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CALIFORNIA CORPORATE & SECURITIES LAW

How California Made Mergers Potentially More Difficult

The last two sentences of Section 1101 of the Corporations Code can be an unwonted surprise to some practitioners.  They are intended to ensure fair treatment of shareholders in a merger by imposing two requirements: Each share of the same class or series of any constituent corporation must be treated equally with respect to the distribution of…

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Facebook/Oculus VR Acquisition Raises Pseudo-Foreign Corporation Question

Yesterday, The Guardian reported that Facebook had acquired Oculus VR using a combination of cash and stock.  Facebook avoided SEC registration by availing itself of a fairness hearing before the Department of Business Oversight.  Readers may recall, that Facebook used the fairness hearing process in 2011 to acquire Instagram. In reviewing the notice of hearing,…

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A Program Guide To The Facebook Fairness Hearing

As discussed in this earlier post, Facebook, Inc. has requested a fairness hearing before the California Department of Corporations.  Technically, the hearing is being held pursuant to Corporations Code Section 25142 in connection with Facebook’s application for a permit authorizing the issuance of securities to effect its proposed acquisition of Instagram, Inc.   Since a permit may…

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Want A Fairness Hearing But Paying In Cash – No Problem?

In yesterday’s post, I mentioned California Corporations Code Section 1001(d).  That statute imposes a super-majority shareholder approval requirement for sale of assets transactions covered by Section 1001(a) when the acquiring entity is in “control” of or under common control with the corporation disposing of the assets.  The vote required is 90% of the voting power of the disposing corporation.  “Control”…

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