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CALIFORNIA CORPORATE & SECURITIES LAW

Who Votes As Proxy For Shares Standing In The Name Of Another Corporation?

The Proxy Season blog yesterday discussed the following question from the Q&A Forum of TheCorporateCounsel.net: Under Delaware law, can a Board of Directors authorize a person who is not an officer of the company to act as agent and vote shares of stock for the Company that it holds in another entity? John Jenkins responded…

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When Directors Are Or Become Bad Actors . . .

I’ve devoted several blog posts to the multifarious problems engendered by the SEC’s new “bad actor” disqualification provisions.  I’ve done so because Rule 506(d) is so poorly drafted that, like the annals of Volusius, its fate should be to provide loose wrappings for fish (“laxas scombris saepe dabunt tunicas“).   Under Rule 506(d), an issuer will…

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When Incorporating, Stay Off The “Highway of Sorrow” For There May Be No Turning Back

As an erstwhile player of the five-string banjo, I’m a big fan of Bluegrass music.  One of my favorite songs is the rueful “Highway of Sorrow” as performed by the great flat pick guitar player Doc Watson.  The song includes these mournful lines: I’m heading for destruction, I’m on the wrong track Down the highway of sorrow, there’s no…

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“If there be nothing new, but that which is hath been before . . .”

The California General Corporation Law has imposes a single qualification to serve as a director – the person must be a “natural person”.  Cal. Corp. Code § 164. Nevada’s for-profit corporation law adds the additional requirement that a director must be at least 18 years of age.  NRS 78.115.  The GCL does permit bylaws to…

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Are Bylaws Required?

Is a corporation required to have bylaws?  I expect that many attorneys considers anyone who thinks bylaws are not required to be benighted at best. The answer will, of course, depend on the law of the state of incorporation.  If that state is Nevada, there is no explicit requirement that the incorporators, stockholders or directors adopt bylaws.  See Bishop &…

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Do You Have The Correct Authorized Number Of Directors?

I frequently come across corporations with the wrong number of authorized directors.  California, unlike other states, has some very precise rules and these frequently seem to be missed. The Bylaws of many California corporations establish a minimum and maximum number of directors and permit the board to fix the exact number within that range.  For…

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Time To Reevaluate The Meaning Of Director Qualifications

In 2003, the Securities and Exchange Commission began requiring companies to disclose “any specific, minimum qualifications that the nominating committee believes must be met by a nominating committee-recommended nominee for a position on the company’s board of directors, and a description of any specific qualities or skills that the nominating committee believes are necessary for…

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