California Corporate & Securities Law Blog

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By: Allen Matkins

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Keith Paul Bishop
Keith P. Bishop

Latest from California Corporate & Securities Law Blog

Shares that otherwise meet California’s definition of “dissenting shares” are not dissenting shares if immediately before the reorganization or short-form merger, they are listed on any national securities exchange certified by the Commissioner of Financial Protection and Innovation pursuant to Section 25100(o).  Cal. Corp. Code §  1300(b)(1).   The reason for this “market out” exception is that when a liquid trading market exists, a shareholder who is unhappy with the proposed transaction may simply sell the…
Often parties to a contract will agree that a third party will make the final call as to whether an obligation has been performed or an amount to be determined post-closing.  In California, it has long been held that the parties may agree that the third party’s decision is conclusive and binding in the absence of bad faith, fraud, or gross negligence.   Brown v. Aguilar, 202 Cal. 143 (1927).  Suppose that the third party is an…
Chapter 5 of the California General Corporation Law limits when a California corporation may make a distribution to its shareholders.   Because Section 166 of the Corporations Code defines “distribution to its shareholders” so as to include a share repurchase, any payment to the holder of dissenting shares are subject to the limitations of Chapter 5.  Directors who approve a payment that is contrary to Chapter 5 (and a shareholder who receives the payment) may be…
Earlier this month, a Texas non-profit membership association filed a complaint in the United States District Court for the Central District (Western Division) of California, Alliance For Fair Board Recruitment v. Weber, Case No. 2:21-cv-05644-RGK-RAO (July 12, 2021).  Unlike an earlier court challenges, this lawsuit takes on both SB 826 and AB 979.   These bills impose quotas as to the number of female directors (SB 826) and directors from underrepresented communities (AB 979) on the…
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The California Secretary of State suspends or forfeits an entity for failure to file the required Statement of Information, and in the case of a domestic corporation that is an association formed to manage a common interest development, the required Statement by Common Interest Development Association.  In addition, the Secretary of State may suspend domestic or foreign corporation for the failure of the corporation to reimburse the Victims of Corporate Fraud Compensation Fund…
You will find numerous references to classes of shares in the California General Corporation Law.  See, e.g., Cal. Corp. Code § 203 (Except as specified in the articles or in any shareholders’ agreement, no distinction shall exist between classes or series of shares or the holders thereof.   What you won’t find is a definition of “class”.   The late Professor Harold Marsh, Jr.  explained that the California General Corporation Law does not define either “class” or “series”…
Yesterday’s post discussed the Court of Appeal’s holding in Ramirez v. Gilead Sciences, Inc., 2021 Cal. App. LEXIS 558, that a beneficial owner has no right to inspect corporate records under California Corporations Code Section 1601.  The petitioner in that case also argued that the common law right of inspection extends to beneficial owners as well as record holders of shares.  The Court of Appeal, however, rejected this argument, finding that the “clear and unequivocal” language…
Corporations Code Section 1601(a) unambiguously bestows on shareholders the right to inspect the accounting books, records, and minutes of proceedings of the shareholders and the board and committees of the board of any foreign corporation keeping any records in California  or having its principal executive office in California.  When a stockholder of Gilead Sciences, Inc., a Delaware corporation, filed a petition for writ of mandate  under Section 1601, the trial court rejected the petition, ruling:…
The United States of America was the first country to recognize Israel as a state in 1948, and the first to recognize Jerusalem as the capital of Israel in 2017.  The World Factbook published by the Central Intelligence Agency describes Israel as being located in the “Middle East, bordering the Mediterranean Sea, between Egypt and Lebanon”.    And yet, one of this country’s leading proxy voting advisory firms conspicuously fails to recognize that Israel is…
In 2016, respondent China Yida Holding, Co. (CY), a Nevada corporation, merged with a private holding company, taking CY private and delisting it from the Nasdaq stock exchange.  The merger agreement and the proxy statement filed with the Securities and Exchange Commission provided for dissenters’ rights.  When a stockholder attempted to exercise dissenters’ rights, the company took the position that the stockholder never had dissenters rights because Nevada’s market-out exception applied.   Nevada’s market-out exception provides…