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CALIFORNIA CORPORATE & SECURITIES LAW

The Securities Fraud Device That The Legislature Devised To Omit

Last year, Senator Jerry Hill authored a bill, SB 538, which rewrote Corporations Code Section 25401.  As I posted, the underlying premise was fanciful at best – that California’s statute “has failed to keep up with similar language in federal anti-fraud statutes”.   By metamorphosing Section 25401 from a statute based on Section 12(a)(2) of…

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What Exactly Was The Legislature Trying To Say?

Section 17703.04(a) is one of many bizarre provisions in California’s new Revised Uniform Limited Liability Company Act: (a) All of the following apply to debts, obligations, or other liabilities of a limited liability company, whether arising in contract, tort, or otherwise: (1) They are solely the debts, obligations, or other liabilities of the limited liability company to…

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Some Corporations Code Mysteries

While many disagree with the policy choices made by the drafters of the California General Corporation Law, I think many would agree that the GCL is well drafted from a technical perspective.  I find it far better organized and accessible than Delaware’s code.  Nonetheless, there are a few mysteries that I find intriguing and at…

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Just What Does “Deem” Mean?

The Legislature likes to deem things, but what does it really intend when it does so?  Consider the following examples: “When an involuntary proceeding for winding up has been commenced, the jurisdiction of the court includes: . . . The making of orders for the bringing in of new parties as the court deems proper for…

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Before This LLC Was Formed, These Members Knew It

The new California Revised Uniform Limited Liability Company Act contains some weird inversions of time and logical order.  For example, it allows for the formation of an operating agreement even before an LLC is formed.  In defining “operating agreement”, the CRULLCA provides that the term “may include, without more, an agreement of all members to…

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The Odd Case Of The Unformed Applicant And The Non-Complying Name Holder

Suppose you are forming an LLC and have even settled on the perfect name.  Alas, the Secretary of State’s office refuses to file the articles of organization because your perfect name is so perfect that someone has already bestowed it on an LLC.  Although people can, and do, have the exact same name, the legislature simply won’t tolerate it…

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Another Reason Not To Like California’s New LLC Act

Suppose Bob asks his lawyer, Paul, to form an LLC under California’s new Revised Uniform Limited Liability Company Act.  Paul’s paralegal, Natalie, signs the Form LLC-1 as the organizer. Natalie then quits work and claims that the LLC was to have a single member – herself.  Bob agrees that the LLC was to have one…

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Another Modest Proposal – Risk Factors

This week, Broc Romanek launched CorporateAffairs.tv.  No, it’s not a live video feed of boardroom dalliances.  One of Broc’s first videos, Dramatic Risk Factors: We Face Competition (Vol. 1), inspired me to write about an idea that has been percolating in my cranium for some time. As Broc so entertainingly points out, many risk factors, such…

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This Interest May Be Common, But It’s Still Privileged

Section 954 of the California Evidence Code establishes a privilege “to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer”.  A “confidential communication between client and lawyer” is defined in Section 952 of the Evidence Code.  Under that statute, the presence of third persons does not result always…

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OAH Seeks Opinion Regarding Appearances By Non-Attorneys and Out-of-State Attorneys

I’ve written on several occasions about the Office of Administrative Law.  It should not be confused with the Office of Administrative Hearings.  The OAH provides administrative law judges who conduct hearings for over 1500 state and local government agencies.  In many cases, although the hearings are quasi-judicial, non-attorneys and out-of-state attorneys often appear on behalf of…

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