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CALIFORNIA CORPORATE & SECURITIES LAW

Negotiating Permits?

The title of yesterday’s post may have been a bit recondite for some readers as I never directly mentioned negotiating permits in the post.  Therefore, today’s post will back up a bit and fill in some of the missing pieces. As noted yesterday, the California Corporate Securities Law prohibits offers of securities by issuers unless the…

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A Permit To Negotiate – Really?

It is sometimes forgotten that the California Corporate Securities Law of 1968 makes it unlawful to either offer or sell a security in California in an issuer transaction unless that the sale has been qualified or exempt from or not subject to qualification.  Cal. Corp. Code § 25110.  Thankfully, the CSL exempts most offers.  Today’s…

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Shares of Foreign Subsidiaries

I expect that little or no thought is given to the possible application of California’s Corporate Securities Law of 1968 when a corporation incorporates a subsidiary under the laws of a foreign country.  However, the issuance of shares to a corporate parent located in California may well involve the offer and sale of securities in California.  As…

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Five Gnostic Exemptions From The Qualification Requirements Of The Corporate Securities Law

When looking for exemptions from the qualification requirements of the California Corporate Securities Law of 1968, a good place to start is Chapter 1, Part 2, Division 1 of Title 4 of the Corporations Code.  Cal. Corp. Code § 25100 et seq.  If you don’t find an usable exemption there, another promising place to look is the rules of the Commissioner…

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Will New Rule 147A Lead To A Renaissance In California Permit Applications?

Yesterday, the Securities and Exchange Commission adopted a new intrastate offering exemption under the Securities Act of 1933.  Significantly, new Rule 147A will have no restrictions on offers and will not require that an issuer be organized in the state in which the intrastate offering is being conducted.  I was pleased to see that the adopting release cited…

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And You Thought Dissenters’ Rights Didn’t Apply To Delaware LLCs

Delaware’s Limited Liability Company Act provides that a limited liability company agreement or an agreement of merger or consolidation or plan of merger may provide for appraisal rights.  6 Del. Code § 18-210.  Does this mean that a Delaware LLC with no such provision need not worry about dissenters’ rights?  Not necessarily.  Article 11 of…

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No Need For “F” For Phantom Plans

When establishing a phantom stock plan, some issuers may erroneously believe that the only available exemption is the limited offering exemption in Section 25102(f) of the Corporations Code.  While the “F” exemption is a viable option for some issuers, some of the conditions (such as preexisting relationship or financial experience) can present insurmountable problems for…

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Blue Sky And Rule 144A

Rule 144A is a non-exclusive safe harbor rule under the Securities Act of 1933.  The rule exempts reoffers and resales of securities from the registration (but not the anti-fraud) provisions of the Securities Act.  Many securities practitioners are, of course, familiar with the conditions of Rule 144A which has been on the books for over two…

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Bill Proposes To Allow General Solicitations In California

Previously, I reported on a highly punitive bill, SB 978 (Curren), that would make the limited offering exemption under Section 25102(f) contingent upon the timely filing of a notice of exemption with the Commissioner of Corporations.  Today, I’m happy to report on a more positive legislative proposal. Last Friday, Assembly member Michael Allen introduced AB 2081 to…

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Punitive Bill Proposes Giant Step Backwards On Capital Formation

The California Corporate Securities Law of 1968 forbids the offer and sale in this state of any security in an issuer transaction unless the sale has been qualified or the security or transaction is exempt or not subject to qualification.  Cal. Corp. Code Section 25110.  This important principle is the same whether it is the…

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