Corporate Securities Law Blog

Directors of California corporations have, for years, struggled to understand the scope of their fiduciary duties when a corporation is insolvent versus when a corporation is in the “zone of insolvency.” While other states (particularly Delaware) have provided some recent guidance in this area[1], the California Court of Appeal recently provided some much needed clarification – including providing comfort to the decision making processes of directors who are considering various alternatives when a corporation enters into a zone of insolvency.

In Bader v. Anderson, No. CV041521, 2009 Cal. App. LEXIS 1880 (Cal. App. Nov. 23, 2009), the California Court of Appeal for the Sixth Appellate District addressed two important issues affecting shareholder derivative actions under California law. First, the Court offered guidance regarding the distinctions between direct claims and derivative claims by shareholders against corporate management, holding that “incidental harm” to shareholders, in the form of reduced share value, does not transform a derivative claim into a direct cause of action. Second, the Court confirmed that no exception to the presuit demand requirement exists for claims alleging misleading statements or omissions in proxy statements.
 

Third Thursday Emerging Company Webinar
January 21, 2010
LiveMeeting

Start-up companies have unique needs and issues related to implementing stock option and other equity compensation incentive plans for the company's employees and key service providers. This interdisciplinary presentation will highlight some of the many important tax, legal and accounting elements surrounding these plans, including:

• Why to implement a stock incentive plan
• Types and features of equity awards
• Key terms for the stock incentive plan and award agreements
• Common traps and pitfalls in operating a stock incentive plan
• 409A and the criticality of fair market valuation
• Securities law compliance and income tax/financial accounting consequences
• Other administration issues including new IRS rules on ISO annual reporting

A must for CFOs and anyone considering putting equity incentive plans in place in their company.  

This activity complies with standards for Minimum Continuing Legal Education prescribed by the California State Bar and is approved for 1.0 hour of MCLE credit. Sheppard, Mullin, Richter & Hampton LLP is a State Bar of California approved MCLE provider.

The LiveMeeting link and dial in will be e-mailed to you once you register.  MCLE certificates will be distributed following the webinar.