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MARCH 2019
 
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IN THIS ISSUE
 
California Court of Appeals Upholds Delaware Forum-Selection Bylaws
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It’s Official!  Formation of Business Law Section and Adoption of New Bylaws
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Great Success: Business Law Section Networking Mixer
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Free Webinar: Annual California and Delaware Law Update - April 11
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Register Now: Securities Arbitration New Developments: Everyone’s Perspective – April 30
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Save the Date :52nd Annual Securities Regulation Seminar – Friday, October 25
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Enhance Your Practice: Join the Executive Committee of the Business Law Section
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Law Firm Memos
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The Business Law Section Newsletter
is published by the LACBA Business Law Section

Editors:
Andrew Clark
Latham & Watkins LLP
Andrew.Clark@lw.com

Alex Voxman
Latham & Watkin LLP
Alex.Voxman@lw.com


Executive Committee Officers:

Katherine Blair, Chair
June M. Baldwin, Vice Chair, Corporate Law Departments
Harumi Hata, Vice Chair, Membership
Roger Loomis, Vice Chair, Membership
Barry Burten, Vice Chair, Programs
James Coupe, Vice Chair, Treasurer and
Council of Sections Liaison
Mark Hiraide, Vice Chair, Events
Scott Lochner, Vice Chair, Events and Secretary

Barristers Liaison
Sarah Kelly-Kilgore
Department of Business Oversight Liaison
Teresa Leets
LACBA Liaison
Terrina Scott

 

 
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California Court of Appeals Upholds Delaware Forum-Selection Bylaws
 

The California Court of Appeal joined Delaware and Oregon courts in recognizing the enforceability of forum-selection bylaws adopted by Delaware corporations. Drulias v. 1st Century Bancshares, Inc., No. H045049 (Cal. Ct. App. 6th Dist. Dec. 21, 2018) (full decision here). See also Boilermakers Local 154 Retirement Fund v. Chevron Corp., 73 A.3d 934 (Del. Ch. 2013) (holding that exclusive forum bylaws are facially valid under Delaware law); Roberts v. TriQuint Semiconductor, Inc., 358 Or. 413 (Dec. 10, 2015) (holding that forum bylaws are valid). Exclusive forum bylaws, which require state corporate law claims to be brought in a designated venue, have gained significant traction in recent years, especially among Delaware corporations. Stockholder plaintiffs have sought to invalidate Delaware forum-selection bylaws to gain the ability to sue Delaware corporations in other states. The decision in Drulias, is the first controlling statement of California law on the issue.

In Drulias v. 1st Century Bancshares, Inc., a stockholder of a Delaware corporation sued the corporation in a California court, alleging that the board had breached its duties by approving a merger. On defendants’ motion, the trial court stayed the action on the basis of the company’s forum-selection bylaw, which designated Delaware as “the sole and exclusive forum” for intra-corporate disputes, including any action asserting a claim for breach of fiduciary duty. Plaintiff appealed, arguing that the enforcement of the bylaw was unreasonable because the bylaw conflicted with California statute and had been adopted unilaterally by the board after the alleged breach of duty.

Rejecting plaintiff’s arguments, the appeals court held that although the California Corporations Code allows a California resident to bring a suit against foreign corporations transacting business in the state, “nothing in the provision requires a California court to exercise jurisdiction over such a case.” The court further noted that “Forum selection bylaws have the effect of consolidating such litigation into a single forum, thereby reducing litigation expenses and avoiding duplication of effort (not to mention promoting efficient use of judicial resources), which is beneficial to corporations and their shareholders alike.”

 
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It’s Official! Formation of Business Law Section and Adoption of New Bylaws
 

We are excited to announce that it’s official! On February 27, 2019, in connection with the combination of the Business and Corporations Law Section and the Corporate Law Departments Section, we adopted new Amended and Restated Bylaws for the Business Law Section. Our Section members include attorneys that practice all types of business law, whether as a private practitioner or in-house at a company. The Business Law Section is committed to providing business law attorneys and in-house counsel with programs, resources, and information relative to their practices and their companies as well as opportunities to network and engage with others in the Los Angeles legal community. We will continue to provide outstanding webinars, events, and programs, including our Annual Securities Regulation Seminar, FINRA Arbitration and Enforcement series, and the California and Delaware Law Annual Update. In addition, we will offer programs that are particularly important to in-house counsel, including the General Counsel Roundtables and the Outstanding Corporate Counsel Awards Dinner. Together, our combined Executive Committee will seek to create more opportunities for our members to benefit from our diverse offerings. Also, be on the lookout for our new Business Law Section page on the LACBA website!

