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CALIFORNIA CORPORATE & SECURITIES LAW

What Every Delaware Unicorn Needs To Know About The California General Corporation Law

Recently, I came across a list of unicorns.  These are private companies with valuations of $1 billion or more.  I can’t vouch for the accuracy of the list, but I did recognize many of the names.  Many of the companies on the list shared two characteristics – they are incorporated in Delaware and headquartered in…

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What, Pray Tell, Is A “Foreign Corporation”?

Earlier this week, I wrote about Wellisch v. Pa. Higher Educ. Assistance Agency, 2017 U.S. Dist. LEXIS 40831 (N.D. Cal. Mar. 21, 2017).  The issue was whether the defendant, Pennsylvania Higher Education Assistance Agency, was required to register as a foreign corporation in the State of California.  The case turned on whether the defendant was…

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Interstate Versus Intrastate Business – What’s The Difference?

Some words are easily confused such as hyperthermia and hypothermia.  In the case of the former, one is overheated and in the case of the latter, one is not warm enough.  The difference becomes more understandable when one knows the roots of these two words.  Both use “thermia” which is derived from the Greek word for heat –…

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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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