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CALIFORNIA CORPORATE & SECURITIES LAW

Does A Director Have A Contractual Right To Compensation?

Yesterday, I wrote about stockholder challenges to director compensation.  Today’s post considers what happens when a director joins a board.  When someone is invited to join a board, she may ask about compensation.  The company may refer the candidate to the disclosure regarding compensation in the company’s proxy statement.  When the candidate agrees to join…

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When It Comes To Director Compensation Claims, Nevada And Delaware Are Fundamentally Different

Since 1969, there has no question that directors of a Delaware corporation have the authority to set their own compensation.  8 DGCL § 141(h).  Having authority to do something, however, doesn’t mean that the use of that authority won’t be challenged, as was illustrated by newly appointed Chancellor Andre G. Bouchard’s ruling last month in Cambridge Ret. Sys.…

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Some Questions Boards Might Want To Ask When Considering Fee-Shifting Bylaws

1.  Is a fee-shifting bylaw facially valid under applicable law?  The Delaware Supreme Court has held that a fee-shifting bylaw adopted by a Delaware non-stock corporation is facially valid.  ATP Tour, Inc. v. Deutscher Tennis Bund, 2014 Del. LEXIS 209 (Del. May 8, 2014).  This decision does not bind courts in other states and they…

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Federal Court Rejects Court Of Chancery’s Privity Analysis

Two years ago, I wrote about La. Mun. Police Emples. Ret. Sys. v. Pyott, 46 A.3d 313 (Del. Ch. 2012) in which Vice Chancellor J. Travis Laster refused to give preclusive effect to federal district court’s dismissal of a derivative action.  See Delaware Court of Chancery “Overrules” Federal Court.  Among other things, the Court of Chancery…

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How Broad Was That Bylaw?

In yesterday’s posting, I noted a recent Form 8-K filing that discloses the adoption of a fee-shifting bylaw.  In  ATP Tour, Inc. v. Deutscher Tennis Bund, 2014 Del. LEXIS 209 (Del. May 8, 2014), the Delaware Supreme Court held that a fee-shifting provisions in a non-stock corporation’s bylaws can be valid and enforceable under Delaware law.  In reaching this…

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Public Company Adopts Fee Shifting Bylaw

The Delaware Supreme Court caused quite a stir when it concluded that a fee shifting bylaw adopted by a non-stock corporation did not run afoul of the Delaware General Corporation Law.  ATP Tour, Inc. v. Deutscher Tennis Bund, 2014 Del. LEXIS 209 (Del. May 8, 2014).  The Delaware legislature threatened to put the kye-bosk on this type of bylaw but it…

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Federal Court Rules Boilermakers Didn’t Decide All Issues And Orders Company To File A Form 8-K

At first glance, the plaintiff’s position in Bushansky v. Armacost, 2014 U.S. Dist. LEXIS 88072 (N.D. Cal. June 25, 2014) seems a bit peculiar.  The plaintiff had filed suit challenging Chevron Corporation’s adoption of an exclusive forum bylaw.  However, U.S. District Court Judge William H. Alsup stayed the action pending resolution of a pending proceeding…

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When “All” Doesn’t Necessarily Mean “All”

In Who Can’t Raise Capital?: The Scylla and Charybdis of Capital Formation, 102 Ky. L.J. 1 (2013-2014), Duke University Professor James D. Cox tackles the widespread criticism of state blue sky laws as barriers to capital formation.  Along the way, he critique’s California’s limited offering exemption (Corp. Code § 25102(f)) as follows: It is ironic, if…

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Californians May Vote This November On Whether To Overturn Citizens United

Although state law does not explicitly authorize advisory elections, the California legislature is poised to pass a bill calling a special election for this November for an advisory vote.  SB 1272 (Lieu) would submit the following question to the voters: “Shall the Congress of the United States propose, and the California Legislature ratify, an amendment…

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How Confused Is This? California Defines LLCs Subject To New Law To Include Foreign LLCs

The California Revised Uniform Limited Liability Company Act. which took effect on January 1 of this year, provides the statutory framework for the formation and operation of limited liability companies.  The law appears to distinguish between a “limited liability company” and a “foreign limited liability company”.  As might be expected, a “limited liability company” is defined…

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