 
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Great Success: Business Law Section Networking Mixer
 

On February 21, LACBA and MSK co-hosted a networking mixer to celebrate the combination of the Business and Corporations Law Section and the Corporate Law Departments Section into the new Business Law Section. The event was a great success and attended by many current and prospective Section members. We look forward to hosting further successful networking mixers in the near future.

 
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Free Webinar - Annual California and Delaware Law Update – Thursday, April 11
 

Join us for one of our most popular webinars - The Annual California and Delaware Law Update, to be held on Thursday, April 11, 2019 starting at noon.

Join the experts for this free webinar as they analyze recent California and Delaware law changes and highlight differences and commonalities between the two. The panelists are Michael Allen, Partner at Richards Layton & Finger, a top-tier ranked Delaware law firm, and Keith Bishop, Partner at Allen Matkins and former California Commissioner of Corporations. This program is eligible for 1.5 hours of General CLE.

When it’s time to join the meeting CLICK HERE

 
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Register Now: Securities Arbitration New Developments: Everyone’s Perspective – Tuesday, April 30
 

Securities Arbitration New Developments: Everyone’s Perspective, co-sponsored by the Business Law Section and FINRA will be held from 12:30 to 1:30 pm on April 30, 2019 at the Omni Hotel. The program will present perspectives from a claimant, regulator, arbitrator, respondent and mediator. Laura D. McNamire, Esq., FINRA Regional Director, will provide the regulator’s perspective and Robert C. Rosen, Program Chair, will moderate the panel.  This program is eligible for 1 hour General CLE.

Click HERE to register.

 
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Save The Date: 52nd Annual Securities Regulation Seminar – Friday, October 25
 
The 52nd Annual Securities Regulation Seminar which is sponsored by LACBA’s Business Law Section and the Securities and Exchange Commission, and co-sponsored by the California Department of Business Oversight and FINRA, will be held on Friday, October 25, 2019. Please save the date.
 
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Enhance Your Practice
 
Join the Executive Committee of the Business Law Section

The Executive Committee of the Business Law Section is seeking new members. Membership on the Executive Committee is a terrific forum to network with your fellow corporate law practitioners across the city. Membership on the committee affords unique opportunities to participate in the creation of law in your practice area, to get to know and be known by other practitioners, to work with the recognized leaders in your field, and to stay on the cutting edge of developments and practice techniques.

For further information on the Section, click here.

If you are interested, please contact hhata@buchalter.com.
 
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Law Firm Memos
 

Developments in California Law

Court Lacks Authority To Order Buyout Of Foreign Entities
Allen Matkins Leck Gamble Mallory & Natsis LLP

Secretary Of State Modifies Corporate Disclosure Form In Response To Gender Quota Law
Allen Matkins Leck Gamble Mallory & Natsis LLP


M&A

New HSR Filing Thresholds for 2019
Morrison & Foerster LLP

Expansion of Regulation A to Reporting Companies: Increased Alternatives Now Available to Public Companies Seeking to Raise Capital or for Mergers and Acquisitions
Sheppard, Mullin, Richter & Hampton LLP

Chancery Court Confirms Limited Scope of Authority of Expert-not-Arbitrator Dispute Resolution Provisions
K&L Gates, LLP


Securities Laws

SEC Proposes to Expand “Test-the-Waters” Modernization Reform to All Issuers
Ropes & Gray LLP

FINRA Launches New Self-Reporting Initiative for 529 Savings Plan Violations
Latham & Watkins LLP

Nasdaq Amends and Clarifies Listing Requirements for Direct Listings
Sullivan & Cromwell LLP

Smart Contract Coders May Face Aiding And Abetting Risk
Harvard Law School Forum on Corporate Governance and Financial Regulation


General

Corporate Opportunity Waivers in Private Equity and Venture Capital Investments
Harvard Law School Forum on Corporate Governance and Financial Regulation

Follow the Leader: California Paves the Way for Other States to Strengthen Privacy Protections
Federal Court Blocks Shareholder Inspection Of Delaware Corporation’s Records Pursuant To California Statute
Epstein Becker Green, LLP

 

 

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