California And Nevada Corporations Can Do This But Not Delaware Corporations

Sometimes it’s nice to tidy up the corporate stock book.  For example, a corporation may effect a stock split and want to collect the outstanding certificates and exchange them for new certificates reflecting the change.  California and Nevada provide a mechanism for this Delaware does not. California Corporations Code Section 422(a) provides: When the articles are

Three Questions To Ask Before Incorporating In Delaware

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In the business world it was once commonly said that “no one ever was fired for buying IBM”.  Given Delaware’s preeminent market share, the same thinking may underlie a recommendation to incorporate there.  Before making that recommendation, I encourage you to consider the following three questions: Does the corporation want to pay a lot more money in

Court of Appeal Says Same Counsel Can’t Represent Corporation And Individual Defendants in Derivative Suit

Derivative suits put the corporation in the odd position of simultaneously occupying the position of a defendant and plaintiff.  When the suit is initiated, the corporation is named as a nominal defendant.  If, however, the suit is allowed to proceed, then the corporation is the “real” plaintiff.   What does this mean for attorneys who seek

Verifying The Identity Of Directors

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Sometimes, you just can’t be sure whether about the identity of a corporation’s directors.  Doubt can arise for a number of reasons.  Corporate records may be lost entirely.  Corporate records may be incomplete or inconsistent.  Corporate formalities may have been ignored.   In a sea of doubt, how does one find a safe harbor of certitude? California

Why Is California’s Derivative Suit Statute Stuck In 1977?

California Corporations Code Section 800 governs derivative suits brought by both domestic and foreign corporations.  The statute provides a modicum of protection to defendants by establishing a procedure by which either the corporation or an individual defendant may move the court to require the plaintiff, as a condition to maintaining the action, to supply a

California Finders Exemption Has Yet To Catch On

Last October, Governor Brown signed AB 667 (Wagner) into law.  The bill, which was thefor “finders” product of the efforts of the Corporations Committee of the Business Law Section of the California State Bar, created a statutory “finders” exemption from California’s securities broker-dealer registration requirement.  It is important to recognize that the bill defines “finder” with particularity and not

Investment Advisor or Investment Adviser?

Even though the federal statute is named the Investment Advisers Act of 1940, persons regulated by that act often refer to themselves as “advisors” and not “advisers”.  Which is spelling is correct? In English, we use both the –er and –or as endings to create agent-nouns.  For example, the verb “create” becomes the agent-noun “creator”.  The question

Should Church Debt Be Exempt From Qualification?

The California Corporate Securities Law of 1968 currently exempts from qualification any security of an issuer (1) organized exclusively for educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes and not for pecuniary profit, if no part of the net earnings of the issuer inures to the benefit of any private shareholder or individual, or (2)

What Does Americold Realty Trust Have To Do With Rule 147?

Under Article III, Section 2 of the U.S. Constitution, the judicial power of the federal courts may extend to, among other things, controversies between citizens of different states.  When a party is a trust, in what state is the trust a citizen for purposes of the diversity jurisdiction of the federal courts?  There are several

Bill Aims To Negate Scienter

You can thank the Romans for science and the English for knowledge The etymon of “scienter” is sciens which is the present participle form of the Latin verb meaning to know (scire).  The English word “know” is derived from the Old English verb, cnāwan, the present participle of which is cnāwende.  The roots of cnāwan can be traced back to