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CALIFORNIA CORPORATE & SECURITIES LAW

Would Glass Lewis Have Anything To Do If It Were Consistent?

Ralph Waldo Emerson famously derided a foolish consistency, famously writing in his essay, Self-Reliance: “With consistency a great soul has simply nothing to do. He may as well concern himself with his shadow on the wall. Speak what you think now in hard words, and to-morrow speak what to-morrow thinks in hard words again, though it…

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California’s Corporations Code And Securities Rules Are Rife With Errors

Spring is the traditional season for cleaning and California’s Corporations Code and securities rules are desperately in need of some tidying up.  In a very quick and incomplete review of the Code and the Commissioner’s rules, I found the following: California Corporations Code Sections 5260, 9260 and 23000 refer to the “Internal Revenue Code of 1954”…

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Nevada Legislature Mulls Codification Of The Internal Affairs Doctrine

Delaware and Nevada are each in the business of marketing their corporate laws to businesses in other states.  Thus, it should surprise no one that these states don’t appreciate it when their legal offerings are undermined by other states.  One way to protect the franchise is by embracing the “internal affairs doctrine”. The internal affairs…

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Why An Understanding Of Officers As Agents May Be Important

In several recent posts, I have noted that officers, unlike directors, are agents of the corporation.  Recognizing the agency status of officers can affect the legal analysis in a number of significant ways, including: Choice of law.  California Corporations Code Section 2116 explicitly provides that the law of the jurisdiction of incorporation applies to the…

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Can The Board Remove A Director?

Can a board of directors remove one of its own?  In the case of a California corporation, the answer is no.  The power to remove directors is vested in the shareholders and the superior court pursuant to Corporations Code Section 303 and 304.  While technically not a removal, one option may be available to a…

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Synecdoche And The California Corporations Code

Synecdoche is a literary trope by which one refers the whole by a component, or vice versa.  The word is derived from an ancient Greek word, σuνεκδοχή, which means understanding one thing with another.  Although I was first introduced to the term in High School, I don’t ordinarily employ synecdoche in my legal writing.  Thus,…

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Why Some Delaware Corporations Should Be Careful About Relying On This Vice Chancellor’s Ruling

Francis Pileggi in his Delaware Corporate & Commercial Litigation Blog recently wrote that there is no per se duty on the part of a closely held company to disclose financial statements .  In The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Transcript) (Del. Ch. Feb. 25, 2016), former Vice Chancellor John W. Noble wrote:…

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A Question Of Nomenclature – The GCL Versus The CCC

A colleague recently asked me why some Bylaws refer to both the California Corporations Code and the California General Corporation Law.  The simple answer is that these aren’t the same thing.  The General Corporation Law is a part of the Corporations Code, but only a part.  Cal. Corp. Code § 100(a) (“This division shall be known and…

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Are Charter Indemnification Provisions Contracts?

Public companies typically include provisions in their articles and bylaws that mandate indemnification of directors and officers.  Often, these provisions include a statement to the effect that the rights to indemnification are a contract right.  However, declaring that a contract exists does not necessarily establish a contract.  Fortunately, the California Civil Code provides some rules for…

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But Different Folk Have Different Views

Yesterday, I pointed out several ambiguities in Corporations Code Section 701 and offered some alternative interpretations.  Today, I heard from one reader who suggested some additional interpretations.  This reader suggests that “action” in Section 701(a) refers to the date on which the first request for consents is distributed or mailed to other shareholders.  While the statute doesn’t exclude this interpretation, I…

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