40% Is Less Than A Majority But Can It Be “Control”?

Yesterday’s post concerned the Court of Appeal’s opinion in Busse v. United Panam Financial Corp., 2014 Cal. App. LEXIS 11 (Cal. App. 4th Dist. Jan. 8, 2014) holding that shareholders may not pursue monetary damages under Section 1312(b) of the California Corporations Code.  That statute applies if “one of the parties to a reorganization or short-form

Court Of Appeal Says Legislature Was “willing to tolerate some dead cats to keep management honest.”

Chapter 13 of the California General Corporation Law establishes the rights of “dissenting shareholders” (defined in Section 1300(c)) to demand payment of cash for their shares in reorganizations and short-form merger transactions. Section 1312(a) generally provides that these shareholders do not have any right at law or in equity to attack the validity of these

Is LLC Veil Piercing Really “Not Required By Statute”?

Professor Stephen Bainbridge begins his abstract Abolishing LLC Veil Piercing with the following assertion: Courts are now routinely applying the corporate law doctrine of veil piercing to limited liability companies.  This extension of a seriously flawed doctrine into a new arena is not required by statute and is insupportable as a matter of policy. But is

Commissioner Adopts Rewrite Of Investment Adviser Custody Rule

To many, the words “custody” and “hide” would seem to have absolutely nothing in common.  Etymologically speaking, however, they are cognates (blood relatives).  Their common ancestor is the Proto-Indo-European etymon – “(s)keu”, meaning to cover or hide.  In Latin, this word became “custos”, meaning a guardian.  It’s easy to see how the “(s)keu” might become “custos” because they both include

Finders Bill Finds Some Forward Transaction

Finders in securities transactions are common but their legal status is uncertain at best.  Last year, I wrote that Assembly Member Donald P. Wagner had introduced a bill, AB 713, to statutorily homologate the status of finders in California.  See Eureka! Bill Introduced To Homologate Finders.  The bill was set for hearing last April, but the author

For Executives, This May Have Been The Most Frightening Holding Of 2013

Recently, I wrote about the Court of Appeal’s holding in Asahi Kasei Pharma Corp. v. Actelion Ltd., 2013 Cal. App. LEXIS 1017 (Cal. App. 1st Dist. Dec. 18, 2013).  Because it was the holidays, I’m not sure that the case received the attention that it deserves.  In a nutshell, the Court held that managers of a parent

Secretary Of State Changes Forms And Procedures For LLC Filings

Novelty does not mean better.  With the change from 2013 to 2014, California repealed, albeit unconstitutionally, the Beverly-Killea Limited Liability Company Act (former California Corporations Code sections 17000 – 17657), and installed in its place the California Revised Uniform Limited Liability Company Act” (California Corporations Code sections 17701.01 – 17713.13).  See California’s New LLC Act – Call

Simply Getting Stiffed On A Judgment May Be An Inequitable Result

What happens when you sue someone who is judgment proof?  One solution may be to ask the trial court to amend the judgment to add additional judgment debtors.  Now, it may seem unusual to be able to add judgment debtors who were not part of the litigation.  The procedure, however, is equitable and is based

Assembly To Consider Mandatory Indemnification Of LLC Agents

The California legislature operates on a two-year schedule.  Cal. Const. Art. IV, Sec.3(a).  The legislature will convene for the second year of the current biennium next Monday (Jan. 6).  J.R. 51(a).  One immediate job for the returning legislators will be to consider pending bills introduced in the first year.  Under the Joint Rules of the

CalPERS’ Offbeat Personal Trading Policy

Yesterday’s post discussed a news report of an SEC inquiry into insider trading by CalPERS.  Rather than being abashed by this news, CalPERS responded by congratulating itself on having implemented a personal trading policy. As but one example of the muddle that is this policy, CalPERS defines a “Private Placement Vehicle” as an offering of securities