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Blogs 1 - 25 of 200
californiacorporate&securities 4/28/2017
The Limited Liability Company Agreement That Has No Name

Practitioners under California’s Revised Uniform Limited Liability Company Act will be familiar with the concept of an “operating agreement” (Cal. Corp. Code § 17701.02(s)).  Indeed, I expect that nearly every LLC formed under the CARULLCA has, or will have, some form of operating agreement.  Practitioners, however, may be unaware that the CARULLCA also contemplates the existence of…

The post The Limited Liability Company Agreement That Has No Name appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/27/2017
District Court Rules Plaintiff Failed To Plead Real Estate Investment Was A “Security”

Both the Securities Act of 1933 and the California Corporate Securities Law of 1968 provide similar, but not the same, definitions of a “security”.  See Making A List Of Securities And Checking It Twice.  Although these lists are expansive, courts continue to explain why some items on the lists are not securities and why some…

The post District Court Rules Plaintiff Failed To Plead Real Estate Investment Was A “Security” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/26/2017
Buying Assets? Have You Considered This Secretary’s Certificate?

California Corporations Code Section 1001 requires approval by the outstanding shares (Corp. Code § 152) of the principal terms of a sale of all or substantially all of a corporation’s assets (unless the transaction is in the usual and regular course of business).  Presumably, corporate sellers are in a good position to determine whether Section 1001…

The post Buying Assets? Have You Considered This Secretary’s Certificate? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/25/2017
Court Rules Indirect Purchaser Claims Against Theranos May Proceed

Theranos’ anni horribilium began in October 2015 with the publication of a story by investigative reporter John Carreyrou at The Wall Street Journal.  Lawsuits and government investigations ensued.  Although the Theranos recently announced agreements with the Arizona Attorney General and the Centers for Medicare & Medicaid Services, U.S. District Court Magistrate Judge Nathanael M. Cousins last week dealt a setback to the…

The post Court Rules Indirect Purchaser Claims Against Theranos May Proceed appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/24/2017
Court of Appeal Defines Good Faith Defense Under The UFTA

In 2015, the California legislature refurbished the Uniform Fraudulent Transfer Act and rechristened it as the Uniform Voidable Transactions Act.  2015 Cal. Stats. Ch. 44 (SB 161 (Vidak)).  The UFTA has not left the stage entirely as courts continue to address disputes arising under the former law. In Nautilus, Inc. v. Yang, 2017 Cal. App. LEXIS…

The post Court of Appeal Defines Good Faith Defense Under The UFTA appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/21/2017
Looking For A Deceased Celebrity’s Successor-In-Interest? The Secretary Of State Has An Answer

The California Secretary of State’s office is the repository for a vast a disparate number of filings.  Few people, for example, may be aware that they may register with the Secretary of State’s office as a successor-in-interest to a deceased personality pursuant to California Civil Code Section 3344.1.  A person registering as a successor-in-interest must provide…

The post Looking For A Deceased Celebrity’s Successor-In-Interest? The Secretary Of State Has An Answer appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/20/2017
Alter Ego and the Nevada LLC

California’s version of the Revised Uniform Limited Liability Company Act expressly subjects members to potential alter ego liability:  A member of a limited liability company shall be subject to liability under the common law governing alter ego liability, and shall also be personally liable under a judgment of a court or for any debt, obligation,…

The post Alter Ego and the Nevada LLC appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/19/2017
California And The “Entitled To Vote” Standard

Recently, I came across a proxy statement for a California corporation that stated the vote required for shareholder action on several proposals was “the affirmative vote of the majority of the shares represented at the Annual Meeting and entitled to vote on such matter”.  While this statement was consistent with the voting standard enunciated in…

The post California And The “Entitled To Vote” Standard appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/18/2017
Failure To Return Shares Subject To Repurchase Right Supports Conversion Claim

