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Fiduciary Duty Board of Directors California

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

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

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

Allen Matkins

A First Sighting Of Zuckerberg Decision In California

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Last year, the Delaware Supreme Court adopted a tripartite test for assessing demand futility allegations in derivative actions. United Food & Commercial Workers Union v. Zuckerberg 262 A.3d 1034 (Del. 2021). Under this...more

Allen Matkins

"Disinterested" May Be Pretermitted In Delaware But Not In California

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In this post, Professor Stephen Bainbridge posits that the Delaware Supreme Court incorrectly decided Fliegler v. Lawrence, 361 A.2d 218 (Del. 1976) by requiring that stockholder approval of conflicted transaction requires 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

Allen Matkins

Court Finds No Cause Of Action Against Officer For Interfering With Shareholder Inspection

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William Romanowski is a former NFL linebacker who later became the majority shareholder, director, and "public face" of Nutrition 53, Inc.  When the company's second largest shareholder was allegedly denied inspection of the...more

Allen Matkins

Is There No Protection For The Innocent When A Corporation Transfers Its All To Secured Creditors?

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Last Friday, this space addressed itself to Vice Chancellor J. Travis Laster's ruling in  Stream TV Networks v. SeeCubic, C.A. No. 2020-0310-JTL (Dec. 8, 2020).   He concluded that stockholder approval was not required when...more

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