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CALIFORNIA CORPORATE & SECURITIES LAW

FTB Publishes Disinformation About Corporations

Recently, I happened across a summary of the “key features” of a corporation on the California Franchise Tax Board’s website.  Recognizing that it is always a challenge to summarize accurately complex legal matters, I do beg to differ with some of the FTB’s assertions. A corporation must register with the California Secretary of State before conducting…

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Putting These Provisions In Bylaws Won’t Be Sufficient

Section 202 of the California Corporations Code lists those provisions that must be included in a California corporation’s articles of incorporation in order for them the be accepted by the Secretary of State for filing.  There are a number of other provisions that although not required to be included in the articles won’t be effective…

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California Proposes To End Bylaw Amendment Reviews

Credit Unions got their start in Nineteenth Century Germany.  In 1909, Roman Catholic textile workers opened the first credit union in the United States, St. Mary’s Cooperative Credit Association (later, renamed La Caisse Populaire Ste.-Marie).  At first, the credit union operated out of the home of its first president, Joseph Boivin.  Today, that building is the site of America’s Credit Union Museum. …

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California And The “Entitled To Vote” Standard

Recently, I came across a proxy statement for a California corporation that stated the vote required for shareholder action on several proposals was “the affirmative vote of the majority of the shares represented at the Annual Meeting and entitled to vote on such matter”.  While this statement was consistent with the voting standard enunciated in…

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The Principal Executive Office – It’s Not Just About Venue

Last week, I wrote about the venue implications of the location (or lack of) a corporation’s principal executive office.  The location of a corporation’s PEO isn’t just about venue, however.  Numerous provisions of the California General Corporation Law make reference to the location of the corporation’s PEO. Section 213, for example, requires every corporation to…

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Who Signs The Bylaws?

I am occasionally asked who should sign the bylaws.  The question presumes that bylaws must be signed.  Although the California General Corporation Law requires that the original or a copy of the bylaws be available to shareholders (Section 213), it does not require that corporate bylaws be signed.  Indeed, it could be argued that the…

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Drafting Bylaws – Four Things To Consider

Four points to consider when drafting these often crucially important, but tiresome, documents: Distinguish among Shall/Will/Must. I often cite Bylaws as an example of how “shall” may sometimes mean “must” while other times may mean “may”.  See When Shall/Will/Must/May We Meet Again? Remember the Articles!  Occasionally, I come across bylaw provisions that are inconsistent with the articles of incorporation. …

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He Had A Vice President’s Title And The Company Identified Him As “Management”, But He Was No Officer

Delaware attorney Francis Pileggi recently wrote about a ruling in the Court of Chancery concerning Nevada’s private corporation law.  The case, Eric Pulier v. Computer Sciences Corp., et al., C.A. No. 12005-CB, hearing (Del. Ch. May 12, 2016), arose from Computer Science Corporation’s acquisition in 2013 of Agility Platform, Inc., which was formerly known as ServiceMesh, Inc. After…

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Why Some Delaware Corporations Will Want To Waive This California Statute

In yesterday’s post, I commented on a recent ruling by former Vice Chancellor John W. Noble to the effect that “Delaware disclosure law which generally does not require disclosures to shareholders unless shareholder action is sought”.  The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Transcript) (Del. Ch. Feb. 25, 2016). …

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It’s Time To Put A Stop To Fee-Shifting (But Not In the Way You Might Think)

The problem with “fee-shifting bylaws” starts with the name.  A better name might be “anti fee-shifting bylaws” because they end the fee shifting that otherwise applies.  Without fee-shifting bylaws, plaintiffs’ attorneys are encouraged to bet with the stockholders’ money.  This is, of course, unfair to the stockholders.  Society also suffers because the current fee-shifting regime…

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