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CALIFORNIA CORPORATE & SECURITIES LAW

Incorporating In Delaware May Not Eliminate Director Liability Under This California Statute

Some readers may have skipped this week’s posts discussing director liability under California Corporations Code Section 316 on the theory that the statute applies only to directors of corporations incorporated under the General Corporation Law.  That could be a big mistake.  California’s pseudo foreign corporation statute, Corporations Code Section 2115, applies Section 316 to foreign…

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What Law Governs Real Property Conveyances By Foreign Corporations?

Consider the following fact pattern: Joe is the Chief Executive Officer of Transient, Inc., a Delaware corporation that is headquartered in Dallas, Texas.  Transient’s sole asset is 100 acres of undeveloped land in California.  Without consulting, much less obtaining the authorization of Transient’s board of directors or stockholders, Joe enters into a land sales contract…

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New California Law Threatens To Destroy Plan Uniformity

Companies often include a choice of law provision in their equity and other compensation plans.  Some companies include a choice of law  in the award agreement, either in lieu of, or in addition to, the plan document.  Specifying applicable law helps to ensure that plans are consistently interpreted and applied.  Uniformity may be particularly important…

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Does California Corporate Law Really Govern 20% of All Public Companies?

On Tuesday, the Deal Professor (aka Berkeley Law School Professor Steven Davidoff Solomon) wrote an interesting column for The New York Times’ Dealb%k.  According to the Professor, California is the headquarters state for 20% of all companies with securities listed on the New York and Nasdaq stock exchanges.  He finds this number particularly impressive in light…

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Why Delaware Corporations Should Worry About California Law When Making Dividends

When paying a dividend to shareholders, California corporations are subject to Chapter 5 of the California Corporations Code.  Corporations incorporated in Delaware and other states may also be subject to Chapter 5 if they meet the conditions of Corporations Code Section 2115, California’s pseudo-foreign corporation statute.  Section 2115 excepts companies with outstanding companies listed on…

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Inspecting Foreign Corporation Shareholder Lists

Recently, I’ve written about the “absolute” right of shareholders to inspect the shareholders list pursuant to California Corporations Code Section 1600.  Readers at, or representing, foreign corporations may have skipped these posts as inapposite to their circumstances.  That could be a mistake. A foreign corporation may be subject to Section 1600 if it meets the conditions set…

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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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Why Some Delaware Corporations Will Want To Waive This California Statute

In yesterday’s post, I commented on a recent ruling by former Vice Chancellor John W. Noble to the effect that “Delaware disclosure law which generally does not require disclosures to shareholders unless shareholder action is sought”.  The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Transcript) (Del. Ch. Feb. 25, 2016). …

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Why Some Delaware Corporations Should Be Careful About Relying On This Vice Chancellor’s Ruling

Francis Pileggi in his Delaware Corporate & Commercial Litigation Blog recently wrote that there is no per se duty on the part of a closely held company to disclose financial statements .  In The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Transcript) (Del. Ch. Feb. 25, 2016), former Vice Chancellor John W. Noble wrote:…

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9th Circuit Holds Subsidiary Could Be The General Manager Of Its Parent

Section 2110 of the California Corporations Code governs service of process on a foreign corporation.  One means of valid service under the statute is by delivering process by hand to the corporation’s general manager in California.  The California General Corporation Law, however does not define “general manager”.  In Miller v. The Public Warehousing Company KSC…

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