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A Field Guide To Distinguishing Directors From Officers

A colleague who is not a corporate lawyer recently noted that in common parlance directors and officers are often simply lumped together as the “same thing”.   He suggested that I devote a post to a primer on the differences between directors and officers.  As requested, here is my take on the subject: Directors can not act alone…

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Can Pseudo-Foreign Corporations Exonerate Their Directors?

Corporations Code Section 2115 is not an easy read.  Fortunately, California Supreme Court Chief Justice Tani Cantil-Sakauye has provided a more digestible overview of the statute: Section 2115 was enacted as part of a comprehensive revision of the Corporations Code in the mid-1970s.  The section addressed so-called pseudoforeign corporations—entities incorporated outside California, but that meet two…

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Why An Understanding Of Officers As Agents May Be Important

In several recent posts, I have noted that officers, unlike directors, are agents of the corporation.  Recognizing the agency status of officers can affect the legal analysis in a number of significant ways, including: Choice of law.  California Corporations Code Section 2116 explicitly provides that the law of the jurisdiction of incorporation applies to the…

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Nevada’s Duty Of Care Standard Fails To Win Summary Judgment For Director

NRS 78.138(1) imposes two explicit duties on directors in the exercise of their powers: they must act in good faith and with a view to the interests of the corporation.  This contrasts with Delaware case law which speaks of a triad of duties comprised of care, loyalty and good faith, with good faith standing a bit…

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District Court Refuses To Apply Business Judgment Rule To Claims Against Officers

Since 2008, a total of 38 banks have failed in California (See this list of failed banks).  When this happens, the Federal Deposit Insurance Corporation acts as receiver for the bank.  Since the FDIC is also an insurer of the failed bank’s deposits, it has an interest in pursuing directors, officers and professionals who were involved in…

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