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CALIFORNIA CORPORATE & SECURITIES LAW

Valid Reasons May Exist For Reincorporating In Delaware, But This Isn’t One Of Them

I am always interested in the reasons that corporations give when seeking approval to reincorporate from California to Delaware.  One company in a recently filed proxy statement made the following claim (among others): Enhanced Flexibility to Engage in Stock Repurchase Programs. The Company will have an enhanced ability to make distributions to its shareholders (i.e.,…

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Is Rescission Ever Legal?

Yesterday’s post concerned when a corporation’s rescission of the issuance of shares does not constitute a “distribution to its shareholders” as defined in Section 166 of the California Corporations Code.  I noted that one of the three conditions is that “it is reasonably likely that the holder or holders of the shares in question could…

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Bill Would Ease Corporate Distributions Test

Last week, Assembly Member Curt Hagman introduced AB 571 on behalf of the Business Law Section of the California State Bar.  The bill would ease the restrictions on distributions to shareholders, as defined in Corporations Code § 166.  These limitations apply to California corporations and foreign corporations subject to Corporations Code Section 2115. California’s current statute…

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