Keith Bishop on Corporate Counsel

Where Have All The Articles Gone?

The term "article" has an interesting etymology. It is derived (via Latin) from the Ancient Greek word, ἄρθρον, meaning a bodily joint. Articles, like joints, connect things together....more

7/19/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , General Corporation Law , Secretary of State , Shareholders

Are Your Bylaws Demode?

While the California General Corporation Law contemplates that corporations will have bylaws but does not explicitly require that they do. In my experience, it is extremely rare to come across a corporation that has not...more

7/15/2022 / Board of Directors , Bylaws , California , Corporate Counsel , Corporate Governance , General Corporation Law , Shareholders

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

This "Defunct" Delaware Corporation Remains A California Citizen

Diversity jurisdiction of the federal courts requires complete diversity of citizenship. 28 U.S.C. § 1332. If a party is a corporation, then it becomes necessary to determine the location of the corporation's citizenship. ...more

6/29/2022 / California , Corporate Counsel , Delaware , Jurisdiction , Secretary of State

Must A Nonprofit Abnegate Private Gain?

The California Corporations Code includes provisions governing a wide variety of nonprofit organizations. However, the "Big 3" categories of nonprofit corporations are the public benefit, mutual benefit and religious...more

6/28/2022 / B Corporation , Board of Directors , California , Charitable Organizations , Corporate Counsel , Corporate Governance , Corporations Code , Directors , Nonprofits , Public Benefit Corporation

A Truly Piscatory Exemption

California's blue sky law, the Corporate Securities Law of 1968, generally requires that offers and sales of securities be qualified unless the security or transaction is exempt or not subject to qualification. Most...more

6/22/2022 / California , Corporate Counsel , Corporations Code , Department of Financial Protection and Innovation (DFPI) , Securities , Securities Fraud

Why A River Runs Through Every Derivative Action

I was perplexed by Judge Cindee F. Mayfield's repeated references to "derivate claims" in a recent unpublished opinion - JBB Investment Partners v. Fair, Cal. Ct. of Appeal Case No. No. A160098 (June 9, 2022). Was this a...more

6/17/2022 / California , Corporate Counsel , Corporations Code , Derivative Suit , Derivatives , General Corporation Law

Due Process No Bar To Alter Ego Action

In a decision published on Wednesday, the California Court of Appeal held that a defendant's due process rights do not protect the sole shareholder of a corporation from an alter ego action. Lopez v. Escamilla, Cal. Ct....more

6/9/2022 / Alter Ego , Corporate Counsel , Corporate Governance , Corporate Veil , Personal Liability , Shareholders

Can A Corporation Pledge Its Own Shares?

A "pledge" is a bailment for security. It is effected by delivery of possession of the pledged property, although title remains in the pledgor. Hartford v. State Bar, 50 Cal. 3d 1139, 791 P.2d 598, 270 Cal. Rptr. 12...more

5/27/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , Publicly-Traded Companies , Shareholders

Whose Law Applies To LLC Alter Ego Claims?

In a recent ruling, U.S. District Court Judge Dale A. Drozd applied California law to the determination of which law to apply to an alter ego claim...more

5/25/2022 / Alter Ego , Corporate Counsel , Corporate Governance , Limited Liability Company (LLC)

The Verdict Is In On California's Female Director Quota Law

As I noted yesterday, Los Angeles Superior Court Judge Maureen Duffy-Lewis has found California's female director quota law, SB 826, to violate the Equal Protection clause of the California Constitution (A person may not be ....more

5/17/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Diversity , Gender Equity , Publicly-Traded Companies , Quotas , Woman Board Members

Judge Finds California Female Director Quota Law To Be Unconstitutional

Following a lengthy trial, Los Angeles Superior Court Judge Maureen Duffy-Lewis has found that California's female director quota law violates the Equal Protection Clause of the California Constitution...more

5/16/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Diversity , Gender Equity , Quotas , Shareholders , Woman Board Members

Are Directors Joint Clients?

