California's Revised Uniform Limited Liability Company Act provides "The law of the state . . . under which a foreign limited liability company is formed governs all of the following: The organization of the limited liability company, its internal affairs, and the authority of its members and managers."  Cal. Corp. Code § 17708.01(a).  Notably, the statute does not define what constitutes an LLC's internal affairs ..read more

I recently came across another publicly traded Delaware corporation with plans to reincorporate in Nevada.  Interestingly, this corporation, Sonoma Pharmaceuticals, Inc., originally began as a California corporation and then reincorporated in Delaware.  According to the company's proxy statement filed with the Securities and Exchange Commission on July 1, the company has several reasons for the move ..read more

When faced with an unauthorized or defective action, I expect that many practitioners will seek fix the problem by obtaining a ratification of the action.  But will a ratification cure the problem ..read more

Seven years ago, I addressed the question of whether the board of directors of a California corporation could remove a fellow director ..read more

The classic model of corporate governance is that the board of directors appoints and removes the principal corporate officers.  This is consistent with the general principle that the business and affairs of a corporation must be managed and all corporate powers be exercised by or under the direction of the board.  Cal. Corp. Code § 300(a).   Appointment of officers by the board is not, however, written in stone (at least under the California General Corporation Law).  While Section 312(b) of the Corporations Code does indeed provide that "officers shall be chosen by t ..read more

The California Corporate Securities Law of 1968 generally requires that the offer and sale of a security in an issuer transaction must be qualified unless exempt or not subject to qualification (due to preemption).  Cal. Corp. Code § 25110.  Anyone who violates this requirement may be liable for rescission (if they still own the security) or damages (if they no longer own the security).  Cal. Corp. Code § 25503.  Importantly, a defendant may be liable for violating California's qualification requirement in the absence of any showing of fault on the part of the defendant.&nb ..read more

As California began the new year, it was suffering from a six-year drought.  Then came le deluge.  According to the Governor's office "These storms brought more rain than had been recorded in over 100 years and all in one winter season".   On March 1, the Governor declared a state of emergency.  If you don't remember these events, it may be because they occurred seven years ago - in 2017.  However, the state of emergency did not end until last week when Governor Gavin Newsom finally signed a proclamation ending 22 outstanding states of emergency, includi ..read more

Given the importance of venture capital to California's economy, one might expect that state lawmakers would be keen to nurture the industry rather than enact laws that encourage venture capital companies to avoid the Golden State.   Last year, I posted  that Governor Gavin Newsom had signed a new venture capital reporting law even while acknowledging that it contained "problematic provisions".  As part of the recently completed budget process, the legislature has now repealed and recast these requirements.  Problems and constitutional overbreadth remain, however. In g ..read more

Both the legal and popular presses have been abuzz about the Supreme Court's overruling of the Chevron Doctrine.  Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce, 2024 WL 3208360 (June 28, 2024).   According to my firm's Legal Alert:  Essentially, under Chevron, when a federal statute is silent or ambiguous about a particular regulatory issue, courts must defer to the implementing agency’s reasonable interpretation of the law. As momentous as the Supreme Court's holding is, I expect that it will likely ..read more

It is a peculiar hubris of California's legislators that they often presume to extend the application of the state's laws beyond its legal borders.  Corporations Code Section 2115, for example, presumes to apply multiple provisions of the California Corporations Code to foreign corporations to the exclusion of the laws of their states of incorporation.  While the Delaware Supreme Court famously refused to apply the statute, California's appellate courts have yet to agree.  Compare VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (2005) and Wilson v. Lo ..read more