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CALIFORNIA CORPORATE & SECURITIES LAW

Nevada Seizes Delaware’s Business Entity Formation Crown

Delaware has long dominated the market for incorporations.  Thus, I was surprised to see University of Nevada Law Professor Eric H. Franklin write that Nevada enjoys a 4 to 1 advantage over Delaware in corporate formations.  If this seems inexplicable, there is an explanation.  Delaware accounts for three times as many business formations as Nevada.…

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Benefit Corporation Files For Initial Public Offering

A few years ago, I participated in the drafting of California’s Flexible Purpose Corporation Act, Cal. Corp. Code § 2500 et seq.  In 2014, the legislature changed the name to “Social Purpose Corporations Act”.  SB 1301 (DeSaulnier).  The purpose of the act was (and still is) to provide an alternate form of corporation that provided greater flexibility…

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Does Brewing Beer Positively Impact Society And The Environment?

California, like many other states, has enacted legislation allowing for the formation of benefit corporations.  Cal. Corp. Code § 16400 et seq.  Technically, a benefit corporation is a corporation formed under the General Corporation Law that has elected to be governed by the Benefit Corporation Law.  One requirement of the Benefit Corporation Law is that the corporation…

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Directors May Be Invested With Super Powers In Nevada But Not California

Directors With Super Powers Sometimes investors would like to endow one or more directors with greater voting powers.  This is possible with a Nevada corporation by virtue of NRS 78.330(3) which provides ” The articles of incorporation may provide that the voting power of individual directors or classes of directors may be greater than or less than that of any other…

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Forming A Benefit Or Flexible Purpose Corporation? Some Pitfalls To Avoid

In previous blogs, I’ve noted the appearance of two new types of California corporations – the flexible purpose corporation and the benefit corporation.  Because the laws creating both of these forms took effect on January 1, organizers have been forced to draft on a tabula rasa.  Here are a few drafting pitfalls that have come to my attention.…

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Governor Brown Signs Flexible Purpose And Benefit Corporation Bills – Confusion To Follow

A Tale of Two Bills In an action that is likely to lead to concern, confusion and consternation, Governor Brown has signed not one, but two bills that will allow for the formation of corporations that combine profitability with public or other purposes. Flexible Purpose Corporations SB 201 (DeSaulnier) was the handiwork of a working group of lawyers…

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A Competing Flexible Purpose Corporation Bill?

In this post last week, I identified AB 361 as a “spot” bill introduced by Assembly Member Jared Huffman.  As explained in this post from last June, a spot bill is a bill that would make non-substantive changes to a particular code or law in order to serve as a placeholder so that the bill…

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