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CALIFORNIA CORPORATE & SECURITIES LAW

What Is A Foreign Registrant And Why Must They Translate Their Names?

Earlier this week, the Securities and Exchange Commission proposed amendments to Regulation S-K, and related rules and forms.  According to the SEC, these are intended to modernize and simplify certain disclosure requirements in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors.  While I view…

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There’s No Dressing This Up – Item 303(a)(1) Of Regulation S-K Is Unreasonable

In less than a month, the United States Supreme Court will hear oral argument in Leidos, Inc. v. Indiana Public Retirement System (Docket No. 16-581).  The question presented in Leidos is: Whether the Second Circuit erred in holding – in direct conflict with the decisions of the Third and Ninth Circuits – that Item 303…

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“Lead Independent Director” Or “Presiding Director”?

Neither California nor Nevada require that a corporation have either a “lead independent director” or “presiding director” and yet many corporations state that they have such a position.  Why? Item 407(h) of Regulation S-K requires that if one person serves as both principal executive officer and chairman of the board, a company must disclose whether it has a “lead…

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What, If Anything, Is Wrong With The Contractual Obligations Table?

Many readers will recognize the table above as being required by Item 303(a)(5) of Regulation S-K.  The Securities and Exchange Commission added this disclosure requirement in 2003, explaining in the adopting release: Aggregated information about a registrant’s contractual obligations in a single location will provide useful context for investors to assess a registrant’s short- and…

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To Whom Does “Related Parties” Refer In A.S. No. 18?

In June of last year, the Public Company Accounting Oversight Board adopted Auditing Standard No. 18 which “establishes requirements regarding the auditor’s evaluation of a company’s identification of, accounting for, and disclosure of relationships and transactions between the company and its related parties.”  Because A.S. #18 is effective for audits of financial statements for fiscal years beginning…

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An Epic Question: Is This Pay Ratio Too Large, Too Small or Just Right?

California’s corporate tax rate is currently 8.84%.  According to the California Taxpayer’s Association, only nine states (Alaska, Connecticut, Illinois, Iowa, Maine, Minnesota, New Jersey, Pennsylvania and Rhode Island) have a higher top rate.  Nonetheless, a bill that could increase the corporate tax rate for some publicly traded corporations by over 47% continues to move through the…

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Just Who Is A Promoter And Why You May Want To Know

The California General Corporation Law uses, but does not define, the term “promoter”.  For example, a promoter can be criminally prosecuted.  Corporations Code Section 2251 provides that any promoter “who knowingly and willfully issues or consents to the issuance of certificates for certificated securities, or initial transaction statements or written statements for uncertificated securities, in…

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All The World’s A Stage, But The SEC Isn’t Allowing All Actors To Play Upon It

Every Rule Must Play It’s Part, But This Part Is A Sad One There is much to dislike in the SEC’s recent “bad actor” rule amendments.  While Congress conceived the idea of disqualifying bad actors (Section 926 of the Dodd-Frank Act), the SEC was more than a midwife.  Here are a few reasons why I believe that the SEC’s naughty…

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How Many Ways Can The SEC Describe A “Year”?

It’s not easy to write regulations and lawyers can be a hypercritical group.  Nonetheless, the Securities and Exchange Commission’s rules can be maddingly inconsistent.  As one small example, I offer Item 405 of Regulation S-K and its many references to “year”. In general, the purpose of Item 405 is to require disclosure of late filers under…

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