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California › Fiduciary Duty › Corporate Governance

Sheppard Mullin Richter & Hampton LLP

California Court of Appeal Holds That Derivative Litigation Settlement Procedural Rules Apply Even In Intra-Shareholder Suits in...

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In Norman v. Strateman, No. A170356, 2025 WL 1802786 (Cal. App., 1st Dist., June 20, 2025), the California Court of Appeal held that a settlement of derivative claims reached among all shareholders of a close corporation was...more

Allen Matkins

Court Applies Internal Affairs Doctrine Even Though Statute Refers Only To Directors

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Courts are wont to say that Section 2116 of the California Corporations Code codifies the internal affairs doctrine.  See Villari v. Mozilo, 208 Cal. App. 4th 1470, 1478 n.8 (Cal. Ct. App. 2012) (“Corporations Code section...more

Allen Matkins

As Predicted, Silicon Valley Bank Failure Will Test Fiduciary Duties Of Officers And Directors Under California Law

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Late last year, I wrote that the the Board of Directors of the Federal Deposit Insurance Corporation had voted unanimously to approve the staff’s request for authorization to file a suit against six former officers and 11...more

Allen Matkins

Just What Are The Duties Of A Controlling Shareholder And How Should Claims Of Breach Be Brought?

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In a recent post, Professor Stephen Bainbridge discusses the question of when a controlling shareholder owes fiduciary duties to minority shareholders.  Knowing when controlling shareholder owes fiduciary duties is one thing,...more

Allen Matkins

California Court Opines On Fiduciary Duties Of LLC Members And Covenants Not To Compete

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Yesterday, the Fourth District Court of Appeal issued a noteworthy opinion addressing at least two significant questions.  Samuelian v. Life Generations Healthcare, LLC, 2024 WL 3878448....more

Allen Matkins

Court Holds Internal Affairs Doctrine Typically Covers Breach Of Fiduciary Claims Despite No Averment Of Fiduciary Duty

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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...more

Allen Matkins

May A Joint Venturer Withdraw From A Joint Venture In Order To Pursue A Joint Venture Opportunity?

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California's Uniform Partnership Act of 1994 provides that a partner has a duty to refrain from competing with the partnership in the conduct of the partnership business "before the dissolution of the partnership".  Cal....more

Allen Matkins

Discerning When A Director Has Acted With "Reckless Disregard"

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Section 204(a)(10) of the California Corporations Code permits the articles of incorporation to include provisions eliminating or limiting the personal liability of a director for monetary damages in an action brought by or...more

Allen Matkins

Court of Appeal Applies Caremark/Marchand To Directors of a California Corporation But The Result May Surprise You

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Over the years, I have commented on the fact that the California Court of Appeal has yet to apply In re Caremark International Inc., 698 A.2d 959 (Del. Ch. 1996) to the directors of a California corporation. Last Friday,...more

Allen Matkins

The General Corporation Law's Filioque

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The Nicene Creed as approved by the Council of Constantinople in 381 A.D. included the following: "τὸ ἐκ τοῦ πατρὸς ἐκπορευόμενον (who proceeds from the father).  About 200 years later at the Third Council of Toledo, the...more

Sheppard Mullin Richter & Hampton LLP

California Court of Appeal Holds that a Corporation’s Direct Cause of Action for Breach of Fiduciary Duty is Legal Rather than...

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In ZF Micro Solutions, Inc. v. TAT Capital Partners, Ltd., 2022 WL 4090879 (Cal. App. Aug. 8, 2022), the Fourth Appellate District of the California Court of Appeal decided, as a matter of first impression, that a...more

Allen Matkins

Why California Requires Notice Of Rights That Shareholders May Not Have

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Dissenters' rights under California's General Corporation Law do not exist unless there are "dissenting shares", a term defined in Section 1300(b) of the California Corporations Code.  In order to qualify as "dissenting...more

Allen Matkins

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

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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...more

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