Corporation Owes No Duty To Warn Former Director Of Impending Option Expiration

Does a corporation commit constructive fraud if it fails to warn a former director of the impending expiration of a stock option?  That was one question decided earlier this month by Judge Jennifer A. Dorsey in  Nelson v. FluoroPharma Med., Inc., 2016 U.S. Dist. LEXIS 1270 (D. Nev. Jan. 4, 2016).  In granting summary judgment for the

The Most Important Principles of Delaware Corporate Law Can’t Be Found In the DGCL

I have often observed that you can read every section of the Delaware General Corporation Law and learn almost nothing about Delaware corporate law.  Here are three of the most fundamental principles of Delaware corporate law that you won’t find in the DGCL: The business judgment rule.  This venerable presumption is derived from, but not stated

Nevada Supreme Court Opines On Scope Of Debtor’s Exemption For Stock

NRS 78.746 provides that, with several qualifications, the exclusive remedy of judgment creditors with respect to the stock in a relatively closely held corporation is to charge a stockholder’s shares.  To the extent so charged, the creditor only has the rights of an assignee of the shares.  This means that a judgment creditor has rights

Complaint To Administrative Agency Does Not Support Abuse of Process Claim But May Be A Nuisance

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Bonnie Springs Ranch sits below towering and very picturesque Aztec Sandstone cliffs a few miles outside of Las Vegas, Nevada.  After terminating a contract to sell some adjacent land, Bonnie Springs alleged that that buyer abused process by filing a citizen’s complaint with the county commissioner for the ulterior purpose of coercion.  As a result of

Was This Director Duly Elected Or Appointed?

Suppose that a corporation’s bylaws includes the following two provisions: 1.  The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by the Board. 2.  Unless otherwise provided in the Articles of Incorporation or in these bylaws, vacancies and newly-created directorship [sic] resulting from any

Failure To Follow Up Demand Dooms Derivative Suit

Shareholders wanting to pursue a derivative suit all come to the same fork in the road.  One fork is to make a demand.  The other is to file a lawsuit and allege that demand would have been futile.  Most plaintiffs choose the latter because the act of making the demand terminates their ability to pursue

Nevada Enacts Provisions Permitting Ratification Of Corporate Acts

Etymologically, one might view the meaning of “ratify” as to make as one had thought.  It is derived from two Latin words – ratus (the past participle of the verb meaning to think) and facere (the infinitive of the verb meaning to make).  Two years ago, Delaware added two statutes intended to facilitate ratification of corporate

Nevada Corporate Law: What’s Wrong With Expedition?

As someone who has been writing about Nevada corporate law for over two decades, I’ve been somewhat amused by the recent “discovery” of the Silver State as an alternative to Delaware.  Writing for The Wall Street Journal, Liz Hoffman observed that Nevada is the second most popular state after Delaware for public company incorporations.  This prompted

Will You Be Gulled By This Notice?

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Some Nevada corporations have been receiving the above notice and paying a $150 fee to the Division of Corporate Services.  According to the Nevada Secretary of State: This is not an official notice from the Secretary of State’s office.  Nevada entities are not required to regularly provide to the Secretary of State shareholder information or

No Calm In Delaware After Calma v. Templeton

In derivative suits, cases are essentially lost and won at the motion to dismiss stage.  Unless the defendants succeed in winning dismissal, they must confront an unhappy choice between continued litigation with all of its costs and risks or a settlement that “feeds the bulldog”.  Thus, the Delaware Court of Chancery’s rulings in Calma v. Templeton,