But Wait, California May Require Even More In Annual Reports To Shareholders
Yesterday’s blog discussed California’s requirement that many domestic and foreign corporations send financial statements to their shareholders. If a corporation has 100 or more holders of record (determined in accordance with Section 605), then the annual report must also provide a brief description of the following: Any transaction during the previous fiscal year involving an amount in excess of $40,000 to which the Read more...
Bill Would Mandate Indemnification Of LLC Agents
California’s current limited liability act permits indemnification of any person (including any manager, member, officer, employee, or agent of the limited liability company) against judgments, settlements, penalties, fines, or expenses of any kind incurred as a result of acting in that capacity. Cal. Corp. Code § 17155(a). The statute excepts indemnification against liability for a manager’s breach of fiduciary duty to Read more...
Are Charter Indemnification Provisions Contracts?
Public companies typically include provisions in their articles and bylaws that mandate indemnification of directors and officers. Often, these provisions include a statement to the effect that the rights to indemnification are a contract right. However, declaring that a contract exists does not necessarily establish a contract. Fortunately, the California Civil Code provides some rules for answering the question of whether Read more...
Should The Articles Of Incorporation Define “Officers”?
Today’s post is devoted to what may seem an unlikely question: should the articles of incorporation define “officers”? This is an unlikely question because it is the bylaws that typically identify the titles of officers and their duties. Cal. Corp. Code § 312(a). Nevertheless, it occurs to me that in at least one circumstance, a corporation may wish to define Read more...
Should Your Articles Of Incorporation Include A Choice of Law Provision?
In yesterday’s post, I considered the fundamental question of why indemnification provisions are included in articles of incorporation. State general corporation laws typically contain express provisions empowering or authorizing corporations to indemnify other persons, including directors, officers and agents. For example, California has its Section 317, Delaware has Section 145 and Nevada has NRS 78.7502. When an indemnity provision is included in the articles (or Read more...
Some Observations On Indemnification Provisions In Articles Of Incorporation
Over the years, I’ve read many articles of incorporation that include provisions relating to indemnification of officers, directors and others. Today’s post will cover a few questions and observations that have occurred to me over the years. I’ll cover more of these “Why is there air?” type questions in future posts. Vice Admiral James Stockdale Asked A Very Good Question: Read more...
The Corporations Code Can Make Suing Your Former Employees Costly
Supreme Court Justice Felix Frankfurter once told the following story about Oliver Wendell Holmes, Jr. and Ralph Waldo Emerson. When Holmes at the urging of his father visited the great author, Emerson asked “Young man, have you read Plato?” When Holmes said no, Emerson said: You must. You must read Plato. But you must hold him at arm’s length and say, “Plato, Read more...
Court of Appeal Holds That Employee Indemnification Statute Does Not Reach “First Party” Lawsuits
If you ask a corporate law attorney about indemnification of officers and other corporate agents, she will likely steer you to Corporations Code § 317. Ask an employment law attorney the same question, and she will likely refer you to Labor Code § 2802. In Nicholas Laboratories, LLC v. Chen, 4th Dist. Ct. Appeal Case No. G044105 (Oct. 12, 2011), both statutes were Read more...
Agency – One Of The “Three Great Relations In Private Life”
Suppose you are sued and win. Then, your luck runs out with your spouse and your last, best friend. To make matters worse, you’ve run up big legal fees but have no insurance and no indemnification agreement. Moreover, no statute and no agreement requires the plaintiff to pay these expenses. Has your luck really run out? The answer may be no if you are an agent of a Read more...
