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CALIFORNIA CORPORATE & SECURITIES LAW

Hiring & Firing Officers In California

John Jenkins at The Mentor Blog addresses the question of who has authority to hire and fire officers?  He notes: The bottom line is that that the Board always has that authority. That’s because Delaware 141 says “the business and affairs of every corporation organized under this chapter shall be managed by or under the…

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Officers: Got Business Judgment Rule? Nevada Says Yes, Delaware Maybe Not

Francis Pileggi writes about a recent ruling by U.S. District Judge Sue L. Robinson in which she refused to consider whether the business judgment rule applied to officers of a Delaware corporation: Defendants have cited to no cases where a Delaware court has held that the business judgment rule applies to corporate officers; therefore, the court…

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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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These Loans Can Be Problematical Even When The Borrower Isn’t An Officer or Director

I spent most of last week discussing California Corporations Code Section 315.  As a reminder, that statute 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. Section 315, however, isn’t concerned only with loans to officers and…

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Can Limited Partnerships Have Officers?

Can limited partnerships have officers?  In many cases, individuals with officer titles will actually be officers of the general partner.  My question is whether a limited partnership itself may have officers. Two provisions of Delaware’s Revised Uniform Limited Partnership Act contemplates that the answer is “yes”.  Section 17-403(c) provides: Unless otherwise provided in the partnership agreement,…

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Officers And The Business Judgment Rule

Recently, I came across the following assertion: First, other than the recent aberration of Poggetto v. Switzer , the BJR has never been applied to officers in California. Stephen P. Wiman, Thomas D. Long, and David J. Farkas, The Calif. Business Judgment Rule: Does it Apply to Corporate Officers and What Are the Insurance Implications if It Does…

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Is FDIC v. Van Dellen California’s Smith v. Van Gorkom?

Last Friday, the jury in FDIC v. Van Dellen (C.D. Cal. Case No. CV 10-4915 DSF (SHx)) returned a verdict totalling nearly $169 million against three former officers of the home builder division of IndyMac Bank, F.S.B.  The Office of Thrift Supervision closed the bank in 2008.  As the receiver for the bank, the Federal Deposit Insurance Corporation filed…

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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…

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