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CALIFORNIA CORPORATE & SECURITIES LAW

Nevada’s Constitutional Limitation On Shareholder Liability

Article 8, Section 3 of the Nevada Constitution provides: Dues from corporations shall be secured by such means as may be prescribed by law; Provided that corporators in corporations formed under the laws of this State shall not be individually liable for the debts or liabilities of such corporation. Remarkably, the Nevada Supreme Court has…

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Fee Shifting Bylaw Provisions May Face Constitutional Limitation

The corporate governance world has been disquieted by Delaware Supreme Court Justice Carolyn Berger’s recent opinion that upheld the validity of a fee-shifting bylaw provision in the bylaws of a Delaware non-stock corporation.  ATP Tours, Inc. v. Deutscher Tennis Bund (No. 534, 2013, May 8, 2014).  Even though the ink has barely dried on the opinion,…

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Where Exactly Is It Written That Shareholders Aren’t Liable For Corporate Debts?

Recently, UCLA Law School Professor Stephen Bainbridge took notice of Section 6.22(b) of the Model Business Corporation Act and asked what might lead a corporation to waive the limited liability of shareholders in its articles of incorporation.  That section provides “Unless otherwise provided in the articles of incorporation, a shareholder of a corporation is not…

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