How To Eliminate Accrued Dividends

The existence of accrued and unpaid dividends can hang like an ominous cloud over a corporation's future financings.  Are these accrued but unpaid dividends in the nature of a debt that cannot be erased by an amendment of the articles?  

Why California Law Applies To Dividends Made By A Delaware Corporation (And Not To Some California Corporations)

Corporations incorporated under California's General Corporation Law are subject to the limitations on distributions set forth in Chapter 5 of that law. A foreign corporation may also be subject to Chapter 5 by virtue of Section 2115 of the...

Federal Court Rules Alter Ego Liability Of Members Is Governed By State Of Formation

In an opinion issued last week, U.S. District Court Edward M. Chen ruled that Ohio law applied to an alter ego claim against the members of an Ohio limited liability company.  Greenlight Sys., LLC v. Breckenfelder, 2021 U.S. Dist. LEXIS 120288. He...

Professor Asks The Wrong Question About Lawyers' Role

Professor Stephen Bainbridge's blog yesterday highlighted a recent article by his Sung Hui Kim entitled "Do Lawyers Make Good Gatekeepers?" In answering this question, Professor Kim distinguishes between in-house and outside counsel. As to the...

Bill Would Require Notification To LLCs Of Updated Filings

Corporations Code Section 17702.09 requires every California limited liability company and every foreign limited liability company registered to transact intrastate business in California to file and update a Statement of Information. Although the...

Why Do Boards Get To Spend Money In Proxy Contests

Recently, UCLA Law School Professor posed the question "Why do boards get to spend corporate money to fight off proxy contests?" His answer is answer "because the courts say so". In California, it is because the legislature has said so, at least in...

"Refusal To Acquiesce" To Director's Removal Results In Multimillion Dollar Damage Award

A recent holding by the Second District Court of Appeal is a cautionary tale for directors who fail to acquiesce to a director's removal from the board.  Association for Los Angeles Deputy Sheriffs v. Macias, 63 Cal. App. 5th 1007 (2021). The case...

Why Is The General Corporation Law Silent On Shareholder Liability For Corporate Debts?

Today's blog revisits (and answers) a question that I posed nearly eight years ago in this post.  The question was: "Where Exactly Is It Written That Shareholders Aren't Liable For Corporate Debts?"

9th Circuit: Shareholder Is Injured When California Requires Or Encourages Discrimination

In 2018, California enacted SB 826 to impose female director quotas on publicly held domestic or foreign corporation whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California. At the time, it was...