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CALIFORNIA CORPORATE & SECURITIES LAW

Nevada Supreme Court Holds That Member-Managers Were Not Proper Parties To Negligence Claim Against An LLC

In an opinion issued yesterday, the Nevada Supreme Court addressed the extent to which a member of a limited liability company is protected in a negligence based tort action against the LLC.  Gardner v. Henderson Water Park, LLC, 133 Nev. Adv. Op. 54 (2017).  The plaintiffs in the case are the parents of a boy who…

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Court Declines To Impose Alter Ego Liability On LLC’s President

In general, the debts, obligations, or other liabilities of a California limited liability company do not become the debts, obligations, or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager for the LLC.  Cal. Corp. Code § 17703.04(a).  An important exception to this…

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In California, Directors Who Abstain May Still Face Liability

Section 316(a) of the California Corporations Code imposes joint and several liability on directors who approve any of the following actions: The making of any distribution to shareholders to the extent contrary Sections 500 – 503; The distribution of assets to shareholders after institution of dissolution proceedings of the corporation, without paying or adequately providing…

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Why You Should Have Read Last Week’s Posts On California’s D&O Loan Ban

I spent the better part of last week writing about California Corporations Code Section 315.  The statute general prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of, an officer or director without specified shareholder approval.  What happens if a prohibited loan is made? The good…

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Why Politicians Should Read The Corporations Code (Or At Least This Blog)

Last September, I wrote about California’s unincorporated associations law.  In “Thinking About Joining A Club? You May Want To Consider These Corporations Code Provisions First“, I noted that Title 3 of the California Corporations Code addresses a number of issues, including whether a member may be held liable for the obligations of an unincorporated club.  A…

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Crowdfunding – There Will Be Investor Losses

With preternatural sagacity, Yogi Berra once observed that “prediction is very hard, especially about the future”.  Although I whole heartedly concur with Mr. Berra’s assessment of the difficulties that inhere in prognistication, I’ve nonetheless decided to make a prediction.  My prediction is that after President Obama signs the Jumpstart Our Business Startups Act, there will be investor losses.  I feel very safe…

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