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When A Distribution Is Not Subject To Chapter 5

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"...

California Corporations Code

When Is Notice Given?

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...

California Corporations Code

Are Supermajority Board Voting Bylaws Effective?

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...

California Corporations Code, Corporate Governance

The Ineluctably Absent Modality Of Creditor Derivative Claims

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,...

California Corporations Code

Who Knew? The California General Corporation Law Governs Contracting And Conveyancing By Foreign 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...

California Corporations Code

Directorial Duties To Creditors - Getting To The Bottom Of The California Trust Fund Theory

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,...

California Corporations Code, Corporate Governance

9th Circuit Holds Insurer May Defend Suspended Corporation

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...

California Corporations Code

DBO Says It "Will Not Criticize" Banks And Credit Unions For Holding Virtual Meetings

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

When Is An Emergency An Emergency For Purposes of Emergency Bylaws?

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...

California Corporations Code

Does This California Statute Arbitrarily Shackle Corporate Boards In Times of Emergency?

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...

California Corporations Code, Corporate Governance

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ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashxKeith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
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