Keith Bishop on Shareholder Litigation

A Preference For Minority Rule?

Section 204(a)(9) of the California Corporations Code allows the articles of incorporation to include a provision requiring the approval of the shareholders (Section 153) or the approval of the outstanding shares (Section...more

7/11/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , General Corporation Law , Minority Shareholders , Shareholder Litigation , Shareholders

A First Sighting Of Zuckerberg Decision In California

Last year, the Delaware Supreme Court adopted a tripartite test for assessing demand futility allegations in derivative actions. United Food & Commercial Workers Union v. Zuckerberg 262 A.3d 1034 (Del. 2021). Under this...more

6/23/2022 / Board of Directors , Breach of Duty , California , DE Supreme Court , Derivative Suit , Derivatives , Directors , Fiduciary Duty , Shareholder Litigation , Shareholders

California Court Of Appeal Finds Caremark To Be Too Steep A Hill For Plaintiff To Climb

In January 2018, the media began reporting on two security vulnerabilities affecting Intel Corporation's microprocessors - dubbed "Spectre" and "Meltdown". Following these disclosures, Intel's stock price fell and its...more

3/28/2022 / Board of Directors , Breach of Duty , Derivative Suit , Derivatives , Directors , Fiduciary Duty , Shareholder Litigation , Shareholders

Federal Court Applies Demand Excused Test When Demand Was Allegedly Made

I must confess that I confess that I am nonplused by a recent ruling by U.S. District Court Judge James A. Teilborg in SinglePoint Direct Solar LLC v. Curiel, 2022 U.S. Dist. LEXIS 19880. The case involved, among other...more

3/17/2022 / Board of Directors , Breach of Duty , Corporate Officers , Derivative Suit , Shareholder Litigation , Shareholders

Bill Would Urgently Remove Limitation On Virtual Shareholder Meetings And Allow Utopian Meetings

The last sentence of California Corporations Code Section 600(e) imposes a significant limitation on the ability of California corporations to hold virtual-only meetings...more

3/9/2022 / Board of Directors , California , Corporate Counsel , Proposed Legislation , Shareholder Litigation , Shareholders , State Legislatures , Virtual Meetings

Closing Arguments To Start This Morning In First Trial Of California's Female Director Quota Law

Closing arguments are scheduled to begin this morning at 10:00 a.m. (California) in the first trial of the constitutionality of California's female director quota law, SB 826. The trial began last December before Los Angeles...more

2/16/2022 / Board of Directors , Corporate Counsel , Corporate Governance , Corporate Officers , Gender Equity , Shareholder Litigation , Shareholders , Woman Board Members

Some Information That You Won't Find On The Secretary Of State's Website

The California Secretary of State's website provides certain information with respect to a wide range of domestic and foreign entities registered to transact intrastate business, including corporations, limited liability...more

1/24/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , General Corporation Law , Secretary of State , Shareholder Litigation , Shareholders

No File Number, No Filing

Several provisions of the California General Corporation Law that require filing with the Secretary of State specify that the filed instrument must include the Secretary of State's file number. E.g., Cal. Corp. Code §§...more

1/13/2022 / California , Corporate Counsel , Corporate Governance , General Corporation Law , Insider Trading , Secretary of State , Shareholder Litigation

"Disinterested" May Be Pretermitted In Delaware But Not In California

In this post, Professor Stephen Bainbridge posits that the Delaware Supreme Court incorrectly decided Fliegler v. Lawrence, 361 A.2d 218 (Del. 1976) by requiring that stockholder approval of conflicted transaction requires a...more

12/15/2021 / Board of Directors , California , DE Supreme Court , Delaware General Corporation Law , Fiduciary Duty , Shareholder Litigation

Should Boeing Fly To Nevada?

After Vice Chancellor Morgan Zurn's in September issued his opinion in In re Boeing Company Derivative Litigation, UCLA Professor Stephen Bainbridge declaimed that "After Boeing, Caremark is no longer 'the most difficult...more

11/8/2021 / Board of Directors , Boeing , Breach of Duty , Caremark claim , Corporate Counsel , Corporate Governance , Fiduciary Duty , Shareholder Litigation

Can A Corporation Change Its Board Size In Proprio Motu?

As noted in yesterday's post, Secretary of State Shirley N. Weber is asking U.S. District Court Judge R. Gary Klausner to dismiss a challenge to California's board quota statutes. In her motion to dismiss, the Secretary of...more

10/15/2021 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , General Corporation Law , Secretary of State , Shareholder Litigation , Shareholders

Professor Bainbridge's Quibble Might Be No Quillet

In this post, UCLA Law School Professor Stephen Bainbridge quibbles my description of Delaware's two-step approach to the special litigation committee defense in derivative suits. In particular, he points out that Delaware...more

8/25/2021 / Board of Directors , Corporate Counsel , Corporate Governance , Derivative Complaint , Derivative Suit , Derivatives , Shareholder Litigation , Shareholders

Actions Against Shareholders Of Dissolved Corporations (Part III)

Today's post follows up on two prior posts addressing actions by creditors of dissolved corporations. This post discusses the non-applicability of Chapter 5 of the California General Corporation Law to proceedings for...more

