“Wherever You Go, There You Are”, But Will You Be In The Proper County?

The California General Corporation Law makes numerous references to the “proper county”.  For example, Corporations Code Section 304 empowers the superior court of the proper county to remove a director in specified circumstances at the suit of shareholders holding at least 10 percent of the number of outstanding shares of any class.  Other sections referring to the “proper county” are: Section 304 (authority of the superior court to summarily order a special meeting); Section 308 (authority of the superior court to appoint a provisional director); Section 419 (action for a replacement share certificate); Section 600 (authority of the superior court to order an annual meeting); Section 601 (authority of the superior court to order notice of a special meeting); Section 709 (authority of the superior court to determine elections); Section 1304 (dissenters’ rights); Section 1501 (authority of the superior court to enforce annual report requirement); Section 1600 (authority of superior court to order delay of shareholders’ meeting); Section 1603 (enforcement of inspection rights); Section 1800 (complaint for involuntary dissolution); Section 1801 (publication of notice by Attorney General); Section 1904 (superior court jurisdiction over voluntary dissolution); Section 1907 (superior court order declaring corporation duly wound up and dissolved); Section 2000 (stay of dissolution);  and Section 2003 (determination of identity of directors).

But just what is the “proper county”?  None of these statutes offers a clue.  There should be no mystery because Section 177 provides that the “proper county” is “the county where the principal executive office of the corporation is located”.  What if the corporation’s principal executive office is out of state?  In that case, the statute provides that the proper county is the County of Sacramento.  The same rule pertains if the corporation has no principle executive office.

Yet, there is a problem.  Some of the statutes listed above apply to foreign corporations as well.  Section 177 refers only to the “corporation”, a term defined in Section 162.  Thus, a strict reading of Section 162 would be that it doesn’t apply to foreign corporations.  However, this would leave unanswered what constitutes the proper county with respect to foreign corporations.  If you are inclined to believe that people don’t fight over questions under Section 177, see Capp Care v. Superior Court, 195 Cal. App. 3d 504 (1987).