quality Of Mercy? Nevada’s Exculpation Statute

The legislatures of California, Delaware and Nevada have each enacted statutes eliminating or limiting the personal liability of corporate directors for monetary damages.  Cal. Corp. Code § 204(a)(10), Del. Code Ann. tit. 8 § 102(b)(7), and NRS § 78.138(7).  While it might be assumed that these statutes are generally similar, Nevada’s statute differs in two…

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