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How Do You Know if a Particular Section of California’s Corporation Code Applies to a Foreign Corporation Doing Business in California?
So how can you know whether or not California law applies in specific instances? Unfortunately, the answer is about as consistent as most peoples’ New Years Resolutions.
Broadly speaking, the business judgment rule protects business decisions by corporate directors from judicial review.
The California Corporation Code imposes statutory restrictions on the ability of corporations to make loans and guaranties to their directors and officers.
Involuntary Dissolution of a California Corporation: The Nuclear Option for Mistreatment of Minority Shareholders
Unlike a partner in a partnership, a minority shareholder has no right to dissolve a corporation merely by withdrawing her interest. Absent judicial intervention, corporate dissolution occurs only at the consent of all shareholders.
The impact in California of forum selection clauses contained in a corporation’s bylaws or in its articles of incorporation has been the subject of an earlier article at this blog. The law in California concerning such forum selection clauses has continued to evolve and change, particularly in light of developments in Delaware.
In its broadest sense, the business judgment rule is a policy of respect by the courts for the business judgment of corporate directors in exercising their discretion in making corporate decisions.
I use the term “shareholder oppression” to refer to the denial of any realistic benefit to a shareholder for their investment in the company. So, how do the people in control of a privately held company oppress minority shareholders? I will discuss that in this article.
Shareholders Rights to Corporate Annual Financial Reports Under California Corporations Code §1501(a)
Corporations have a statutory and fiduciary duty to provide shareholders with an annual report containing an up-to-date balance sheet, income statement, and a statement of cash flows accompanied by any independent auditors’ reports, within 120 days of the end of the previous fiscal year.
Shareholders have limited rights to inspect the records of California corporations. While statutory laws governing the types of records shareholders may examine are complex and may appear unwieldy, an experienced attorney may assist the shareholder to take full advantage of broader common law shareholder rights of inspection
Federal Court in California Nixes Forum Selection Clause in Delaware Corporation’s Bylaws that Would Require Shareholders Outside Delaware to Bring Suit Against the Corporation in Delaware.
In recent years, several Delaware corporations have either adopted or proposed exclusive forum selection bylaw provisions. These provisions generally require that stockholder suits relating to the internal affairs of a corporation be brought exclusively in the company’s state of incorporation, Delaware. However, a minority shareholder in California might prefer to bring suit here
California Law May Determine Critical Corporate Governance Issues Even Though It’s a Delaware, Nevada or Texas Corporation
WARNING: A potential investor should not assume merely because she buys stock in a corporation based in the Golden State, that California’s corporations laws will protect the shareholder from losses if the founders or other insiders defraud the company!
Discover what shareholder oppression remedies are available for shareholders in California.
Shareholder Election of Directors, Cumulative Voting Rules and Annual Shareholder Meeting Requirements for California Corporations
Discover how minority shareholders are protected by California statues that govern the election of directors.
Learn about the rules governing voting by directors and the tallying of the votes by corporate boards in California.
Minority Shareholders in California Can Sue Controlling Shareholders for Breach of their Fiduciary Duties Where They Have Paid Themselves Disproportionately as Officers of the Corporation
Learn why minority shareholders can sue the controlling shareholders for breach of fiduciary duty where they compensate themselves excessively as a means to distribute a disproportionate share of the corporation’s profits to themselves and to the exclusion of the minority shareholders.
In California, depending upon the relevant facts presented, a shareholder seeking redress against the corporation is required to pursue one of two distinct types of remedial actions: direct and derivative. Learn the differences between the two.
In California, minority shareholders can recover damages from officers or controlling shareholders for breach of their fiduciary duties, despite a purported contract waiving such rights.
Where a transaction between a majority shareholder or a director and the corporation is challenged, a court will set it aside unless the interested majority shareholder or director can prove the good faith of the transaction and its fairness from the standpoint of the corporation and all of the shareholders.
By Gerald P. (“Jerry”) Burleson, Esq., Member of the California Bar The Supreme Court of California announced a fundamental rule of fairness that must be respected in all situations where majority shareholders exercise their power to control the corporation: “Any...