Recently, I came across a prospectus that included a description of California Corporations Code Section 2115 under the caption “Description of Capital Stock”.  The description began:

We are a Delaware corporation, governed by the Delaware General Corporation Law; however, our headquarters, property and officers are located in California.  Section 2115 of the California Corporations Code (the “California Corporation Long-Arm Statute”) purports to impose on corporations like the Company certain portions of California’s laws governing corporations formed under the laws of the State of California.

This struck me as odd.  First, there is the question of nomenclature. Although there is no official name for Section 2115, the statute is usually referred to as California’s “pseudo-foreign corporation” statute.  I don’t typically hear it referred to as a “long-arm statute”.  That term is usually applied to Section 410.10 of the California Code of Civil Procedure which addresses the jurisdiction of California’s courts, not the application of the General Corporation Law.  Section 410.10 authorizes its “courts to exercise jurisdiction over a foreign corporation to the fullest extent consistent with due process.”  Sanders v. CEG Corp., 95 Cal. App. 3d 779, 783 (1979).

Odder still was the following assertion:

We believe it is likely that we meet the test for the application of the California Corporation Long-Arm Statute and do not anticipate a specific time in the future when we would not meet such test.  The California Corporation Long-Arm Statute, if applicable, would purport to require a different outcome for certain important activities fundamental to the governance of corporations, and you are encouraged to review the effect of the California Long-Arm Statute to determine whether the differences from the Delaware General Corporation Law are important to you.

This sounds reasonable enough, but it overlooks one key fact.  Only two pages before, the prospectus states that the shares of its common stock are listed on the Nasdaq Capital Market.  What has this to do with Section 2115? Subdivision (c) of Section 2115 provides that the statute does not apply to any corporation with outstanding securities listed on “the New York Stock Exchange, the NYSE Amex, the NASDAQ Global Market, or the NASDAQ Capital Market” (emphasis added).