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CALIFORNIA CORPORATE & SECURITIES LAW

Meandering Through Minutiae – How The Type of Consideration Can Determine The Need For Shareholder Approval

Section 1001 of the California Corporations authorizes a corporation to sell all or substantially all of its assets when the principal terms are approved by the board of directors and the outstanding shares (unless the transaction is in the usual and regular course of business).  When the shareholders elect to dissolve the corporation, the board…

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Is It Necessary To Check With The Shareholders Before Hocking The Corporate Crown Jewels?

Corporations Code Section 1001(a) authorizes a corporation to “sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets” if the principal terms are approved by the board, and, unless the transaction is in the usual and regular course of its business, approved by the outstanding shares.  While this suggests…

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Seeing Red And More Than 50% Ownership May Mean A 90% Vote

California broadly authorizes a corporation to sell, lease, convey, exchange, transfer or otherwise dispose of all or substantially all of its assets when the principal terms have been approved by the board.  If the sale is not in the usual and regular course of business, the principal terms must also be approved by the outstanding shares. …

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Fairness Hearings: Not Just For Reorganizations

California attorneys are fortunate to have a wealth of resources at their disposal.  One of these treasures is the Continuing Education of the Bar – California (CEB).  The University of California and the State Bar of California founded CEB more than 60 years ago.  CEB is, however, self-supporting.  Among numerous other publications, the CEB publishes…

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Want A Fairness Hearing But Paying In Cash – No Problem?

In yesterday’s post, I mentioned California Corporations Code Section 1001(d).  That statute imposes a super-majority shareholder approval requirement for sale of assets transactions covered by Section 1001(a) when the acquiring entity is in “control” of or under common control with the corporation disposing of the assets.  The vote required is 90% of the voting power of the disposing corporation.  “Control”…

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When a Sale of Assets is not a “Sale-of-Assets Reorganization”

The California General Corporation Law (CGCL) contemplates three different types of reorganizations – a merger reorganization, an exchange reorganization, and a sale-of-assets reorganization.  Cal. Corp. Code § 181.  Chapter 12 of the CGCL prescribes both board and shareholder approval requirements for reorganizations, including sale-of-asset reorganizations. Readers of the CGCL, however, will note that Corporations Code…

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