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California Sustainable Communities Law

Blogs 1 - 25 of 1000
californiacorporate&securities 5/22/2018
Federal Judge Applies California Insider Trading Statute To Delaware Corporation

Attentive readers of this blog should be aware that California included an insider trading statute (Corp. Code § 25402) as part of the Corporate Securities Law of 1968.  More than a dozen years ago, a California Court of Appeal held that the internal affairs doctrine does not supplant this statute. Friese v. Superior Court, 134 Cal.App.4th 693, 36 Cal. Rptr. 3d 558 (2005).  The Court rejected an earlier federal court decision, In re Sagent Technology, Inc. Derivative Litigation, 278 F.Supp.2d 1079 (N.D.Cal.2003), as "not persuasive authority".  Then, last fall, U.S. District Court Judge Jon Tigar ruled:

 
californiacorporate&securities 5/21/2018
A Field Guide To Corporations And Domestic Corporations

Some may be surprised to learn that a corporation need not be formed under the California General Corporation Law to qualify as a "domestic corporation".  Corporations Code Section 167 defines "domestic corporation" to be "a corporation formed under the laws of this state" and many other laws provide for the formation.  It turns out that California has enacted numerous other laws providing for the formation of corporations, including three nonprofit corporation laws.  In contrast, the GCL defines "corporation" to be a subset of "domestic corporation".  As somewhat circularly defined in Section 162, "corporation" generally means a corporation formed under the GCL or made subject to the GCL pursuant to Section 102(a).

 
californiacorporate&securities 5/18/2018
Has The DBO Misstated This Statute?

The California Department of Business Oversight administers and enforces the California Financing Law (fka Finance Lenders Law).  Visitors to the DBO's website will find a basic description of the CFL, including the following statement:

 
californiacorporate&securities 5/17/2018
Why "Transfer or Hypothecate"?

Section 204(b) permits the articles of incorporation to include reasonable restrictions upon the right to transfer or hypothecate shares of any class or classes or series.  This is the only time the word "hypothecate" appears in the General Corporation Law (it can also be found in Corporations Code Sections 2603 and 25102(j)(2)).  

 
californiacorporate&securities 5/16/2018
Caremark Claims And California

A popular claim for plaintiffs in derivative litigation against directors of Delaware corporations has been that the directors breached their duty of oversight.  This theory has its genesis in Chancellor William T. Allen's decision in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996).  These claims remain popular notwithstanding Chancellor Allen's oft-quoted (by defendants) observation that "The theory here advanced is possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment."

 
californiacorporate&securities 5/15/2018
The SEC's New C&DI And Cumulative Voting

Last Friday, the staff of the Securities and Exchange Commission issued 45 new Compliance & Disclosure Interpretations relating to proxy solicitations and related schedules.  One of these dealt with the issue of cumulative voting:

 
californiacorporate&securities 5/14/2018
The Cancelled LLC - What Is Thy Power?

To call the California Revised Uniform Limited Liability Company Act "quirky" would be to pay it an unmerited compliment.  Take, for example, the provisions governing dissolution.

 
californiacorporate&securities 5/11/2018
DBO Issues Phishing Warning

The Department of Business Oversight recently published a warning to beware of "phishing" schemes.  The DBO points out that it sends its Monthly Bulletins and other time-sensitive communications through its list host, Granicus (aka GovDelivery).  These will always come from CADBOSubscriptions@Service.GovDelivery.com.  Official communications from DBO staff members are always sent from their DBO email account, which utilizes a firstname.lastname@dbo.ca.gov convention. 

 
californiacorporate&securities 5/10/2018
State Has No Clue As To How Much Board Gender Mandate Will Cost

Several previous posts have highlighted a bill that would impose a gender mandate with respect to the boards of directors of publicly traded corporations that maintain their principal executive office in California.  Having passed out of both the Senate Judiciary and Banking and Financial Institutions committees, the bill is now in the Senate Appropriations committee.  The bill places imposes significant new burdens on the Secretary of State.  For example, the Secretary of State will be required to compile and publish annual reports regarding compliance by subject corporations and will be authorized to impose fines for violations. 

 
californiacorporate&securities 5/9/2018
Secretary Of State Finds Business Chatbots And Online LLC-1 Filings

The California Secretary of State's office yesterday announced two improvements to its business website.  The first is "Eureka" which is intended to allow the public to navigate the Secretary of State's website using "chatbot" technology.  Essentially, this means typing in a question or part of a question.  For example, you might type in "How can I get a copy of a filed document?"  If you can't visualize how this operates, the Secretary of State has released this video.  Eureka was developed in association with Microsoft.  To find Eureka, look for the cartoon bear in the lower right of the Secretary of State's business program page. 

 
californiacorporate&securities 5/8/2018
Will "Best Interest" Preempt Fiduciary Duties?

Last month, the Securities and Exchange Commission proposed to established a standard of conduct for broker-dealers when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.  If adopted as proposed, broker-dealers will be required to act in the "best interest" of the retail customer at the time a recommendation is made "without placing the financial or other interest of the broker-dealer ahead of the interest of the retail customer".  This standard would also apply to natural persons who are associated persons of a broker-dealer. 

 
californiacorporate&securities 5/7/2018
A Curious Case Of Stolen Par Value

The concept of par value has largely fallen into desuetude.  Thus, I was surprised to see a Nevada Supreme Court opinion dealing with stolen par value.  I can understand stealing par value shares, but how does anyone steal par value and why would anyone want to?

 
californiacorporate&securities 5/3/2018
When Demanding Inspection, Don't Overlook The Demand

The wheels of justice turn slowly.  Two years ago, I wrote about Judge Robert C. Jones's ruling in Weinfeld v. Minor, 2016 U.S. Dist. LEXIS 30117 (D. Nev. Mar. 8, 2016).  In that ruling, Judge Jones tackled tackled the question "whether a judgment in an action by a corporation's stockholders suing derivatively on behalf of the corporation is binding under the rules of res judicata in a subsequent action by other stockholders suing derivatively on behalf of the corporation?" He concluded that under Nevada law, the prior lawsuit did not bar a subsequent derivative suit because the plaintiffs in the current suit were "neither parties nor privies to the previous action."

 
californiacorporate&securities 5/2/2018
Is The Codification Of A Director's Standard Of Care A "Liability Created By Law"?

