News & Analysis as of

Corporations Code

A Permit To Negotiate – Really?

by Allen Matkins on

It is sometimes forgotten that the California Corporate Securities Law of 1968 makes it unlawful to either offer or sell a security in California in an issuer transaction unless that the sale has been qualified or exempt from...more

Must A Broker-Dealer Be Licensed As A Personal Property Broker?

by Allen Matkins on

Is your California securities broker-dealer a licensed personal property broker? Does it need to have such a license to make loans to its customers? Anyone reading California Corporations Code Section 25217(c) would...more

Shares of Foreign Subsidiaries

by Allen Matkins on

I expect that little or no thought is given to the possible application of California’s Corporate Securities Law of 1968 when a corporation incorporates a subsidiary under the laws of a foreign country. However, the issuance...more

Court Declines To Impose Alter Ego Liability On LLC’s President

by Allen Matkins on

In general, the debts, obligations, or other liabilities of a California limited liability company do not become the debts, obligations, or other liabilities of a member or manager solely by reason of the member acting as a...more

California Finders Exemption Regulations Are Now Effective

by Allen Matkins on

The Commissioner of Business Oversight’s final regulations implementing a new exemption for finders from the broker-dealer provisions of the Corporate Securities Law took effect on June 21, 2017. See 10 CCR §§ 260.211.4,...more

California Judge Honors Delaware Forum Selection Bylaw

by Allen Matkins on

In May, I wrote about Judge Peter H. Kirwan’s ruling in Drulias v. 1st Century Bancshares, Inc., (Cal. Super. Ct. Case No. 16-CV-294673, Nov. 18, 2016). As readers may recall, Judge Kirwan declined to approve a disclosure...more

A Field Guide To Distinguishing Directors From Officers

by Allen Matkins on

A colleague who is not a corporate lawyer recently noted that in common parlance directors and officers are often simply lumped together as the “same thing”. He suggested that I devote a post to a primer on the differences...more

California Lags Behind The SEC In Permitting Testing Of The Waters In Regulation A Offerings

by Allen Matkins on

In 2015, the Securities and Exchange Commission adopted amendments to Regulation A and other rules and forms to implement Section 401 of the Jumpstart Our Business Startups (JOBS) Act. One significant enhancement to...more

Special Considerations in California M&A Deals

by WilmerHale on

In addition to the deal-structuring issues that typically arise in any acquisition, M&A transactions involving a party incorporated or based in California raise a number of special issues and opportunities. Some of these...more

Disclaiming Proper Appointment With The Secretary Of State – “All You Have To Do Is Ask”

by Allen Matkins on

A lot of things in life may upset you. One these might be discovering that you have been improperly appointed as an agent for service of process, director or officer of a California corporation. Corporations Code Section...more

Referring To Extraneous Agreements In The Articles of Incorporation

by Allen Matkins on

I didn’t take note of AB 1535 (Maienschein) when it was introduced earlier this year because I thought it was a “spot” bill. See “See Spot Run“. As introduced, the bill simply added “which may include a reference to a...more

Scienter Requirement May Be A Question Of Timing

by Allen Matkins on

On several occasions, I have written about whether scienter is required under Corporations Code Section 25401. That question surfaced again last week in Judge Gonzolo P. Curiel’s ruling on the defendants’ motion to dismiss...more

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

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