Annual Reports And Holder Liability

Next Wednesday will be the deadline for many corporations with calendar fiscal year ends to send an annual report to their shareholders.  See Cal. Corp. Code § 1501.  This requirement applies to all corporations incorporated under the California General Corporation Law as well as foreign corporations having their principal executive offices or customarily holding meetings of their boards in California.  However, a corporation with fewer than 100 shareholders may waive the requirement in its bylaws.  In addition, corporations with an outstanding class of securities registered under Section 12 satisfy this obligation if they comply with the SEC's annual report requirement.

Corporations should be aware that they and their officers may be liable to shareholders for furnishing a false, misleading or improperly prepared report.  Small v. Fritz Companies, Inc., 30 Cal. 4th 167, 132 Cal. Rptr. 2d 490, 65 P.3d 1255 (2003).  Liability, moreover, is not limited to shareholders who buy or sell based on the report.  The California Supreme Court in Small held that liability extends to shareholders who make a bona fide showing of actual reliance on the misrepresentation.

How Exactly Does One Passively Use a Trail?

As an avid runner and hiker, I'm happy that some trails have remained open during the current crisis.  I was nonplussed, however, by the following sign:


Perhaps the sign's author is an etymologist who views running or hiking on trails as something to be endured.  "Passive" is derived from the singular, perfect passive participle of the Latin word meaning to suffer or endure, passus.  The word "passion" shares the same root.