Section 400 of the California Corporations Code establishes the following ground rules with respect to the voting rights of shares:
- Classes or series of shares may have full, limited or no voting rights;
-...more
Recently, UCLA Law School Professor Stephen Bainbridge wrote about his allegiance to writing “decision making” as two words. In support, he cites the Chicago Manual of Style. I think that the Manual actually makes a...more
Visitors to the Securities and Exchange Commission’s website will find a pull-down menu entitled “Regulation”. One of the items on that menu has the oxymoronic title of “Interim Final Temporary Rules”. How can a rule be...more
Readers will know that I’m no fan of California’s Revised Uniform Limited Liability Company Act (aka CARULLCA). As originally enacted, the law was rife with technical errors. As the legislature continues to tinker with the...more
Yesterday’s post concerned when a corporation’s rescission of the issuance of shares does not constitute a “distribution to its shareholders” as defined in Section 166 of the California Corporations Code. I noted that one of...more
Section 166 of the California Corporations Code defines “distribution to its shareholders”. Knowing what constitutes a distribution to shareholders is important because Chapter 5 of the General Corporation Law imposes...more
Nevada, unlike California, applies a reasonableness test to non-compete agreements. Although the Nevada courts haven’t identified a specific heuristic to be followed, a covenant not to compete will be found to be...more
Many may not realize that the Money Transmitter Division of the California Department of Business Oversight licenses and regulates money transmitters. Money transmitters include issuers of payment instruments (money orders),...more
Both California and Delaware allow the formations of committees of the Board of Directors. Both states also allow these committees to exercise the authority of the board, but with certain exceptions. California, however,...more
The Federal Trade Commission is not pleased with Discountmetalbrokers, Inc. In fact, the FTC is so unhappy with the company that it filed a complaint alleging that the company held itself out as a legitimate seller of gold...more
Recently, Broc Romanek hosted another one of his excellent webcasts. This one covered the SEC’s Division of Corporation Finance’s recent issuance of several new and modified Compliance & Disclosure Interpretations regarding...more
Spelling and pronouncing English words can be a challenge. I’ve often been puzzled by the word “guarantee”. What’s the point of including the unpronounced “u”? The word is derived from an Old French word, garantir meaning...more
Readers will recall that last year the California legislature created a statutory exemption for finders from the California’s registration requirement for broker-dealers (Chap. 743, Stats. 2015). That exemption, codified at...more
In the midst of the Great Depression, The New Yorker published a poem by Ogden Nash entitled “Bankers Are Just Like Anybody Else, Except Richer”. But are bankers really wealthier than hoi polloi? The answer may be found in...more
Yesterday’s post addressed the use of litotes in California’s broker-dealer suitability rule. Litotes can be an effective rhetorical device, but as Judge Frank H. Easterbrook observed, it is also ambiguous. Associated...more
The Financial Industry Regulatory Authority, better known as FINRA, imposes a suitability requirement on its members. Rule 2111(a) requires, in part, that a broker-dealer or registered representative “have a reasonable basis...more
In addition to directors and officers, Section 16 of the Securities Exchange Act of 1934 applies to every person who is “directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security...more
In Luther v. Countrywide Financial Corp., 195 Cal. App. 4th 789 (2011), the trial court ruled that state courts do not enjoy concurrent jurisdiction when a class action meeting the definition of a “covered class action” under...more
I spent the Fourth of July holiday in the Fürstentum Liechtenstein, a very beautiful and surprisingly inaccessible part of Europe. Its capital city has no airport. The country is also largely vertical, as it is sandwiched...more
In April, I wrote about a bill, SB 726 (Hueso), that would have added a new section to the Corporate Securities Law banning false statements to government officials for the purpose of manipulating the price of a company’s...more
Many have expressed disappointment that the U.S. Supreme Court denied certiorari in Midland Funding, LLC v. Madden. The question presented by the petitioners in the case was as follows...more
As reported by Broc Romanek yesterday, the Securities and Exchange Commission adopted (again) a resource extraction rule. Congress had ordered the SEC to adopt a rule by April 17, 2011. After belatedly adopting a rule, the...more
Counterfeiting was once considered to be tantamount to treason. It is still a serious, but not capital, crime. In fact, it is one of only four crimes specifically mentioned in the Constitution. Notably, however, the...more
Last week, I discussed the Court of Appeal’s consideration of whether the business judgment rule protects a director from claims based on breach of the corporation’s governing documents. See Does The Business Judgment Rule...more
Under the business judgment rule, a director will not be liable for a mistake in business judgment provided that certain conditions are met. In the case of a California nonprofit mutual benefit corporation, a director who...more