Will the “Real” Directors Please Take Your Seats?

As discussed in this earlier post, the Securities and Exchange Commission’s new proxy access requirements will likely bring attention to director qualification requirements. The California General Corporation Law does not require that a person satisfy any particular qualification requirements to hold office as a director. The bylaws may, however, impose qualification requirements. Cal. Corp. Code § 212(b)(4). These qualifications should be upheld if they (1) are reasonable; and (2) do not contravene the corporation’s articles of incorporation or California law. Olincy v. Merle Norman Cosmetics, Inc. 200 Cal. App. 2d 260, 266-67 (1962) (case involving a Nevada corporation). Even if valid, questions are likely to arise concerning when and how these qualifications should be met.

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