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Facebook/Oculus VR Acquisition Raises Pseudo-Foreign Corporation Question

Yesterday, The Guardian reported that Facebook had acquired Oculus VR using a combination of cash and stock. Facebook avoided SEC registration by availing itself of a fairness hearing before the Department of Business...more

7/23/2014 - Department of Business Oversight Facebook Fairness Hearings Foreign Corporations Oculus VR SEC

California Dividend Statutes Found To Preempt Common Law Claims

Chapter 5 of the California Corporations Code imposes specific limitations on “distributions to shareholders”, a term defined in Corporations Code section 166. Directors who approve the making of any distribution to...more

7/22/2014 - Board of Directors Dividends Preemption Professional Liability Shareholder Litigation Shareholders

Californians To Vote On Stripping Common Cause Of Its First Amendment Rights

I recently wrote about SB 1272 (Lieu) which calls a special election for this November 4 at which California voters will be able to cast an advisory vote on whether the U.S. Constitution should be amended to overturn the U.S....more

7/21/2014 - Citizens United Citizens United v Federal Election Commission Constitutional Amendment First Amendment Legislative Agendas New Legislation

Why Doesn’t The SEC Post SubCommittee Recommendations?

Last Thursday, the Investor Advisory Committee held another meeting. The agenda included this rather vague agenda description...more

7/14/2014 - SEC

Legislature Enacts “5 Second Rule” For Electronic Contracts To Sell Real Property

The Statute of Frauds has been a part of Anglo-American jurisprudence for centuries. It made its first appearance in the wake of the English Civil War (yes, they had one too but for very different reasons) when King Charles...more

7/10/2014 - Contract Formation Contract Interpretation Statute of Frauds Text Messages

Does A Director Have A Contractual Right To Compensation?

Yesterday, I wrote about stockholder challenges to director compensation. Today’s post considers what happens when a director joins a board. When someone is invited to join a board, she may ask about compensation. The...more

7/9/2014 - Board of Directors Director Compensation Directors Oral Contracts Proxy Statements Shareholder Resolution

When It Comes To Director Compensation Claims, Nevada And Delaware Are Fundamentally Different

Since 1969, there has no question that directors of a Delaware corporation have the authority to set their own compensation. 8 DGCL § 141(h). Having authority to do something, however, doesn’t mean that the use of that...more

7/8/2014 - Board of Directors Director Compensation Directors

Some Questions Boards Might Want To Ask When Considering Fee-Shifting Bylaws

1. Is a fee-shifting bylaw facially valid under applicable law? The Delaware Supreme Court has held that a fee-shifting bylaw adopted by a Delaware non-stock corporation is facially valid. ATP Tour, Inc. v. Deutscher...more

7/7/2014 - ATP Tours Bylaws Corporate Counsel Fee-Shifting Statutes

Federal Court Rejects Court Of Chancery’s Privity Analysis

Two years ago, I wrote about La. Mun. Police Emples. Ret. Sys. v. Pyott, 46 A.3d 313 (Del. Ch. 2012) in which Vice Chancellor J. Travis Laster refused to give preclusive effect to federal district court’s dismissal of a...more

7/3/2014 - Derivative Standing Derivative Suit Shareholder Litigation Shareholders Standing

How Broad Was That Bylaw?

In yesterday’s posting, I noted a recent Form 8-K filing that discloses the adoption of a fee-shifting bylaw. In ATP Tour, Inc. v. Deutscher Tennis Bund, 2014 Del. LEXIS 209 (Del. May 8, 2014), the Delaware Supreme Court...more

7/2/2014 - ATP Tours Bylaws Corporate Governance Delaware General Corporation Law Fee-Shifting

Public Company Adopts Fee Shifting Bylaw

The Delaware Supreme Court caused quite a stir when it concluded that a fee shifting bylaw adopted by a non-stock corporation did not run afoul of the Delaware General Corporation Law. ATP Tour, Inc. v. Deutscher Tennis...more

7/1/2014 - ATP Tours Bylaws Corporate Governance Delaware General Corporation Law Fee-Shifting Statutes Publicly-Traded Companies

Federal Court Rules Boilermakers Didn’t Decide All Issues And Orders Company To File A Form 8-K

At first glance, the plaintiff’s position in Bushansky v. Armacost, 2014 U.S. Dist. LEXIS 88072 (N.D. Cal. June 25, 2014) seems a bit peculiar. The plaintiff had filed suit challenging Chevron Corporation’s adoption of an...more

6/30/2014 - Bylaws Chevron Class Action Delaware General Corporation Law Federal Jurisdiction Form 8-K Forum Selection Clause Shareholder Activism Shareholder Litigation Shareholders