By codifying the standard of performance of directors in Corporations Code Section 309 did the legislature create a liability by law? 

 
californiacorporate&securities 5/1/2018
Does New York's Martin Act Conflict With California's Blue Sky Law?

A recent dispute between plaintiffs domiciled in California and defendants domiciled in New York caused U.S. District Court Judge Arthur D. Spatt to ponder whether to apply New York's Martin Act or California's Corporate Securities Law of 1968.  He asked the parties to brief the question, but to no avail:

 
californiacorporate&securities 4/30/2018
Pay Ratios And Sustainability

California Senator Benjamin Allen would like to establish an Office of Sustainability within the Governor’s Office of Business and Economic Development, also known as GO-Biz.  His bill, SB 950, would require the Office of Sustainability to establish guidelines and criteria that provide for the certification of a sustainable business operating in California.  

 
californiacorporate&securities 4/27/2018
Can California Dictate The Composition Of Foreign Corporations?

Senator Hannah-Beth Jackson's effort to mandate the number of female directors recently passed out of the Senate Committee on Judiciary.  That should not be too surprising as Senator Jackson chairs the committee.  The bill's next stop is the Senate Appropriations Committee.

 
californiacorporate&securities 4/26/2018
Federal Regulator's Departure Foments Move To Tighten Oversight Of Finance Lenders

Richard Cordray's resignation last fall as head of the federal Consumer Financial Protection Bureau may result in more stringent regulation of California Finance Lenders.  In February, Assemblymember Monique Limón introduced AB 2984 as a "spot bill" that made a nonsubstantive change to the definition of "credit union" in the Financial Code.  Last month, the gloves came off as she gutted the bill and amended it to impose tougher regulation of lenders under the California Financing Law (fka Finance Lenders Law). 

 
californiacorporate&securities 4/25/2018
Insurance Or Indemnity?

Suppose you desire to place your prized collection of bibelots into storage.  The storage company offers an to assume the risk of loss for an additional monthly payment.  Have you entered into:

 
californiacorporate&securities 4/24/2018
Legislator Seeks University Study Of Diversity At California High Technology Companies

California Assemblymember Chris Holden has authored a bill that would require the University of California to conduct a study of the racial and ethnic diversity of the board of directors and employees of California high technology companies.  The bill, AB 2819, would define a "California high technology company” as a publicly traded company whose primary trade or business is either software development or computational hardware that has a business location in this state and has more than 1,000 employees in California.

 
californiacorporate&securities 4/23/2018
The Memberless LLC And Diversity

When faced with someone who is blowing things out of proportion, one response might be "Don't make a federal case out of this!"  Sometimes, it may not even be possible to make a federal case.  The reason is that federal courts are courts of limited jurisdiction.  The power of the federal judiciary is circumscribed by Article III, Section 2 of the United States Constitution which permits federal courts to hear only certain controversies such as those between citizens of different states.  The diversity jurisdiction of the U.S. District Courts is codified at 28 U.S.C. § 1332. 

 
californiacorporate&securities 4/20/2018
Court Holds International Cancer Agency Is Not A Private Corporation

More than a half century ago, the World Health Assembly established the International Agency for Research on Cancer as the specialized cancer agency of the World Health Organization.  Although headquartered in Lyon, France, the IARC has a critical role under California's Safe Drinking Water and Toxic Enforcement Act of 1986 (aka Proposition 65) which relies on the IARC to identify known carcinogens pursuant to Labor Code § 6382.

 
californiacorporate&securities 4/19/2018
Department Of Business Oversight Found Liable For Investors' Attorney Fees

In 2011, the Department of Business Oversight filed a civil action against Investco Management & Development LLC and its promoters alleging various violations of the securities laws in connection with the offer and sale of LLC membership interests.  In 2012, the DBO obtained an interlocutory judgment.  The investors subsequently filed their own civil actions.  Investco and the promoters moved to amend the interlocutory judgment to stay all actions.  The DBO filed a written joinder in support of the motion.  The investors successfully opposed the motion to modify and then obtained an attorney fees against the DBO pursuant to Code of Civil Procedure § 1021.5, which has been described as codifying California's version of the private attorney general doctrine.

 
californiacorporate&securities 4/18/2018
Legislature Mulls Mandating Board Interviews Of Everyone But Nonbinary Persons And Caucasian Males

I have previously written about one California legislator's plan to impose gender quotas on publicly traded companies that have their principal executive offices in the state.  The bill is being heard today by the Senate Banking and Financial Institutions Committee.  The bill, SB 826, is being sponsored by the National Association of Women Business Owners - California (NAWBO-CA) and has the support of the Consumer Attorneys of California.  The bill is opposed by a coalition of 24 business groups, including the California Chamber of Commerce.

 
californiacorporate&securities 4/17/2018
Industrial Development Bonds And The Mystery Of Federal Preemption

This should be a straightforward question - Are qualification and registration requirements under state securities laws preempted with respect to industrial development bonds?

 
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