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CALIFORNIA CORPORATE & SECURITIES LAW

California And Delaware Corporate Law Differ In Many Respects, Including The Authority Of Committees

Both California and Delaware allow the formation of committees of the Board of Directors.  Both states also allow these committees to exercise the authority of the board, but with certain exceptions.  California, however, has far more exceptions than Delaware.  For example, California does not allow the board to delegate its authority with respect to the…

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Grammatical Gender And The General Corporation Law

Many, but not all languages, employ grammatical gender.  Anyone who has studied Spanish or German will know that grammatical gender is essential and can be unrelated to biological sex.  For example, el vestido is a masculine noun even though it denotes an article of clothing historically worn by women.  I still recall my High School Latin teacher explaining that even though a Roman legion was comprised of thousands of…

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Just How Many Ways Are There To Become A Director?

Lao Tzu (老子) is said to have written that there a many paths to enlightment, but how many paths are there to becoming a director?  To answer the question, let’s look at the definition of “directors” in the California General Corporation Law: “‘Directors’ means natural persons designated in the articles as such or elected by…

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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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The Legality Of Corporate Giving

According to the Chronicle of Philanthropy, the top three corporate philanthropists (Wells Fargo, Walmart and Chevron) in 2012 gave nearly $900 million in cash in 2012.  At the most fundamental level, do corporations have the power to make donations? For corporations governed by the California General Corporation Law, the answer is generally yes.  Section 207(e) of the California Corporations…

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“Wherever You Go, There You Are”, But Will You Be In The Proper County?

The California General Corporation Law makes numerous references to the “proper county”.  For example, Corporations Code Section 304 empowers the superior court of the proper county to remove a director in specified circumstances at the suit of shareholders holding at least 10 percent of the number of outstanding shares of any class.  Other sections referring to…

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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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Bitcoin And The Corporations Code

I’ve been seeing an increasing number of references to Bitcoin and other forms of virtual or crypto currencies in the news.  For example, Jeffrey Sparshott and Robin Sidel of the Wall Street Journal reported last week that the Department of Homeland Security had frozen the account “tied to the largest Bitcoin exchange”.  In March, the Financial Crimes Enforcement…

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When a Sale of Assets is not a “Sale-of-Assets Reorganization”

The California General Corporation Law (CGCL) contemplates three different types of reorganizations – a merger reorganization, an exchange reorganization, and a sale-of-assets reorganization.  Cal. Corp. Code § 181.  Chapter 12 of the CGCL prescribes both board and shareholder approval requirements for reorganizations, including sale-of-asset reorganizations. Readers of the CGCL, however, will note that Corporations Code…

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Will Delaware Exclusive Forum Bylaws Founder on the CGCL’s Rocks?

Many practitioners took note last spring when Vice Chancellor Laster wrote “if boards of directors and stockholders believe that a particular forum would provide an efficient and value-promoting locus for dispute resolution, then corporations are free to respond with charter provisions selecting an exclusive forum for intra-entity disputes.”  In Re Revlon, Inc. S’holders Litig.  Since then,…

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