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CALIFORNIA CORPORATE & SECURITIES LAW

How Certain Can You Be Of A General Partner’s Authority?

In this post, Professor Douglas K. Moll attacks the question of whether a partner has “actual authority, simply as a matter of his ‘partner’ status, to bind the partnership to an ordinary business transaction”: On the one hand, RUPA [Revised Uniform Partnership Act] § 401(j) states that “[a] difference arising as to a matter in the ordinary…

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The High Price Of Trying To Enforce The Unenforceable

Readers of this blog will know that California marches to its own drummer when it comes to the enforceability of covenants not to compete. California Business & Professions Code Section 16600 declares these covenants void unless they fall within a statutory exception. Nonetheless, some companies continue to insist on including non-compete clauses in their agreements.…

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Why State Registration Of Security-Based Swaps Is Non-Existent

The regulation of “swaps” lies at the intersection of the commodities and securities regulation.  In the parlance of commodity regulation, a “swap” is a contract or transaction that provides for a payment dependent on an event or contingency “associated with” a financial, economic or commercial consequence.  7 U.S.C. § 1a(47).  A “security-based swap” is a “swap”…

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The Principal Executive Office – It’s Not Just About Venue

Last week, I wrote about the venue implications of the location (or lack of) a corporation’s principal executive office.  The location of a corporation’s PEO isn’t just about venue, however.  Numerous provisions of the California General Corporation Law make reference to the location of the corporation’s PEO. Section 213, for example, requires every corporation to…

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Why The Location Of The Principal Executive Office Matters

The California General Corporation Law does not require that a California corporation have a principal executive office located in California.  In fact, Section 177 explicitly contemplates that a corporation’s PEO may be located elsewhere or that the corporation may have no PEO at all.  The location of the PEO is not without significance, however.  Numerous…

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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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Hiring & Firing Officers In California

John Jenkins at The Mentor Blog addresses the question of who has authority to hire and fire officers?  He notes: The bottom line is that that the Board always has that authority. That’s because Delaware 141 says “the business and affairs of every corporation organized under this chapter shall be managed by or under the…

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Officers: Got Business Judgment Rule? Nevada Says Yes, Delaware Maybe Not

Francis Pileggi writes about a recent ruling by U.S. District Judge Sue L. Robinson in which she refused to consider whether the business judgment rule applied to officers of a Delaware corporation: Defendants have cited to no cases where a Delaware court has held that the business judgment rule applies to corporate officers; therefore, the court…

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The JOBS Act And The Convergence Of Private And Public Sales Under The UCC

Section 9610(b) of the California Commercial Code provides that if commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.  The Commercial Code, however, does not override applicable securities laws:…

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“Tandy Letter” Requests – RIP

Broc Romanek reported yesterday that the staff of the Securities and Exchange Commission will no longer require “Tandy Letter” disclaimers in responses to staff comments.   Among other things, the Tandy Letter policy required a company to state affirmatively that it would not raise the SEC review process and acceleration of effectiveness as a defense in any legal proceeding. …

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