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CALIFORNIA CORPORATE & SECURITIES LAW

When A Majority Won’t Suffice

For California corporations, the general rule is that an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board.  Cal. Corp. Code § 307(a)(8).  This general rule is not without its exceptions.  Two of these…

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Does The Foolish Director Abide Whilst The Wise Director Flees?

Never fear? Smith Is No Longer Here Yesterday’s post highlighted Section 316 of the California Corporations Code, a statute that imposes joint and several liability on directors who approve specified transactions such as a loan to an officer contrary to Section 315.  Now consider the following scenario: Dr. Zachary Smith, a director, attends a meeting of the…

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How Many Board Members Are Required To Take Action?

Suppose your corporation has a five member board of directors but two seats are vacant.  Suppose further that your corporate bylaws included the following two provisions: A.  Three members of the board shall constitute a quorum for the purpose of transacting any business of the board. B.  Any final action of the board shall be…

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When A Majority Vote Of The Required Quorum Isn’t Sufficient

Corporations Code Section 307(a)(8) sets forth the general voting rule applicable to actions by directors.  It provides that the decision made by a majority of directors present at a duly held meeting at which a quorum is present is the act of the Board of Directors.  Assume, for example, that a corporation has 7 authorized…

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