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Pay-To-Play Meets The California Labor Code

In 2010, the Securities and Exchange Commission adopted a rule (17 CFR § 206-4(5)) prohibiting an investment adviser from providing advisory services for compensation to a government client for two years after the adviser or certain of its executives or employees make a contribution to certain elected officials or candidates.  The rule applies to any investment adviser…

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Three Considerations For Drafting A Code of Business Conduct

Although the Securities and Exchange Commission does not require that a company adopt a code of business conduct and ethics, I would be very surprised to hear of an SEC reporting company that has not adopted such a code.  Item 406 of Regulation S-K requires a reporting company to disclose whether it has “adopted a code of ethics…

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How California Made Mergers Potentially More Difficult

The last two sentences of Section 1101 of the Corporations Code can be an unwonted surprise to some practitioners.  They are intended to ensure fair treatment of shareholders in a merger by imposing two requirements: Each share of the same class or series of any constituent corporation must be treated equally with respect to the distribution of…

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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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California’s 50/90 Rule – When Being In Control May Mean That You’re Not

Many out-of-state practitioners are surprised to learn that California has special statutory provisions governing a merger when a constituent corporation (Section 161) or its parent (Section 175) owns, directly or indirectly, more than 50%  of the voting power (Section 194.5) of the other constituent corporation prior to the merger.  This is the so-called “50/90 Rule”.   It can be  found in the last…

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