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CALIFORNIA CORPORATE & SECURITIES LAW

Pay By Another Name Might Be Salt

Yesterday’s post concerned the classification of directors and officers as employees for purposes of California’s workers’ compensation law. Effective January 1, 2017, California Labor Code Section 3351(c) will define “employee” to include all “officers and members of boards of directors of quasi-public or private corporations while rendering actual service for the corporations for pay” (read…

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When A Majority Won’t Suffice

For California corporations, the general rule is that an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board.  Cal. Corp. Code § 307(a)(8).  This general rule is not without its exceptions.  Two of these…

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Why You Should Have Read Last Week’s Posts On California’s D&O Loan Ban

I spent the better part of last week writing about California Corporations Code Section 315.  The statute general prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of, an officer or director without specified shareholder approval.  What happens if a prohibited loan is made? The good…

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These Loans Can Be Problematical Even When The Borrower Isn’t An Officer or Director

I spent most of last week discussing California Corporations Code Section 315.  As a reminder, that statute prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of, an officer or director without specified shareholder approval. Section 315, however, isn’t concerned only with loans to officers and…

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Verifying The Identity Of Directors

Sometimes, you just can’t be sure whether about the identity of a corporation’s directors.  Doubt can arise for a number of reasons.  Corporate records may be lost entirely.  Corporate records may be incomplete or inconsistent.  Corporate formalities may have been ignored.   In a sea of doubt, how does one find a safe harbor of certitude? California…

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Senators Pass Gender Diversity Resolution – Have They Read Ecclesiazusae?

In late August, the California Senate approved SCR 62 which encourages “equitable and diverse gender representation on corporate boards”.  The resolution also urges: [W]ithin a three-year period from January 2014 to December 2016, inclusive, every publicly held corporation in California with nine or more director seats have a minimum of three women on its board,…

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When Is A Director’s Inspection Right Not Absolute?

California Corporations Code Section 1602 provides that every director “shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind . . .”. While the statute seems to brook no exceptions, the California Court of Appeal last year held that a director can lose his…

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