How To Avoid The California General Corporation Law

Posted on September 27, 2019 by Keith Paul Bishop

The California legislature has famously extended many provisions of the California General Corporation Law to corporations under the laws of other states.  But, as Michael Corleone observed at the beginning The Godfather: Part III: "Just when I thought I was out, they pull me back in!"  Here are some steps that corporations can take to avoid being pulled back into the CGCL:

  • Do not hold director elections in California (§ 709);
  • Do not appoint directors in California (§ 709);
  • Do not have the principal executive office in California (§§ 301.3, 1501, 1601 & 2115.5);
  • Do not be named as a defendant in a derivative action in California (§ 800);
  • Do not customarily hold meetings of the board in California (§ 1501);
  • Do not keep any records in California (§ 1601);
  • Do not fail the shareholder and business tests in § 2115.

So much for the internal affairs doctrine!