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CALIFORNIA CORPORATE & SECURITIES LAW

Court Refuses To Break Board Deadlock By Appointing A Provisional Director

Section 308 of the California Corporations Code provides for the appointment of a provisional director when a corporation has an even number of directors who are equally divided and cannot agree as to the management of the corporation’s affairs, so that its business can no longer be conducted to advantage or so that there is danger that…

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You Say Collectable, I Say Collectible

Recently, I circulated a draft agreement that included a representation that a party’s receivables were collectible.  The other side returned a draft that modified the representation and changed the spelling to “collectable”.  Which is correct? First, I checked to see how the word is spelt by the California courts.  Below are the results for published…

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Court Of Chancery Rejects Delaware Choice Of Law

The public policies of California and Delaware both espouse freedom.  Ironically, the freedoms that they espouse are antithetical to each other.  California embraces the freedom of people to pursue any lawful and employment of his or her choice.  Hence, Section 16600 of the California Business & Professions Code declares, with narrow exceptions, covenants not to…

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Applying Today’s Statute To Yesterday’s Offer And Sale

In September 2013, Governor Jerry Brown signed SB 538 (Hill) into law.  This bill fundamentally rewrote a key anti-fraud provision of the Corporate Securities Law of 1968 – Corporations Code Section 25401.  At the time, I cast a chary eye on the amendment and predicted that it would lead to judicial confusion.  See California Creates Complete…

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These Data Show Nevada Rising And California Sinking

A recent paper by Matthew D. Cain, an economic fellow at the Securities and Exchange Commission, Stephen B. McKeon, an Assistant Finance Professor at the University of Oregon, and Steven Davidoff Solomon, a Professor of Law at the  University of California, Berkeley – School of Law provides strong evidence that Nevada is succeeding in attracting…

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Court Of Appeal Decides Against Arbitration Bylaw Amendment

Much has been written of late about the enforceability of exclusive forum bylaws.  What happens when the forum isn’t a court, but an arbitration?  Does it make any difference if the arbitration bylaw is adopted after a dispute has arisen?  The Fourth District Court of Appeal tackled these questions in an opinion issued yesterday.  Cobb…

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California AG Declares Whistleblower Tally A State Secret

Since 2004, the California Attorney General has been required to maintain a whistleblower hotline to receive calls from persons who have information regarding possible violations of state or federal statutes, rules, or regulations, or violations of fiduciary responsibility by a corporation or limited liability company to its shareholders, investors, or employees.  Cal. Labor Code §…

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Victims Of Corporate Fraud Compensation Fund

In the waning days of the 2001-2002 legislative session, then Assemblymember Kevin Shelley gutted and amended AB 55. As introduced, AB 55 would have amended the Elections Code. Instead, AB 55 became the vehicle for the enactment of the deeply flawed California Corporate Disclosure Act, Cal. Corp. Code § 1502.5.   AB 55 also created The…

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Commissioner Ponders Whether To Exempt Real Estate Brokers From Investment Adviser Registration

Last week, the Commissioner of Business Oversight issued an invitation for comment on whether to exempt real estate brokers from the investment adviser certification requirement under the Corporate Securities Law of 1968.  The exemption would require a real estate broker to be operating under the scope of a license issued by the Bureau of Real…

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Magna Carta Friday – King John Guarantees The Freedom Of The English Church

As I’ve mentioned, this year marks the 800th anniversary of the sealing of the Magna Carta by King John at Runnymede.  I previously posted the introduction and my translation of the original Latin of the 1215 version.  Today, I continue with the King’s guarantee of the freedom of the English Church, which was then in…

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