Closely held issuers often include a repurchase right in their equity award agreements.  I expect that in most cases, shareholders will comply with these provisions.  When a shareholder doesn’t, the company’s most obvious cause of action will be for breach of contract.  Conversion is a less obvious cause, but according to the California Court of Appeal, a viable claim nonetheless. …

The post Failure To Return Shares Subject To Repurchase Right Supports Conversion Claim appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/17/2017
Continuing Confusion About Shareholder Approval Requirements

I continue to read confused statements in proxy statements about the vote required for shareholder action.  The default voting rule in Delaware is found in Section 216(2) of the Delaware General Corporation Law: In all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by…

The post Continuing Confusion About Shareholder Approval Requirements appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/13/2017
The SEC’s Flawed Changes To Exchange Act Forms

Title I of the Jumpstart Our Business Startups (aka JOBS) Act amended the Securities Act and the Exchange Act to provide some regulatory relief to issuers that qualify as an “emerging growth company”.  Recently, the Securities and Exchange Commission adopted various changes to its forms and rules to conform to Title I.  The SEC elected not to comply with the notice and…

The post The SEC’s Flawed Changes To Exchange Act Forms appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/12/2017
Did Joseph P. Kennedy Make Insider Trading Illegal?

The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy. (Penguin Press, 2012) by Professor David Nasaw is one of several books that I am currently reading.  As a securities lawyer, the following sentence gave me pause: “Trading on insider information was not illegal – and would not become illegal until [Joseph P.] Kennedy, as…

The post Did Joseph P. Kennedy Make Insider Trading Illegal? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/11/2017
False Statements By Money Managers Support California Commodity Law Convictions

In 1990, California enacted the California Commodity Law, Stats. 1990, Ch. 969, Corp. Code § 29500 et seq.  Although this law hasn’t attracted the attention of legal writers, it has some very sharp teeth, as illustrated by the recent case of People v. Martinez, 2017 Cal. App. LEXIS 314 (Cal. Ct. App. 2017).  The CCL, among other…

The post False Statements By Money Managers Support California Commodity Law Convictions appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/10/2017
Criminal Conviction Of De Facto Officer Does Not Preclude D&O Coverage

After a two week trial in 2013, a jury convicted Mitchell J. Stein, a lawyer, of mail, wire, and securities fraud based on evidence that he fabricated press releases and purchase orders to inflate the stock price of his client Signalife, Inc., a publicly-traded manufacturer of medical devices.  Mr. Stein received a sentence of 204 months’ imprisonment, over…

The post Criminal Conviction Of De Facto Officer Does Not Preclude D&O Coverage appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/7/2017
Dismissal Based On Forum Non Conveniens Does Not Trigger Fee Shifting

California generally follows the “American Rule” with respect to attorney’s fees.  Trope v. Katz, 11 Cal.4th 274, 278 (1995).  Under the American Rule, each party to a lawsuit must ordinarily pay his own attorney’s fees.  A contract may provide, however, that the prevailing party to an action on the contract may recover attorney’s fees.  Sometimes these clauses are unilateral…

The post Dismissal Based On Forum Non Conveniens Does Not Trigger Fee Shifting appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/6/2017
California’s Corporations Code And Securities Rules Are Rife With Errors

Spring is the traditional season for cleaning and California’s Corporations Code and securities rules are desperately in need of some tidying up.  In a very quick and incomplete review of the Code and the Commissioner’s rules, I found the following: California Corporations Code Sections 5260, 9260 and 23000 refer to the “Internal Revenue Code of 1954”…

The post California’s Corporations Code And Securities Rules Are Rife With Errors appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
Sustainable Development Update 4/5/2017
This Foreign Corporation’s Status May Be Forfeited, But The Resident Agent Remains

