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CALIFORNIA CORPORATE & SECURITIES LAW

Thinking About Converting? You May Need The Commissioner’s Approval!

In 1999, the Business Law Section of the California State Bar sponsored AB 197 (Ackerman).  That bill established a comprehensive scheme under the California Corporations Code for the conversion of limited partnerships and limited liability companies into other forms of business entities.  The bill, however, did not address the application of the Corporate Securities Law…

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SEC’s Proposed Whistleblower Rules Will Eviscerate Compliance Programs

Last month, I wrote about California’s whistleblower hotline in this post.  In early November, the Securities and Exchange Commission issued proposed rules for implementing the whistleblower provisions of Section 21F of the Securities Exchange Act of 1934, which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Section 21F requires, subject to various conditions, that…

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LLC Contractor Licensing – “We’re Not Even Talking About That.”

I’ve welcomed the enactment of SB 392 (Florez) which authorizes the Contractors’ State License Board to issue contractor’s licenses to limited liability companies.  Potential LLC licensees should note, however, that SB 392 imposes significant surety bond and liability insurance requirements on LLC’s.  Because SB 392 takes effect in a few weeks, I called the CSLB to ask…

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California’s Big EASI

My friend, Bill Twomey, suggested a post describing how to get copies of securities and franchise filings made with the Department of Corporations.  It’s actually pretty easy.  The DOC maintains the California Electronic Access to Securities Information and Franchise Information (aka Cal-EASI) database.  With Cal-EASI, you can search for filings from July 25, 2002 by company name, federal…

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Where Are CalPERS’ Placement Agent Disclosure Regulations?

In September 2009, I submitted a petition to the California Office of Administrative Law (OAL) for a determination that CalPERS’ placement agent disclosure guidelines constituted illegal, underground regulations.  Although the OAL accepted my petition, CalPERS short circuited a determination by certifying that it would not enforce its guidelines.  My position was not that CalPERS should…

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“One Man Is As Good As Another Until He Has Written A Book”

A few years back, I had the great pleasure of serving with Bruce Dravis as Co-Chairman of the Corporations Committee of the Business Law Section of the California State Bar.  The American Bar Association’s Business Law Section will soon be releasing a new and updated version of Bruce’s book on independent directors – The Role of Independent Directors in Corporate Governance. …

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“It must be confessed! It WILL be confessed! There is no refuge from confession . . .”

In 2003, California Senator Martha Escutia introduced a bill to make “technical nonsubstantive changes” to a provision of the California Civil Code dealing with construction defects.  The bill passed out of the Senate and the Assembly without attracting a single vote of opposition.  However, a funny thing happened on the bill’s journey downstairs to the Governor’s office –…

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Just What Is An Initial Transaction Statement?

When shares of a California corporation are subject to a restriction on transfer or other specified conditions, Section 418 of the California Corporations Code requires that this fact “appear on the certificate, the initial transaction statement, and written statements”.  This, of course, raises the question of what the Code is talking about when it refers to…

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Secondary Trading In Private Company Shares

In this blog posting from last June, I mentioned briefly the phenomenom of secondary trading in the shares of companies not subject to the periodic reporting requirements of the Securities and Exchange Commission.  In this article for the Daily Journal, I mentioned some legal issues and risks associated with the practice.  California, for example, requires qualification…

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“This Is Not The Way Criminal Law Is Supposed To Work.”

Last week, the Ninth Circuit Court of Appeals issued its opinion in U.S. v. Goyal, No. 08-1436 (Dec. 10, 2010).  This case involved an appeal by the former Chief Financial Officer of Network Associates, Inc. (now known as McAfee, Inc.).  This unfortunate individual was indicted, tried and convicted of one count of securities fraud, seven…

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