In a ruling this week, Vice Chancellor Lori Will addressed whether one-half of an evenly divided board could gain access privileged communications between the corporation and its long-time outside counsel. In re Aerojet...more

5/12/2022 / Attorney-Client Privilege , Board of Directors , Continuing Legal Education , Corporate Counsel , Corporate Governance , Directors , Risk Assessment

Section 2115's Peculiar Consolidation Rule

Section 2115 of the California Corporations Code famously purports to impose numerous provisions of the General Corporation Law on foreign corporations if two tests are met. One of these tests, the so-called "business...more

4/28/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Corporations Code , Foreign Corporations , General Corporation Law , Information Statements , Secretary of State , Shareholders

May A Board Sanction A Director By Withholding Corporate Information?

A recent Alaska Supreme Court decisions addresses, but does not decide, the question of whether a corporation may punish a director by withholding corporate information. In Borer v. Eyak Corp., 2022 Alas. LEXIS 37, winning...more

4/7/2022 / AK Supreme Court , Alaska , Board of Directors , Corporate Counsel , Corporate Governance , Fiduciary Duty , Shareholders

Judge Weighs Challenge To California Board Quota Law

On Monday, Los Angeles Superior Court Judge Terry Green heard arguments on opposing motions for summary judgment in a case challenging the constitutionality of AB 979. Crest v. Padilla, L.A. Super. Ct. Case No....more

3/16/2022 / Board of Directors , California , Chief Compliance Officers , Compliance , Corporate Counsel , Corporate Governance , Diversity , Quotas , Shareholders

California Bill Aims To End The Asymmetry Of Corporate Time

For the last eight years, Delaware corporations have been been able to escape the "asymmetry of time" through either ratifying past corporate acts or obtaining validation from the Delaware Court of Chancery. Del. Gen. Corp....more

3/14/2022 / Board of Directors , California , Corporate Counsel , Corporate Governance , Delaware General Corporation Law , General Corporation Law , Shareholders

In This Case, Bylaws By Any Other Name Are Still Bylaws

The California General Corporation Law authorizes the adoption of bylaws, but does not purport to define the term. Cal. Corp. Code § 110. The Nonprofit Corporation Law defines "Bylaws" not by description but by stating what...more

3/11/2022 / Board of Directors , Bylaws , California , Corporate Counsel , Corporate Governance , General Corporation Law , 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

California Court Declines Full Faith And Credit To Utah's Compulsory Cross-Complaint Statute

In 2016, the California legislature enacted Labor Code Section 925 which prohibits an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a provision...more

3/2/2022 / Arbitration , California , Corporate Counsel , Employer Liability Issues , Human Resources Professionals , State Labor Laws , Wage and Hour

CFL Licensees: Beware Of The Ides Of March!

Every month of the year has an Ides. This year the Ides will be doubly significant for licensees under the California Financing Law, Cal. Fin. Code § 22000 et seq. ...more

2/23/2022 / California , Corporate Counsel , Corporate Financing , Financial Services Industry , Financing , Licensees

When Merging What Must The Board And Shareholders Approve?

The California General Corporation Law recognizes three subsets of a "reorganization" - a "merger reorganization", an "exchange reorganization", or "sale-of-assets reorganization". Cal. Corp. Code § 181. Chapter 11 of the...more

2/17/2022 / Acquisitions , Board of Directors , California , Corporate Counsel , General Corporation Law , Mergers , Shareholder Approval , Shareholders

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

Must Board Meeting Notices Be Ingenuous?

Yesterday's post briefly discussed former Chancellor William Chandler's ruling in Fogel v. U.S. Energy Systems, Inc., 2007 Del. Ch. LEXIS 178. In finding that no valid board meeting had occurred, Chancellor Chandler stated...more

2/9/2022 / Annual Meeting , Board Meetings , Board of Directors , California , Corporate Counsel , Corporate Executives , Corporate Governance , Corporate Officers , General Corporation Law , Shareholders

When An Announcement Is A Solicitation

Yesterday's post discussed the Court of Appeal's upholding of a non-solicitation agreement notwithstanding Section 16600 of the California Business & Professions Code. Blue Mt. Enters. v. Owen, 2022 Cal. App. LEXIS 73. The...more

2/2/2022 / California , Corporate Counsel , Non-Solicitation Agreements , Solicitation

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