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
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
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
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
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
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
I was perplexed by Judge Cindee F. Mayfield's repeated references to "derivate claims" in a recent unpublished opinion - JBB Investment Partners v. Fair, Cal.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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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