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California Sustainable Communities Law

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californiacorporate&securities 8/17/2017
A Subsidiary Post

Not too long ago, I wrote about the Securities and Exchange Commission’s confusing classification of subsidiaries.  See The Case Of The Wholly Owned, But Not Totally Held, Subsidiary That May Or May Not Be 100% Owned.  Since this blog is concerned primarily with California corporate and securities laws, I would be remiss in not adding a…

The post A Subsidiary Post appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/16/2017
Under The Public Records Act, A Losing Party May Be The Prevailing Party

When the California legislature enacted the Public Records Act,  it declared “access to information concerning the conduct of the people’s business is a fundamental and necessary right of every person in this state”.  Gov’t Code § 6250.  The legislature was serious, granting “any person may institute proceedings for injunctive or declarative [sic] relief or writ of…

The post Under The Public Records Act, A Losing Party May Be The Prevailing Party appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/15/2017
California Supreme Court Declines To Rehear Documentary Transfer Tax Appeal

In June, I wrote about the California Supreme Court’s disappointing decision in 926 N. Ardmore Ave. v. County of L.A., 2017 Cal. LEXIS 4768 (Cal. 2017).  See California Supreme Court Affirms Novel M&A Tax. Readers may recall that the Supreme Court applied the concept of a change in ownership for purposes of triggering property tax reassessments…

The post California Supreme Court Declines To Rehear Documentary Transfer Tax Appeal appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/14/2017
Inside And Outside Reverse Veil Piercing

UCLA Professor Stephen Bainbridge has published several posts commenting on my post discussing Curci Invs. v. Baldwin, 2017 Cal. App. LEXIS 698.  The issue in Curci was whether reverse veil piercing of a limited liability company is possible in light of Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal.App.4th 1510 (2008).  The Court distinguished Postal…

The post Inside And Outside Reverse Veil Piercing appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/11/2017
California Court Green Lights Reverse Veil Piercing Of Delaware LLC

Courts historically have applied the alter ego doctrine to “pierce the corporate veil” so that a shareholder may be held liable for the debts or conduct of the corporation.  California has extended the possibility of alter ego liability to members of California limited liability companies: A member of a limited liability company shall be subject to…

The post California Court Green Lights Reverse Veil Piercing Of Delaware LLC appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/10/2017
Transfer To Non-Existent Corporation Held To Be A Transfer Nonetheless

Sometimes, the law is just weird.  The case of PGA West Residential Ass’n, Inc. v. Hulven Int’l, Inc., Cal. Ct. App. Case No. E064270 (Aug. 9, 2017) is weirder than most.  The lawsuit alleged that the defendant had tried to insulate the equity in his condominium from creditor claims by executing a promissory note and…

The post Transfer To Non-Existent Corporation Held To Be A Transfer Nonetheless appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/9/2017
How To Confer A $6.9 Million Benefit For Less Than A Half Dollar

In March 2011, the three-member compensation committee of EchoStar Corporation awarded options to purchase 1.5 million shares of company stock to its Chairman, Charles W. Ergen.  According to EchoStar’s proxy statement for its 2012 annual meeting, the aggregate grant date fair value of the award was $21.6 million.  There was just one problem, the plan…

The post How To Confer A $6.9 Million Benefit For Less Than A Half Dollar appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/8/2017
Did The Co-Founder Of Alcoholics Anonymous Violate Rule 10b-5?

Recently, I enjoyed watching My Name is Bill W., a 1989 movie that starred James Woods, JoBeth Williams and James Garner.  The film tells the story of Alcoholics Anonymous co-founder William Griffith Wilson (aka Bill W.).  In telling his story, the film details Wilson’s  work on Wall Street during the 1920s.  According to the film, Wilson decides…

The post Did The Co-Founder Of Alcoholics Anonymous Violate Rule 10b-5? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/7/2017
Was The Jury Empaneled Or Impaneled?

Last week’s news was filled with reports that Special Counsel Robert Mueller had impaneled a grand jury (The Wall Street Journal).  Or did Mr. Meuller empanel a grand jury (The Washington Post).  Aside from the political and legal issues, these reports raised two questions.  First, why do we talk of em/impaneling a jury?  Second, which…

The post Was The Jury Empaneled Or Impaneled? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/4/2017
Nevada Supreme Court Holds That Member-Managers Were Not Proper Parties To Negligence Claim Against An LLC

In an opinion issued yesterday, the Nevada Supreme Court addressed the extent to which a member of a limited liability company is protected in a negligence based tort action against the LLC.  Gardner v. Henderson Water Park, LLC, 133 Nev. Adv. Op. 54 (2017).  The plaintiffs in the case are the parents of a boy who…

The post Nevada Supreme Court Holds That Member-Managers Were Not Proper Parties To Negligence Claim Against An LLC appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/3/2017
Another “Best Practices” May Not Be Best After All

For years, I’ve been critical of governance experts who promote “best practices” without any basis that these practices are actually effective, much less the best.  For example, the Harvard Law School’s Shareholder Rights Project undertook to push numerous companies to eliminate their staggered boards.  Two former SEC Commissioners took the Harvard SRP to task for advancing shareholder…

The post Another “Best Practices” May Not Be Best After All appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/2/2017
Court Of Appeal Holds LLC’s Former Counsel May Represent Insider Defendants In Derivative Suit

Derivative actions can be somewhat confusing.  Although the entity is essentially the plaintiff, it is named as a defendant.  Initially, one might question why must the corporation be named as a party?  I can think of at least two reasons.  First, the litigation involves the rights of the entity directly.  Second, including the entity as a party…

The post Court Of Appeal Holds LLC’s Former Counsel May Represent Insider Defendants In Derivative Suit appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 8/1/2017
Materiality – “Shoulda, Coulda, Woulda?”

