Welcome To California: No Foreign Corporations Need Apply

California continues to hemorrhage corporate charters to Delaware and Nevada.  The most recent potential emigrant is SJW Corp. which filed this proxy statement last week seeking shareholder approval of a reincorporation from California to Delaware.  Can California and other states stanch the flow by offering licenses only to domestic corporations? Surely, there must be some

Substantial, Systematic, And Continuous Contacts Do Not Establish General Jurisdiction

California courts may exercise personal jurisdiction over nonresidents “on any basis not inconsistent with the Constitution of this state or of the United States”.  Code Civ. Proc. § 410.10.  Seventy years ago, Chief Justice Harlan Fiske Stone described the constitutional standard in terms of whether the out-of-state person had certain minimum contacts with the forum state such that the maintenance

California Bar Committee Publishes Venture Capital Sample Opinion

The Opinions Committee of the Business Law Section of the California State Bar recently published a sample opinion for venture capital financing transactions.  In a sad testament to the lowly status of the California General Corporation Law, the committee chose the model of a Delaware, not California, corporation issuing preferred stock.   The sample opinion

The “Long Arm” Of Section 2115 May Be Shorter Than Some Believe

Recently, I came across a prospectus that included a description of California Corporations Code Section 2115 under the caption “Description of Capital Stock”.  The description began: We are a Delaware corporation, governed by the Delaware General Corporation Law; however, our headquarters, property and officers are located in California.  Section 2115 of the California Corporations Code

This Stockholder Would Rather Fly To Delaware Than Drive To L.A.

Yesterday’s post mentioned the recent Delaware Supreme Court decision in United Techs. Corp. v. Treppel, 2014 Del. LEXIS 608 (Del. Dec. 23, 2014).  The case involved an inspection demand under Section 220 of the Delaware General Corporation Law.  The corporation sought to require the stockholder to agree to a confidentiality provision that essentially required that all

Stockholder Inspections Of Delaware Corporations In California

In United Techs. Corp. v. Treppel, 2014 Del. LEXIS 608 (Del. Dec. 23, 2014), the Delaware Supreme Court held that the Court of Chancery had authority to condition a stockholder’s inspection under Section 220 of the Delaware General Corporation Law upon the stockholder’s agreement  that “any claim, dispute, controversy or causes of action . . .

Facebook/Oculus VR Acquisition Raises Pseudo-Foreign Corporation Question

Yesterday, The Guardian reported that Facebook had acquired Oculus VR using a combination of cash and stock.  Facebook avoided SEC registration by availing itself of a fairness hearing before the Department of Business Oversight.  Readers may recall, that Facebook used the fairness hearing process in 2011 to acquire Instagram. In reviewing the notice of hearing,

And You Thought Dissenters’ Rights Didn’t Apply To Delaware LLCs

Delaware’s Limited Liability Company Act provides that a limited liability company agreement or an agreement of merger or consolidation or plan of merger may provide for appraisal rights.  6 Del. Code § 18-210.  Does this mean that a Delaware LLC with no such provision need not worry about dissenters’ rights?  Not necessarily.  Article 11 of

Court Of Appeal Holds Breach Of Fiduciary And Conflict Of Interest May Be Grounds For Summary Election Challenge

Section 709 of the California Corporations Code creates a summary procedure that allows any shareholder or any person who claims to have been denied the right to vote to petition the Superior Court for a determination of the validity of any election or appointment of any director.  The court may determine the person entitled to the office of

Another Possible Exception To Exclusive Forum Bylaws

Yesterday, I discussed several vulnerabilities of exclusive forum bylaws should they be challenged in California.  The California General Corporation Law includes many provisions that expressly subject foreign corporations to the jurisdiction of California’s superior court.  Section 709 is one such statute. In general, Section 709 requires the Superior Court to try and determine the validity of