When “All” Doesn’t Necessarily Mean “All”

In Who Can’t Raise Capital?: The Scylla and Charybdis of Capital Formation, 102 Ky. L.J. 1 (2013-2014), Duke University Professor James D. Cox tackles the widespread criticism of state blue sky laws as barriers to capital...more

6/27/2014 - Blue Sky Laws Regulation CE

Californians May Vote This November On Whether To Overturn Citizens United

Although state law does not explicitly authorize advisory elections, the California legislature is poised to pass a bill calling a special election for this November for an advisory vote. SB 1272 (Lieu) would submit the...more

6/25/2014 - Advisory Election Citizens United Proposed Legislation

How Confused Is This? California Defines LLCs Subject To New Law To Include Foreign LLCs

The California Revised Uniform Limited Liability Company Act. which took effect on January 1 of this year, provides the statutory framework for the formation and operation of limited liability companies. The law appears to...more

6/24/2014 - Foreign Corporations Limited Liability Companies LLC

If Fee-Shifting Bylaws Are Ever Put On Trial, This Case Should Be Exhibit A

Item 5.07(d) of Form 8-K requires issuers to disclose “the company’s decision in light of such vote as to how frequently the company will include a shareholder vote on the compensation of executives in its proxy materials...more

6/23/2014 - Board of Directors Bylaws Executive Compensation Form 8-K Proxy Statements Say-on-Pay SEC Shareholder Litigation Shareholders

Notes From The 2114 Securities Law Conference

Courtesy of Professor Emmett Brown, I recently attended the 2114 Securities Law Conference and I must say that I was heartened by what I heard there and then. Here are some of my notes from the conference...more

6/20/2014 - Dodd-Frank Form 8-K Insider Trading Reporting Requirements SCOTUS SEC Section 16

Why Biolase v. Oracle Partners, L.P. May Not Be The Last Word On Resignations

Yesterday, I mentioned the Delaware Supreme Court’s recent holding in Biolase, Inc. v. Oracle Partners, L.P., 2014 Del. LEXIS 278 (Del. June 12, 2014). In an opinion written by Chief Justice Leo E. Strine, Jr., the Supreme...more

6/19/2014 - Board of Directors Delaware General Corporation Law Directors Hiring & Firing Resignation

May A Director Resign By Telling Another Director “I Quit”?

Suppose in a fit of pique, a director telephones a fellow director and announces that she is quitting the board. Has the director resigned? California Corporations Code Section 305(d) provides...more

6/18/2014 - Board of Directors Corporations Code Resignation Written Notice

This Legislative Lacuna Looms Large In RULLCA

I expect that most limited liability company operating agreements specify how profits and losses are to be allocated among members. Sometimes, they may not. The now repealed Beverly-Killea Act provided a default provision...more

6/17/2014 - Limited Liability Companies RULLCA

Commissioner Rings Pension Fund Tocsin

In a speech given late last month, SEC Commissioner Daniel M. Gallagher warned that “for years, state and local governments have used lax governmental accounting standards to hide the yawning chasm in their balance sheets.” ...more

6/16/2014 - Balance Sheets CalPERS Pensions SEC SEC Commissioner Securities

Nevada Exculpation Statute Leads To Dismissal Of Claims Against Erstwhile Officer

Nevada, unlike either California or Delaware, exculpates corporate officers from liability to the corporation for any damages as a result of “any act or failure to act” in his or her capacity as an officer unless it is proven...more

6/12/2014 - Breach of Duty Dismissals Exculpatory Clauses Fiduciary Duty Police

How A Public Records Act Request Can Be Better Than A Subpoena Duces Tecum

The California counterpart to the Freedom of Information Act (aka FOIA) is the Public Records Act, Government Code Section 6250 et seq. In a recent unpublished decision, the Court of Appeal succinctly explains why submitting...more

6/11/2014 - FOIA Public Records Public Records Act Request For Information Subpoenas

Those Who Hold Themselves Apart Seem To Be Getting All The Attention

Who knew that abstentions were so newsworthy? Here are three recent news stories involving abstentions at annual meetings...more

6/10/2014 - CalPERS Coca Cola Shareholder Litigation Shareholders Warren Buffet

This Ruling Appears To “Unravel The Very Fabric Of The Space-time Continuum”

In prior posts, I’ve cast a jaundiced eye on last year’s amendment of California’s general securities fraud statute, Corporations Code Section 25401. See Die Verwandlung: How The Legislature Likely Raised The Bar On...more

6/9/2014 - Corporate Counsel Corporations Code New Amendments Section 10(b)-5 Section 25401 Securities Securities Act of 1933 Securities Fraud

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