California Court Acknowledges “Quasi-California Corporation” Decision

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2012-09-19

Summary:

Editor’s Note: Larry Sonsini is chairman of Wilson Sonsini Goodrich & Rosati. This post is based on a WSGR alert.

Companies incorporated outside of California but with significant California contacts (so-called "quasi-California corporations") have struggled with exactly how to comply with the long-arm statute found in Section 2115 of the California Corporations Code. The statute purports to impose a number of provisions of the California Corporations Code on quasi-California corporations, including the state's requirement to obtain separate approval from holders of each class of capital stock on a merger "to the exclusion of the law of the jurisdiction in which [the quasi-California corporation] is incorporated." Section 2115 has been thought to be legally infirm for some time, particularly after a decision by the Delaware Supreme Court in 2005. However, there never has been an acknowledgement by a California court that Section 2115 reaches too far. That changed earlier this year, when a California Court of Appeal stated in dicta that certain matters of internal corporate governance fall within a corporation's internal affairs and should be governed by the laws of the corporation's state of incorporation.

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Link:

http://blogs.law.harvard.edu/corpgov/2012/09/19/california-court-acknowledges-quasi-california-corporation-decision/

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california mergers & acquisitions practitioner publications court cases larry sonsini wilson sonsini goodrich & rosati internal control incorporations corporati

Authors:

Larry Sonsini, Wilson Sonsini Goodrich & Rosati,

Date tagged:

09/19/2012, 11:42

Date published:

09/19/2012, 08:53