But Wait, California May Require Even More In Annual Reports To Shareholders
Yesterday’s blog discussed California’s requirement that many domestic and foreign corporations send financial statements to their shareholders. If a corporation has 100 or more holders of record (determined in accordance with Section 605), then the annual report must also provide a brief description of the following: Any transaction during the previous fiscal year involving an amount in excess of $40,000 to which the Read more...
Are Charter Indemnification Provisions Contracts?
Public companies typically include provisions in their articles and bylaws that mandate indemnification of directors and officers. Often, these provisions include a statement to the effect that the rights to indemnification are a contract right. However, declaring that a contract exists does not necessarily establish a contract. Fortunately, the California Civil Code provides some rules for answering the question of whether Read more...
I’ve Been Thinking About Conversion, But I Haven’t Decided To Convert
Conversion can be a sensitive subject for some. In California, corporate conversions are a relatively new phenomenon, having made their first appearance with legislation enacted in 2002 (SB 399 (Ackerman)). The General Corporation Law (GCL) rather unhelpfully defines a “conversion” as “a conversion pursuant to Chapter 11.5 . . . [of the Corporations Code]“. Cal. Corp. § 161.9. Fundamentally, Chapter 11.5 Read more...
Should Your Articles Of Incorporation Include A Choice of Law Provision?
In yesterday’s post, I considered the fundamental question of why indemnification provisions are included in articles of incorporation. State general corporation laws typically contain express provisions empowering or authorizing corporations to indemnify other persons, including directors, officers and agents. For example, California has its Section 317, Delaware has Section 145 and Nevada has NRS 78.7502. When an indemnity provision is included in the articles (or Read more...
Some Observations On Indemnification Provisions In Articles Of Incorporation
Over the years, I’ve read many articles of incorporation that include provisions relating to indemnification of officers, directors and others. Today’s post will cover a few questions and observations that have occurred to me over the years. I’ll cover more of these “Why is there air?” type questions in future posts. Vice Admiral James Stockdale Asked A Very Good Question: Read more...
The Corporations Code Can Make Suing Your Former Employees Costly
Supreme Court Justice Felix Frankfurter once told the following story about Oliver Wendell Holmes, Jr. and Ralph Waldo Emerson. When Holmes at the urging of his father visited the great author, Emerson asked “Young man, have you read Plato?” When Holmes said no, Emerson said: You must. You must read Plato. But you must hold him at arm’s length and say, “Plato, Read more...
Worlds In Collision – Agency Law And A Director’s Fiduciary Duties
Some of you may recall the consternation that arose when former Chancellor Chandler seemed to classify directors as agents of the shareholders. Unisuper, Ltd. v. News Corp., No. 1699 (Del. Ch. Dec. 20, 2005) (“the board’s power—which is that of an agent’s with regard to its principal —derives from the shareholders, who are the ultimate holders of power under Delaware law.”). Less than Read more...
Agency – One Of The “Three Great Relations In Private Life”
Suppose you are sued and win. Then, your luck runs out with your spouse and your last, best friend. To make matters worse, you’ve run up big legal fees but have no insurance and no indemnification agreement. Moreover, no statute and no agreement requires the plaintiff to pay these expenses. Has your luck really run out? The answer may be no if you are an agent of a Read more...
