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CALIFORNIA CORPORATE & SECURITIES LAW

Did The Harvard Shareholder Rights Project Prove Itself Wrong?

In December 2014, Stanford Law School Professor Joseph A. Grundfest and Daniel M. Gallagher incited an academic titanomachy when they released a draft of an academic paper provocatively entitled “Did Harvard Violate Federal Securities Law?  The Campaign Against Classified Boards of Directors“.  In this case, “Harvard” was the Harvard Shareholder Rights Project which described itself as “a clinical program operating at…

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Qualification Of Offers And Sales Of Non-Voting Common Stock Is No Snap In California

In March, Snap Inc. announced that it and the selling stockholders had sold of 230 million shares of Class A Common Stock to the public at an initial public offering price of $17.00 per share.  The gross proceeds of the offering to the company and its selling stockholders was $3.91 billion. Even successful offerings have…

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California And Van Gorkom

As a corporate lawyer, it is hard to ignore the Delaware Supreme Court’s opinion in Smith v. Van Gorkom, 488 A.2d 858 (1985) overruled on other grounds Gantler v. Stephens, 965 A.2d 695 (Del. 2009).  Professor Stephen Bainbridge has called it “one of the most important corporate law decisions of the 20th century” and Bernard Sharfman has…

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Donald Trump’s Contribution To Nevada Corporate Law (And My Book)

A signature block in a contract seems like a small thing, but sometimes it can lead to litigation.  When an officer signs a contract, is he signing solely as agent for the corporation or might he also be signing in his individual capacity?  In 1993, future presidential candidate Donald J. Trump faced just that question…

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Professor Bainbridge Takes On S.B. 75 And The Delaware Bar

UCLA Law Professor Stephen Bainbridge recently posted an article calling Delaware’s recently enacted S.B. 75 a “self-inflicted wound”.   SB 75, which was signed into law late last month, limits the ability of Delaware stock corporations to adopt so-called “fee shifting” bylaw provisions. What I find particularly interesting is Professor Bainbridge’s thesis that the Delaware legislature…

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Why Commissioner Gallagher Is Not Mistaken On Political Spending Disclosure

In this post published on October 30, I observed: According to Enver Fitch and Limor Bernstock at ISS ESG Proxy Research, shareholders associated with the Center for Political Accountability submitted 47 proposals this year.  The 32 that actually went to a vote only garnered an average of 28.5% of the vote.  That means that on…

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The Point Of An Unenforceable Noncompete May Be Very Sharp Indeed

Writing for Mother Jones, Kevin Drum recently asked “What’s the point of an unenforceable noncompete agreement?”  He posits two possible answers: First, it’s just boilerplate language they don’t really care about but left in just in case.  The second is that they find it useful as a coercive threat. UCLA Law School Professor Stephen Bainbridge picked…

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California’s New RULLCA Provides Ample Potential For Member Liability

Recently, I wrote about Corporations Code Section 17703.04(a) which in singularly inept fashion attempts to establish the non-liability of members of a limited liability company under the California’s new Revised Uniform Limited Liability Company Act.  Whatever principle Section 17703.04(a) may be trying to enunciate, it’s clear that the new act provides ample opportunity for member liability, including the following: Liability…

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The Legality Of Corporate Giving

According to the Chronicle of Philanthropy, the top three corporate philanthropists (Wells Fargo, Walmart and Chevron) in 2012 gave nearly $900 million in cash in 2012.  At the most fundamental level, do corporations have the power to make donations? For corporations governed by the California General Corporation Law, the answer is generally yes.  Section 207(e) of the California Corporations…

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Is LLC Veil Piercing Really “Not Required By Statute”?

Professor Stephen Bainbridge begins his abstract Abolishing LLC Veil Piercing with the following assertion: Courts are now routinely applying the corporate law doctrine of veil piercing to limited liability companies.  This extension of a seriously flawed doctrine into a new arena is not required by statute and is insupportable as a matter of policy. But is…

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