News & Analysis as of

Corporations Code

Hospital Sales: No State Approval Required for Non-Operating Debtor

The Bankruptcy Court for the Central District of California determined the Attorney General’s approval was not required for the sale of a non-operating, non-profit hospital because the hospital no longer qualified as a...more

Did A Non-Existent Committee Move To Update Corporations Code?

by Allen Matkins on

In April, I kvetched about numerous outdated references in the California Corporations Code. For example, several provisions of the Code continue to refer to the “Internal Revenue Code of 1954” more than three decades after...more

Can Pseudo-Foreign Corporations Exonerate Their Directors?

by Allen Matkins on

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

Officers Of Foreign Corporations And The California Courts

by Allen Matkins on

Yesterday’s post concerned Section 2116 of the California Corporations Code. Courts sometimes describe Section 2116 as codifying the internal affairs doctrine. See, e.g., Vaughn v. LJ Internat., Inc., 174 Cal. App. 4th 213,...more

Enforceability Of Exclusive Forum Bylaw May Hinge On The Meaning Of “May”

by Allen Matkins on

No California appellate court has yet addressed the validity of forum selection bylaws in a published decision. When the question comes before a California appellate court, the outcome may turn on the meaning of “may” in...more

Appraisal Rights in Maryland

by Miles & Stockbridge P.C. on

With the recent focus on appraisal rights in the Delaware Court of Chancery, it was only a matter of time before a Maryland court took up the issue. Although originally authored in April 2016, the Circuit Court for Baltimore...more

Federal Judge Rules Out Private Cause Of Action Under California Control Person Statute

by Allen Matkins on

Some persons may be deemed to violate the Corporate Securities Law of 1968 even though they did not directly violate the law. Corporations Code Section 25403(a) provides that a person who with knowledge directly or...more

California Federal District Court Expands Securities Litigation Involving Private Companies by Holding that Indirect Purchasers of...

by Ropes & Gray LLP on

On April 18, 2017, a federal district court in California allowed indirect purchasers of stock in Theranos, a privately held company, to proceed with their lawsuit asserting securities violations under California law. This...more

California And Van Gorkom

by Allen Matkins on

As a corporate lawyer, it is hard to ignore the Delaware Supreme Court’s opinion in Smith v. Van Gorkom, 488 A.2d 858 (1985) overruled on other grounds Gantler v. Stephens, 965 A.2d 695 (Del. 2009). Professor Stephen...more

The Limited Liability Company Agreement That Has No Name

by Allen Matkins on

Practitioners under California’s Revised Uniform Limited Liability Company Act will be familiar with the concept of an “operating agreement” (Cal. Corp. Code § 17701.02(s)). Indeed, I expect that nearly every LLC formed...more

Buying Assets? Have You Considered This Secretary’s Certificate?

by Allen Matkins on

California Corporations Code Section 1001 requires approval by the outstanding shares (Corp. Code § 152) of the principal terms of a sale of all or substantially all of a corporation’s assets (unless the transaction is in the...more

Alter Ego and the Nevada LLC

by Allen Matkins on

California’s version of the Revised Uniform Limited Liability Company Act expressly subjects members to potential alter ego liability...more

California And The “Entitled To Vote” Standard

by Allen Matkins on

Recently, I came across a proxy statement for a California corporation that stated the vote required for shareholder action on several proposals was “the affirmative vote of the majority of the shares represented at the...more

False Statements By Money Managers Support California Commodity Law Convictions

by Allen Matkins on

In 1990, California enacted the California Commodity Law, Stats. 1990, Ch. 969, Corp. Code § 29500 et seq. Although this law hasn’t attracted the attention of legal writers, it has some very sharp teeth, as illustrated by...more

California’s Corporations Code And Securities Rules Are Rife With Errors

by Allen Matkins on

Spring is the traditional season for cleaning and California’s Corporations Code and securities rules are desperately in need of some tidying up. In a very quick and incomplete review of the Code and the Commissioner’s...more

What, Pray Tell, Is A “Foreign Corporation”?

by Allen Matkins on

Earlier this week, I wrote about Wellisch v. Pa. Higher Educ. Assistance Agency, 2017 U.S. Dist. LEXIS 40831 (N.D. Cal. Mar. 21, 2017). The issue was whether the defendant, Pennsylvania Higher Education Assistance Agency,...more

Interstate Versus Intrastate Business – What’s The Difference?

by Allen Matkins on

Some words are easily confused such as hyperthermia and hypothermia. In the case of the former, one is overheated and in the case of the latter, one is not warm enough. The difference becomes more understandable when one...more

Why An Understanding Of Officers As Agents May Be Important

by Allen Matkins on

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?

by Allen Matkins on

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

Why Some Delaware Corporations May Be Concerned With California’s Supermajority Vote Requirements

by Allen Matkins on

Section 710(b) of the California Corporations Code defines a “supermajority vote” as a requirement set forth in a corporation’s articles of incorporation (or certificate of determination) that specified actions be approved by...more

Court Finds Promissory Notes Are Not Securities

by Allen Matkins on

Yesterday’s post concerned the Court of Appeal’s decision in People v. Black, 2017 Cal. App. LEXIS 130 (Cal. App. 6th Dist. Feb. 16, 2017). The case involved the criminal prosecution of an individual for making false...more

What Do You Know? Bill Proposes To Eliminate Scienter

by Allen Matkins on

Corporations Code Section 25401 is California’s basic securities antifraud statute...more

Must A False Statement To A Franchisee Be Made “In this state”?

by Allen Matkins on

The list of instruments and interests included within the definition of a “security” in California Corporations Code Section 25019 is long. A franchise, however, is not to be found amongst the named. In fact, the statute...more

Court Rules Plaintiff Is Not Required To Advance Defendant’s Legal Expenses

by Allen Matkins on

Imagine how frustrated you would be if you sued someone and the defendant responded by demanding that you advance his legal expenses in defending your lawsuit. The plaintiff in Allergia, Inc. v. Bouboulis, 2017 U.S. Dist....more

The Right To Dissent And Fractional Shares

by Allen Matkins on

I’ve devoted several posts to how California’s General Corporation Law deals with fractional shares. Nevada’s approach to fractional shares is somewhat different. For example, Nevada permits rounding up to a full share in...more

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