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CALIFORNIA CORPORATE & SECURITIES LAW

The Right To Dissent And Fractional Shares

I’ve devoted several posts to how California’s General Corporation Law deals with fractional shares.  Nevada’s approach to fractional shares is somewhat different.  For example, Nevada permits rounding up to a full share in all cases.  NRS 78.205(2)(b).  However, if a Nevada corporation elects to cash out or issue scrip for fractional shares, the stockholders may…

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Looking For The List Of OTC Margin Stocks? You’ll Find It In California’s New LLC Act

When originally enacted, the Securities Exchange Act of 1934 banned brokers and dealers from extending margin credit on over-the-counter (OTC) securities.  This changed in 1969 when the Exchange Act was amended.  The Federal Reserve determined which stocks could be margined and it began publishing in the Federal Register the Official List of OTC Margin Stocks.  However, if you…

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And You Thought Dissenters’ Rights Didn’t Apply To Delaware LLCs

Delaware’s Limited Liability Company Act provides that a limited liability company agreement or an agreement of merger or consolidation or plan of merger may provide for appraisal rights.  6 Del. Code § 18-210.  Does this mean that a Delaware LLC with no such provision need not worry about dissenters’ rights?  Not necessarily.  Article 11 of…

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Court Of Appeal Says Legislature Was “willing to tolerate some dead cats to keep management honest.”

Chapter 13 of the California General Corporation Law establishes the rights of “dissenting shareholders” (defined in Section 1300(c)) to demand payment of cash for their shares in reorganizations and short-form merger transactions. Section 1312(a) generally provides that these shareholders do not have any right at law or in equity to attack the validity of these…

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Legislature Repeals Subversive Organization Registration Law And Loosens Advance Notice Requirement For Reorganizations

Just over a year ago, I posted this piece on California’s World War II era Subversive Organization Registration Law.  A few months later, the Assembly Committee on Judiciary suddenly introduced a bill, AB 1405, to repeal the law.  This may have been pure coincidence, but the Committee analysis provides much the same information as my blog…

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1 For 3 Million Reverse Split Fraud Claim Survives Motion To Dismiss

Nancy Wojtas at Cooley LLP alerted me to an interesting ruling case decided last week by the U.S. District Court for the Eastern District of New York, Gardner v. Major Auto. Cos., 2012 U.S. Dist. LEXIS 118191 (E.D. N.Y. Aug. 21, 2012). According to a complaint, Bruce Bendell was the Chairman, Chief Executive Officer, and Chief…

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California Bill Threatens Market Exception For Dissenters’ Rights

The California legislature is taking its summer recess and will reconvene on August 6.  Joint Rule 51(b)(2).  It will then sit until August 31 which is the last day for either the Senate or the Assembly to pass bills.  Cal. Const. Art. IV, §10(c) and Joint Rule. 61(b)(17). One bill that has been somewhat of…

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Dissenters’ Rights And The Saddest Plaintiff

Dissenters’ rights statutes are intended to liberate minority stockholders from the tyranny of the majority.  They accomplish this by allowing stockholders who object to specific transactions the opportunity to require the corporation to purchase their shares pursuant to a statutorily prescribed procedure.  In Nevada, this procedure can be found in Chapter 92A of Nevada Revised…

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Section 1312(a) Held To Preclude Preliminary Injunction In Cost Plus Tender Offer

On May 9, 2012, Cost Plus, a California corporation, and Bed Bath & Beyond, a New York corporation, issued this press release announcing their agreement for BB&B’s acquisition of Cost Plus.  The acquisition was to be effected by a cash tender offer followed by a merger in which the tendering shareholders would receive the same consideration. …

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Elimination Of Exception’s Exception For Listed Companies Is In The Offing

While many were thinking of love on Valentine’s Day, Assembly member Bob Wieckowski’s thoughts were turned to dissenters’ rights; for on that day he introduced AB 1680.  This bill would eliminate an exception to an exception from the definition of “dissenting shares” in Corporations Code Section 1300(b).  Because dissenters’ rights are intended to allow a…

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