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CALIFORNIA CORPORATE & SECURITIES LAW

I Deliver Some Round Observations About California’s Rounding Rule

Yesterday’s post concerned various actions that a California corporation may pursue in lieu of issuing fractional shares.  I left for today the subject of rounding.  Section 407 of the Corporations Code expressly permits rounding to the nearest whole share if the fraction of a share that any person would otherwise be entitled to receive is less than .005…

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California Secretary Of State Upgrades Business Searches

For some time, the California Secretary of State’s office has offered a business search application on its website.  Although the function provided only limited information, the application received more than 5 million views per month.  On St. Lucia’s day, the Secretary of State announced a new and improved search application. From my perspective, one of the…

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Why The Location Of The Principal Executive Office Matters

The California General Corporation Law does not require that a California corporation have a principal executive office located in California.  In fact, Section 177 explicitly contemplates that a corporation’s PEO may be located elsewhere or that the corporation may have no PEO at all.  The location of the PEO is not without significance, however.  Numerous…

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The Charging Order – How The Nevada Secretary Of State Doesn’t Get It Quite Right

In 2007, Nevada imposed an interesting limitation, the charging order, on the ability of creditors to foreclose on shares of closely-held Nevada corporations.  Here’s how the Nevada Secretary of State’s website describes the statute, NRS 78.746: Charging order protection for stock of closely-held corporations protects stockholders of all Nevada corporations with between 2 and 75…

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Court Allows An Exhausted FTC To Serve Summons On The California Secretary Of State

The Federal Trade Commission is not pleased with Discountmetalbrokers, Inc.  In fact, the FTC is so unhappy with the company that it filed a complaint alleging that the company held itself out as a legitimate seller of gold and silver but would often fail to deliver product.  According to the the FTC, the company has “scammed…

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How To Revive A Suspended Corporation

Yesterday’s post concerned the circumstances that will cause the California Franchise Tax Board to suspend a corporation’s rights, powers, and privileges to conduct business in California.  Suspension, however, is reversible, although it isn’t necessarily easy.  First, is the matter of delinquent returns.  The Franchise Tax Board requires that all delinquent tax returns be filed.  Second,…

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Do The Secretary Of State’s Criteria For Determining “Generally Recognized Presidential Candidates” Violate The APA?

Earlier this week, the California Secretary of State released his list of “generally recognized presidential candidates”.  These are the individual whose names will appear on California’s June 2016 primary ballot.  The Secretary of State listed 43 individuals from six political parties (American Independent, Democratic, Green, Libertarian, Peace & Freedom, and Republican).  It’s not too late to…

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Promises, Promises: Secretary of State Admits California Can’t Accommodate Cumulative Voting

California’s 1879 Constitution enshrined cumulative voting as a constitutional right.  Cal. Const. of 1879, Art. XII, § 12 (repealed).  The 1931 California General Corporation Law continued mandatory cumulative voting.  When the current California General Corporation Law was introduced, it allowed corporations to opt out of cumulative voting.  However, the law as finally enacted continued mandatory cumulative voting.  It…

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Can The Secretary Of State Reject Disparaging Business Entity Names?

Section 2(a) of the Lanham Act bars the Patent and Trademark Office from registering scandalous, immoral, or disparaging marks. 15 U.S.C. § 1052(a).  However, the United States Court of Appeals for the Federal Circuit sitting en banc recently held that the disparagement provision in Section 2(a) is unconstitutional because it violates the First Amendment to the U.S. Constitution.  In…

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Initiative Measure Aims To Retard Gut And Amend Legislation

A reader of the California Constitution would be lead to believe that the course of legislation is orderly and predictable.  Under Article IV, Section 8(b), the legislature may make no law except by statute and no statute except by bill.  Every bill, moreover, must have a single subject and that subject must be expressed in…

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