A recent ruling by U.S. District Court Judge Otis D. Wright II illustrates how it may be easier to enter California than to leave it.  Real v. St. Jude Med., Inc., 2017 U.S. Dist. LEXIS 47081 (C.D. Cal. Mar. 29, 2017) In 1996, St. Jude Medical, Inc., a Minnesota corporation, qualified with the California Secretary of State’s…

The post This Foreign Corporation’s Status May Be Forfeited, But The Resident Agent Remains appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/4/2017
Removing Elected Officials For Libelous Or Slanderous Statements

In recent years political smearing and outright lying have come to dominate campaigns in California. Candidates are spending less and less time discussing important issues and their own qualifications and more and more time telling falsehoods about their opponents. Although the above quotation sounds as if it could have been written today, it was in…

The post Removing Elected Officials For Libelous Or Slanderous Statements appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 4/3/2017
California Considers Following New England Colonists In Outlawing Fake News

In February, California Assemblyman Ed Chau introduced a bill (AB 1104) that according to its author “attacks the problem of ‘fake news’ by creating a new state law designed to make it illegal for someone to make false or deceptive statements about a candidate or measure on the ballot”.  Specifically, the bill would amend the…

The post California Considers Following New England Colonists In Outlawing Fake News appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/31/2017
Best Efforts – A California Perspective

UCLA Law School Professor Stephen Bainbridge posted some thoughts yesterday on the meaning of contractual “best efforts” requirements.  See What do “best efforts” and variants mean? A proposed set of definitions.  The springboard for Professor Bainbridge’s piece was the Delaware Supreme Court’s recent decision in Williams Cos. v. Energy Transfer Equity, L.P., 2017 Del. LEXIS 128 (Del.…

The post Best Efforts – A California Perspective appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/30/2017
What, Pray Tell, Is A “Foreign Corporation”?

Earlier this week, I wrote about Wellisch v. Pa. Higher Educ. Assistance Agency, 2017 U.S. Dist. LEXIS 40831 (N.D. Cal. Mar. 21, 2017).  The issue was whether the defendant, Pennsylvania Higher Education Assistance Agency, was required to register as a foreign corporation in the State of California.  The case turned on whether the defendant was…

The post What, Pray Tell, Is A “Foreign Corporation”? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/29/2017
Department Of Business Oversight Proposes Changes To Proposed Finders Rule

Last July, the California Department of Business Oversight proposed regulations to implement the provisions of AB 667 (Wagner).  The bill, which was enacted in 2015 and took effect last year, created a new exemption from the broker-dealer requirements for finders, or individuals who, for compensation, introduce potential investors and issuers of securities to each other.  The proposed regulations, among other…

The post Department Of Business Oversight Proposes Changes To Proposed Finders Rule appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/28/2017
Interstate Versus Intrastate Business – What’s The Difference?

Some words are easily confused such as hyperthermia and hypothermia.  In the case of the former, one is overheated and in the case of the latter, one is not warm enough.  The difference becomes more understandable when one knows the roots of these two words.  Both use “thermia” which is derived from the Greek word for heat –…

The post Interstate Versus Intrastate Business – What’s The Difference? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/27/2017
Improper Purpose Frustrates Member’s Assertion Of A Proper Purpose

The inspection rights of members of California nonprofit mutual benefit corporations mirror those of shareholders of corporations under the General Corporation Law. Section 8333 of the Corporations Code provides that the accounting books and records and minutes of proceedings of the members and the board and committees must be open open to inspection upon the…

The post Improper Purpose Frustrates Member’s Assertion Of A Proper Purpose appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 3/24/2017
Want To File A Derivative Suit? You May Soon Be Required To Read Statutes

I have been writing recently about SB 203, a bill that is now pending in the Nevada legislature.  As introduced, the bill would, among other things, require the following: In an action involving or relating to a domestic corporation that is subject to the provisions of NRS 41.520 or alleges a breach of a fiduciary duty by a director…

The post Want To File A Derivative Suit? You May Soon Be Required To Read Statutes appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
Blogs 1 - 25 of 200