John Jenkins recently took note of this letter from the SEC’s Office of Investor Advocate commenting on a proposal by the Financial Accounting Standards Board to amend the definition of “materiality” in Concepts Statement No. 8, Conceptual Framework for Financial Reporting.  That Concepts Statement currently defines “materiality” as follows: Information is material if omitting it or…

The post Materiality – “Shoulda, Coulda, Woulda?” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/31/2017
Does Disclosure Of Results Of Internal Investigation Constitute Subject Matter Waiver?

Last Friday, I wrote about one of the docketed appeals in Wynn Resorts, Limited v. Eight Jud. Dist. Ct., 41 Nev. Adv. Op. 52 (2017).  Today’s post concerns the other docketed appeal in that case.  This appeal addressed whether disclosure of an internal investigation results in a waiver of the attorney-client privilege.  To recap, the case…

The post Does Disclosure Of Results Of Internal Investigation Constitute Subject Matter Waiver? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/28/2017
Does Assertion Of Business Judgment Rule Waive Attorney-Client Privilege?

Nevada, like California, has codified the attorney-client privilege: A client has a privilege to refuse to disclose, and to prevent any other person from disclosing, confidential communications: Between the client or the client’s representative and the client’s lawyer or the representative of the client’s lawyer Between the client’s lawyer and the lawyer’s representative. Made for…

The post Does Assertion Of Business Judgment Rule Waive Attorney-Client Privilege? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/27/2017
Negotiating Permits?

The title of yesterday’s post may have been a bit recondite for some readers as I never directly mentioned negotiating permits in the post.  Therefore, today’s post will back up a bit and fill in some of the missing pieces. As noted yesterday, the California Corporate Securities Law prohibits offers of securities by issuers unless the…

The post Negotiating Permits? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/26/2017
A Permit To Negotiate – Really?

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 or not subject to qualification.  Cal. Corp. Code § 25110.  Thankfully, the CSL exempts most offers.  Today’s…

The post A Permit To Negotiate – Really? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/25/2017
Why Not All Purchasers Are Buyers

Modern English is partially the product of an unnatural grafting of French onto Old English.  It is for this reason that we often find two words for nearly the same thing.  Thus, we call the animal a cow  but the food beef.  The barnyard term is Old English, cu, while the table term is Old French, buef.  This should…

The post Why Not All Purchasers Are Buyers appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/24/2017
Must A Broker-Dealer Be Licensed As A Personal Property Broker?

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 conclude that it must:  A broker-dealer licensed under this chapter making loans to its customers which are subject to the provisions of Division…

The post Must A Broker-Dealer Be Licensed As A Personal Property Broker? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/21/2017
Shares of Foreign Subsidiaries

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 of shares to a corporate parent located in California may well involve the offer and sale of securities in California.  As…

The post Shares of Foreign Subsidiaries appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/20/2017
The Case Of The Wholly Owned, But Not Totally Held, Subsidiary That May Or May Not Be 100% Owned

When someone says that a subsidiary is “wholly owned”, I believe that the common understanding is that the parent company owns all of the issued and outstanding equity of the subsidiary.  What if the statement is that the subsidiary is “totally” or “100%” owned?  I suspect that most people would not intuit a different understanding. …

The post The Case Of The Wholly Owned, But Not Totally Held, Subsidiary That May Or May Not Be 100% Owned appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/19/2017
Court Declines To Impose Alter Ego Liability On LLC’s President

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 member or manager acting as a manager for the LLC.  Cal. Corp. Code § 17703.04(a).  An important exception to this…

The post Court Declines To Impose Alter Ego Liability On LLC’s President appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/18/2017
When “The Check Is In The Mail” Extinguishes A Debtor’s Obligation

Most creditors likely assume that they have not been paid unless and until they receive checks from their debtors.  In many cases that assumption may be correct, but in some cases it won’t be.  Section 1476 of the California Civil Code provides: If a creditor, or any one of the two or more joint creditors, at any…

The post When “The Check Is In The Mail” Extinguishes A Debtor’s Obligation appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/13/2017
CalPERS And Securities Lending – Waiting For Godot?

California Government Code Section 7603 is short and unambiguous: All loans of securities shall be made pursuant to one of the standardized security loan agreement forms, as developed by the administrators of the State Pooled Investment Account (as authorized by Section 16481 of the Government Code) or the Public Employees Retirement System or the State…

The post CalPERS And Securities Lending – Waiting For Godot? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 7/12/2017
California Judge Honors Delaware Forum Selection Bylaw

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 only settlement based on In re Trulia, Inc. Stockholder Litig., 129 A.3d 884 (Del. Ch. Jan. 22, 2016).  Recently, Judge Brian C. Walsh…

The post California Judge Honors Delaware Forum Selection Bylaw appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
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