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Nevada Favors New York Over Delaware Precedent For SLC Review

Nevada law endows a board of directors “full control over the affairs of the corporation”. NRS 78.120(1). This control is subject only to such limitations as may be provided by NRS chapter 7, or the articles of...more

Bylaws And Supermajority Board Voting Requirements

Yesterday’s post concerned various provisions that, although not required to be included in the articles of incorporation, must be included if they are to be effective. One of these provisions relates to supermajority voting...more

Another “Best Practices” May Not Be Best After All

For years, I’ve been critical of governance experts who promote “best practices” without any basis that these practices are actually effective, much less the best. For example, the Harvard Law School’s Shareholder Rights...more

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...more

Is It A Breach Of Fiduciary Duty To Fail Or Refuse To Conform To Delaware’s Judicial Decisions Or Practices?

The answer to this question in Nevada may soon be an unequivocal “no”. Last week, the Nevada Legislature unanimously passed SB 203 and sent it to Governor Brian Sandoval for signature. Among other things, Section 2 of SB...more

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...more

More On Revlon Duties In California

Following yesterday’s post concerning the status of Revlon duties in California, I received a note from Suzanne Weakley, an attorney at the California Continuing Education of the BAR (aka the CEB). For those readers not...more

Is There A “Revlon Duty” In California?

There are certain seminal Delaware corporate law cases that are so well known that corporate lawyers are wont to assume that they have been adopted and followed everywhere. One such case is Revlon, Inc. v. MacAndrews &...more

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...more

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...more

Nevada Legislature Ponders Rejection Of Unocal And Revlon Standards

Thirty years ago, the Delaware Supreme Court issued two seminal opinions concerning how courts ought to review director decisionmaking in merger and acquisition transactions. In the first case, Unocal Corporation v. Mesa...more

Professor Bainbridge On My “Beef” With Gantler v. Stephens

Professor Stephen Bainbridge yesterday provided a well considered assessment of my “beef” with the Delaware Supreme Court’s holding in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers...more

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...more

Can The Board Remove A Director?

Can a board of directors remove one of its own? In the case of a California corporation, the answer is no. The power to remove directors is vested in the shareholders and the superior court pursuant to Corporations Code...more

What The Delaware Supreme Court Overlooked In Gantler v. Stephens

I have never been reconciled to the Delaware Supreme Court’s pronouncement in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”. Officers are, as...more

Is A Corporate Director An Employee Subject To Workers’ Compensation?

Corporate lawyers tend to believe that directors and officers are not ineluctably employees. Thus, it may come as a surprise that California’s workers’ compensation law has for some time defined an “employee” to include...more

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 §...more

Who Votes As Proxy For Shares Standing In The Name Of Another Corporation?

The Proxy Season blog yesterday discussed the following question from the Q&A Forum of TheCorporateCounsel.net...more

When A Director May Not Be Interested In Director Compensation

Suppose that a corporation has three directors, A, B & C, each of whom is compensated by the corporation. Is director A financially interested in a resolution fixing the compensation of director B? Corporations Section...more

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...more

Why Nevada Is A More Reliable Alternative To Delaware

Directors and officers cannot always base their decisions on first-hand information. As a practical matter, they must receive and act based on information and opinions of others. The question then becomes whether a...more

Hiring & Firing Officers In California

John Jenkins at The Mentor Blog addresses the question of who has authority to hire and fire officers? He notes...more

Why You Should Have Read Last Week’s Posts On California’s D&O Loan Ban

I spent the better part of last week writing about California Corporations Code Section 315. The statute general prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the...more

Court Rules Board Of Directors Is Incapable Of Being Sued

Plaintiffs sue corporations and they sue individual members of the boards of directors, but can a plaintiff sue a board of directors as a body? That was the question in Theta Chi Fraternity, Inc. v. Leland Stanford Junior...more

Are Alternate Committee Members “Then Serving”?

A number of amendments to Delaware’s General Corporation Law took effect at the beginning of this month. One of these changes was to establish a default quorum requirement for meetings of committees of corporate boards of...more

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