News & Analysis as of

Corporations Code

Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply?

by Allen Matkins on

Our November 16, 2017 post discussed one aspect of the California Court of Appeal’s opinion in Central Laborers’ Pension Fund v. McAfee, Inc., 2017 Cal. App. LEXIS 1008. The case arose from Intel Corporation’s acquisition of...more

California Securities Law Claims Founder On Personal Jurisdiction

by Allen Matkins on

Establishing personal jurisdiction may seem mundane, but without it a plaintiff may soon find itself out of court, as did the plaintiff in Marshall v. Galvanoni, 2017 U.S. Dist. LEXIS 185530....more

Judge Rules Internal Affairs Doctrine Governs California Insider Trading Statute

by Allen Matkins on

As I have mentioned on numerous occasions, California has its own insider trading statute – California Corporations Code Section 25402. The statute is included in the California Corporate Securities Law of 1968. In general,...more

Corp Fin’s New Rule 701 C&DI And California’s Compensation Plan Exemption

by Allen Matkins on

Yesterday, Broc Romanek reported that Corp Fin has published a new C&DI addressing the permissibility of electronic delivery of disclosures under Rule 701(e). Readers will recall that Rule 701 is an exemption from the...more

Promoters And California’s Limited Offering Exemption

by Allen Matkins on

I was admitted to the bar the same year that the legislature completed its parturition of a new limited offering exemption under the Corporate Securities Law of 1968 – California Corporations Code Section 25102(f). AB 1518,...more

What Every Delaware Unicorn Needs To Know About The California General Corporation Law

by Allen Matkins on

Recently, I came across a list of unicorns. These are private companies with valuations of $1 billion or more. I can’t vouch for the accuracy of the list, but I did recognize many of the names. Many of the companies on the...more

New York Judge Considers Meaning Of “Voting Power” In California Contract

by Allen Matkins on

Chapter 1 of the California General Corporation Law includes a large number of definitions, beginning with “Acknowledged” (Section 149) and ending with “Written, in writing” (Section 195). It is easy to gloss over these...more

Professor Bainbridge Precises Corporate Philanthropy

by Allen Matkins on

Earlier this week, UCLA Law School Professor Stephen Bainbridge precised the question of corporate philanthropy. He notes “Virtually all states have adopted statutes specifically granting corporations the power to make...more

California And Virtual Annual Meetings

by Allen Matkins on

Seventeen years ago, Delaware amended Section 211 of the Delaware General Corporation Law to permit corporations to hold electronic meetings of stockholders. 72 Del. Laws, c. 343, §§ 7, 8. In the ensuing years, an...more

What Kind Of California Corporation Must Include A Salary Limitation In Its Articles Or Bylaws?

by Allen Matkins on

I suspect that at least a few California corporate lawyers are unaware of a provision in the California Corporations Code requiring the articles or bylaws of certain corporations to contain a limitation on the salaries paid...more

Filing Statements Of Information Online

by Allen Matkins on

Last June, the California Secretary of State’s office announced bizfile California, which it described as “a new online portal to help businesses file, search, and order business records quickly and conveniently from one...more

Nevada Legislature Reinforces Internal Affairs Doctrine and Emphasizes Transparency in 2017 Business Law Amendments

The 79th Session of the Nevada Legislature enacted several meaningful amendments to Title 7 of the Nevada Revised Statutes (NRS), which governs business entities, including corporations, limited liability companies and...more

Section 25401 – Does No One Know Its History?

by Allen Matkins on

A few years back, I criticized the amendment of California Corporations Code Section 25401 to conform to Rule 10b-5 under the Securities Exchange Act of 1934. See California Creates Complete Chaos By Rewriting Anti-Fraud...more

Binary Options And Securities Regulation

by Allen Matkins on

Recently, the North American Securities Administrators Association (NASAA) updated and expanded its 2015 advisory warning investors about online binary option schemes. NASAA offers the following explanation of “binary...more

California Bill May Spur Rewriting Gender Boilerplate

by Allen Matkins on

On the penultimate day of the current session, the California legislature passed SB 179 (Atkins & Wiener). If signed into law by Governor Brown, this bill would enact the California Gender Recognition Act. In general, SB...more

Nevada Favors New York Over Delaware Precedent For SLC Review

by Allen Matkins on

Nevada law endows a board of directors “full control over the affairs of the corporation”. NRS 78.120(1). This control is subject only to such limitations as may be provided by NRS chapter 7, or the articles of...more

This California Court Held That A Limited Partnership Is No Person

by Allen Matkins on

In preceding posts, I commented on the multifarious definitions of “person” in the Securities Act of 1933, the Exchange Act of 1934 and various laws within the California Corporations Code. As noted, the Corporations Code’s...more

Multifarious Meanings of “Person”

by Allen Matkins on

Last Friday, I observed that the definitions of “person” found in the Securities Act and the Securities Exchange Act are oddly incongruous. The California Corporations Code is similarly inharmonious. Section 18 of the Code,...more

Are Limited Liability Companies “Persons”?

by Allen Matkins on

Limited liability companies did not exist when Congress enacted the Securities Act of 1933 and the Securities Exchange Act of 1934. Therefore, it should be no surprise that as originally enacted, these acts did not mention...more

Something Appears To Be Awry With California’s Insider Trading Statute

by Allen Matkins on

I trust that by now most quotidien readers of this blog should be familiar with Corporations Code Section 25402 which declares insider trading to be unlawful. Although the statute has been on the books since the enactment of...more

Scienter In The News Again

by Allen Matkins on

In May, I wrote about Judge Gonzolo P. Curiel’s decision to grant the defendants’ motion to dismiss federal and state securities law claims in Mueller v. San Diego Entm’t Partners, LLC, 2017 U.S. Dist. LEXIS 77643 (S.D. Cal....more

“Lead Independent Director” Or “Presiding Director”?

by Allen Matkins on

Neither California nor Nevada require that a corporation have either a “lead independent director” or “presiding director” and yet many corporations state that they have such a position. Why?...more

Bylaws And Supermajority Board Voting Requirements

by Allen Matkins on

Yesterday’s post concerned various provisions that, although not required to be included in the articles of incorporation, must be included if they are to be effective. One of these provisions relates to supermajority voting...more

Putting These Provisions In Bylaws Won’t Be Sufficient

by Allen Matkins on

Section 202 of the California Corporations Code lists those provisions that must be included in a California corporation’s articles of incorporation in order for them the be accepted by the Secretary of State for filing. ...more

Shareholder Derivative Suit Or Derivative Action?

by Allen Matkins on

I have long puzzled over the question of which is correct – “derivative suit” or “derivative action”? Historically, the term “suit” was used for proceedings in equity. California courts have generally regarded shareholder...more

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