Chapter 5 of the California Corporations Code prohibits a distribution to shareholders unless specified conditions are met. The most common type of distribution subject to these limitations is a dividend, but the term "distribution to shareholders"...
The California General Corporation includes several provisions requiring notice to either directors or shareholders. Section 307, for example, requires that notice be given to directors of special meetings of the board. The statute further...
Section 204 of the California Corporations Code lists a number of possible provisions that may be included in the articles and "which shall not be effective unless expressly provided in the articles". Included in this list of permissible provisions...
On Monday, I wrote about Berg & Berg Enterprises, LLC v. Boyle, 178 Cal. App. 4th 1020, 100 Cal. Rptr. 3d 875 (2009). The Court of Appeal in Berg adopted the trust fund doctrine, holding that upon the actual insolvency of the corporations,...
Section 208 of the California Corporations Code makes it difficult for a California corporation to wriggle out of contracts or conveyances made in the corporation's name. Under the statute, a contract or conveyance will bind the corporation (and...
A week ago today, Kevin LaCroix wrote about the potential liability of directors of financially stressed companies. Kevin's piece focused on Delaware law and makes no mention of the state of the law here in California.
In Berg & Berg Enterprises,...
An insurer of a suspended corporation has an incentive to defend the corporation because it may be liable to a judgment creditor that obtains a default judgment against the insured suspended corporate. See Cal. Ins. Code § 11580(b)(2). However, can...
In response to Covid-19 (Coronavirus) emergency, the California Department of Business Oversight has issued guidance to banks and credit unions and to escrow agents, finance lenders and services, student loan servicers, residential mortgage lenders...
Financial Code, California Corporations Code, Corporate Governance
Last week, I wrote about legislation enacted in 2013 allowing the bylaws to contain "any provision, not in conflict with the articles, to manage and conduct the ordinary business affairs of the corporation effective only in an emergency as defined...
In 2013, the Corporations Committee of the Business Law Section California State Bar sponsored legislation, A.B. 491, to provide California corporations with certain flexibility in the case of an emergency. Among other things, the legislation...
Keith Paul Bishop
