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CALIFORNIA CORPORATE & SECURITIES LAW

How To Win Custody Of A Corporation

In family law, the fights are often over who gets custody of the kids, the pets and the house.  Shareholders battle over many things, but you don’t often hear of custody fights in the corporate context.  Is it even possible to win custody of a corporation?  In Nevada, the answer is yes. NRS 78.347 allows any stockholder to apply to…

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The Investment Company Act And Roy M. Cohn

Last week, UFCW Local 1500 Pension Fund filed a class action and derivative lawsuit against Yahoo! Inc., its board of directors and some of its current and former officers.  (N.D. Cal. Case No. 3:16-cv-00478-RS).  According to the complaint, Yahoo describes itself as a global Internet new media company that offers a branded network of media, commerce,…

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Benefit Corporation Files For Initial Public Offering

A few years ago, I participated in the drafting of California’s Flexible Purpose Corporation Act, Cal. Corp. Code § 2500 et seq.  In 2014, the legislature changed the name to “Social Purpose Corporations Act”.  SB 1301 (DeSaulnier).  The purpose of the act was (and still is) to provide an alternate form of corporation that provided greater flexibility…

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Private Placement Memorandum Saves The Day For Defendants

Do you ever wonder whether the time and expense of preparing a private placement memorandum is really worth it?  Does anyone ever escape liability because of a well drafted PPM?  A recent opinion by the California Court of Appeal provides one, albeit unexpected, reason for preparing and delivering a PPM.  WA Southwest 2, LLC v.…

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New LLC Is Not Delivered By Sale Membership Interests

Readers of this blog should be well aware of California’s general antipathy to covenants not to compete.  See The Point Of An Unenforceable Noncompete May Be Very Sharp Indeed,Covenants Not To Compete – Fourth DCA Considers A New Fine Question (Or Two), TRO Issued Enjoining Breach Of Non-Compete Agreement Clauses, No Surprises Here – California Court…

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Court Of Appeal Holds “May” Does Not Mean “May Only”

California requires persons who are engaged in the business of making consumer loans or commercial loans to be licensed under the Finance Lenders Law, unless exempt.  Cal. Fin. Code § 22100.  The CFLL includes the following: A licensee may sell promissory notes evidencing the obligation to repay loans made by the licensee pursuant to this…

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Court Finds No “Road of Imprudence” or “Chasm of Equity” In Section 25504

Faithful readers of this blog will be familiar with the structure of the California Corporate Securities Law.  Part 5 of the CSL (Cal. Corp. Code §§ 25400 – 25404) proscribes various conduct and Part 6 (Cal. Corp. Code §§ 25500 – 25510) establishes the remedies for violations of Part 5.  See Second Circuit Declines To Apply…

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Could The SEC Ask Airlines To Produce Data On Delayed And Canceled Flights?

The following story is fiction.  It was imagined following the SEC’s recently settled action against KBR, Inc. Airlines were caught completely off guard yesterday by SEC letters asking that they produce five years of data on delayed and canceled flights to the nation’s capital. The SEC’s action was a continuation of the agency’s inquiry into…

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Courts Tackle Meaning of “May” Under the Finance Lenders Law

Section 22340(a) of the California Financial Code provides that a licensee “may sell promissory notes . . . to institutional investors.”  Does this mean that a licensee may only sell promissory notes to institutional investors or that selling promissory notes to institutional investors is something that licensees are permitted to do?  U.S. Magistrate Judge Nathanael M. Cousins…

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Would Hobby Lobby Stores, Inc. Have A Stronger Case As A Flexible Purpose Corporation?

Steve Hazen alerted me to the fact that California Attorney General Kamala D. Harris has filed an amicus brief in Sebelius v. Hobby Lobby Stores, Inc., U.S. Supreme Court Docket No. 13-354.  The question presented in that case is: The Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. 2000bb et seq., provides that the government “shall…

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