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CALIFORNIA CORPORATE & SECURITIES LAW

Nevada Legislature Mulls Codification Of The Internal Affairs Doctrine

Delaware and Nevada are each in the business of marketing their corporate laws to businesses in other states.  Thus, it should surprise no one that these states don’t appreciate it when their legal offerings are undermined by other states.  One way to protect the franchise is by embracing the “internal affairs doctrine”. The internal affairs…

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Incorporating In Delaware May Not Eliminate Director Liability Under This California Statute

Some readers may have skipped this week’s posts discussing director liability under California Corporations Code Section 316 on the theory that the statute applies only to directors of corporations incorporated under the General Corporation Law.  That could be a big mistake.  California’s pseudo foreign corporation statute, Corporations Code Section 2115, applies Section 316 to foreign…

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What Law Governs Real Property Conveyances By Foreign Corporations?

Consider the following fact pattern: Joe is the Chief Executive Officer of Transient, Inc., a Delaware corporation that is headquartered in Dallas, Texas.  Transient’s sole asset is 100 acres of undeveloped land in California.  Without consulting, much less obtaining the authorization of Transient’s board of directors or stockholders, Joe enters into a land sales contract…

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Suspension By The Franchise Tax Board

Yesterday’s post concerned the two circumstances in which the Secretary of State might suspend a corporation.  The California Franchise Tax Board will suspend a corporation if it fails to pay taxes, penalties, fees or interest (Cal. Rev. & Tax. Code § 23301) or fails to file a return (Cal. Rev. & Tax. Code § 23301.5). These…

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Why Some Delaware Corporations Will Want To Waive This California Statute

In yesterday’s post, I commented on a recent ruling by former Vice Chancellor John W. Noble to the effect that “Delaware disclosure law which generally does not require disclosures to shareholders unless shareholder action is sought”.  The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Transcript) (Del. Ch. Feb. 25, 2016). …

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9th Circuit Holds Subsidiary Could Be The General Manager Of Its Parent

Section 2110 of the California Corporations Code governs service of process on a foreign corporation.  One means of valid service under the statute is by delivering process by hand to the corporation’s general manager in California.  The California General Corporation Law, however does not define “general manager”.  In Miller v. The Public Warehousing Company KSC…

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Why Foreign Corporations Might Not Care Where You Live

I noticed the following description of California’s principal “pseudo-foreign” corporation statute in a recently filed registration statement: Section 2115(b) of the California Corporations Code imposes certain requirements of California corporate law on corporations organized outside California that, in general, are doing more than 50% of their business in California and have more than 50% of…

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When A Corporation May Not Be A Corporation At All

The California General Corporation Law separately defines “corporation” and “domestic corporation”.   The definition of “domestic corporation” is straightforward, the definition of “corporation” is not.  In most cases, a corporation will also be a domestic corporation, but in some cases a “corporation” may not even be a corporation at all! A “domestic corporation” is simply a corporation formed under the laws of the State…

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Don’t Bank On Being Able To Use “Bank” In Your Corporate Name

“Bank” is a good example of a homonym (same spelling and pronunciation but different meaning), a homograph (same spelling but different meaning) and a homophone (same pronunciation).  I can think of at least three different meanings of the word in its noun form – a place where financial transactions are made, a mound or heap,…

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Corporations Code Reaches Contracts And Conveyances By Foreign Corporations

Corporations Code Section 313 generally provides that in the absence of actual knowledge of lack of authority, a contract executed by a corporation is not invalidated by any lack of authority of the signing officers provided the contract has been signed  by the chairman of the board, the president or any vice president and the secretary, any assistant secretary, the…

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