8/17/2021 / Board of Directors , California , Corporate Counsel , Corporate Dissolution , Dissolution , General Corporation Law , Shareholder Litigation , Shareholders

Why California Requires Notice Of Rights That Shareholders May Not Have

Dissenters' rights under California's General Corporation Law do not exist unless there are "dissenting shares", a term defined in Section 1300(b) of the California Corporations Code. In order to qualify as "dissenting...more

8/6/2021 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , Fiduciary Duty , Shareholder Litigation , Shareholders

Why California Law Applies To Dividends Made By A Delaware Corporation (And Not To Some California Corporations)

Corporations incorporated under California's General Corporation Law are subject to the limitations on distributions set forth in Chapter 5 of that law. A foreign corporation may also be subject to Chapter 5 by virtue of...more

7/7/2021 / Board of Directors , California , Corporate Governance , Delaware General Corporation Law , Dividends , Fiduciary Duty , Shareholder Litigation , Shareholders

"Refusal To Acquiesce" To Director's Removal Results In Multimillion Dollar Damage Award

A recent holding by the Second District Court of Appeal is a cautionary tale for directors who fail to acquiesce to a director's removal from the board. Association for Los Angeles Deputy Sheriffs v. Macias, 63 Cal. App. 5th...more

6/25/2021 / Board of Directors , Breach of Duty , Corporate Governance , Corporate Officers , Fiduciary Duty , Shareholder Litigation , Shareholders

Why Is The General Corporation Law Silent On Shareholder Liability For Corporate Debts?

Today's blog revisits (and answers) a question that I posed nearly eight years ago in this post. The question was: "Where Exactly Is It Written That Shareholders Aren't Liable For Corporate Debts?"...more

6/24/2021 / Board of Directors , Corporate Governance , Corporate Officers , Fiduciary Duty , Shareholder Litigation , Shareholder Rights , Shareholders

Court Finds No Cause Of Action Against Officer For Interfering With Shareholder Inspection

William Romanowski is a former NFL linebacker who later became the majority shareholder, director, and "public face" of Nutrition 53, Inc. When the company's second largest shareholder was allegedly denied inspection of the...more

5/17/2021 / Board of Directors , Books & Records , California , Corporate Counsel , Corporations Code , Fiduciary Duty , Shareholder Litigation , Shareholders

May A Board Give All The Corporate Assets To Charity?

Yesterday, I listed to a talk by Vice Chancellor J. Travis Laster of the Delaware Court of Chancery entitled "Purpose, Power, and Fiduciary Duty: Dimensions of Delaware's Corporate Law Regime". The webinar was presented by...more

5/13/2021 / Board of Directors , Business Disputes , Controlling Stockholders , Corporate Counsel , Corporate Governance , Corporate Officers , Delaware General Corporation Law , Shareholder Litigation , Shareholders

Can An Article Or Bylaw Forum Selection Provision Bind Persons Who Are Not Yet Stockholders?

Today, the Nevada Assembly Judiciary Committee is holding a hearing on SB No. 95, a bill that would make numerous changes to Nevada's business entity statutes. One change would be to amend NRS 78.046 to authorize the...more

4/22/2021 / Articles of Incorporation , Controlling Stockholders , Nevada , New Legislation , Securities Act , Shareholder Litigation

If Director's Fiduciary Obligations Are Not Contractual, What About Rights To Indemnification?

Yesterday's post concerned, a recent ruling by Vice Chancellor Sam Glasscock in Lacey v. Mota-Velasco, C.A. No. 2019-0312-SG (Del. Ch. Feb. 11, 2021). In finding that a director's duties are fiduciary, not contractual, the...more

2/24/2021 / Board of Directors , Corporate Governance , Corporate Misconduct , Corporate Officers , Delaware General Corporation Law , Fiduciary Duty , Shareholder Litigation , Shareholders

Corporate Charters - Who Are Parties?

Last summer, I considered the question of whether bylaws constitute a contract under California law. See Are Bylaws Contracts Under California Law? and Are Bylaws a Contract or Contracts? Earlier this month, Vice Chancellor...more

2/23/2021 / Board of Directors , Breach of Duty , Charter , Controlling Stockholders , Shareholder Litigation

V.C. Laster Says Stockholder Approval Is Not Required, What Would California Say?

John Jenkins at DealLawyers.com took note yesterday of an interesting ruling by Vice Chancellor J. Travis Laster in Stream TV Networks v. SeeCubic, C.A. No. 2020-0310-JTL (Dec. 8, 2020). On issue in the case was whether...more

12/18/2020 / Board of Directors , Corporate Governance , Delaware General Corporation Law , Fiduciary Duty , Shareholder Litigation , Shareholders

Fee Shifting May Be New To Delaware, But It's Old Hat In California

Writing for DealLawyers.com, John Jenkins yesterday took note of the Delaware Court of Chancery's decision in Pettry v. Gilead Sciences, (Del. Ch.; 11/20). Quoting this Cleary Gottlieb blog, John observes that Pettry...more

12/10/2020 / Attorney's Fees , Corporate Officers , Shareholder Litigation , Shareholders

How Not To Take Valid Shareholder Action

The same might be true of shareholder meetings. In general, there is only one way to get them right but a number of ways to get them wrong. Here are some ways to err...more

11/20/2020 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Keith Bishop

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