February 1, 2023

Volume XIII, Number 32

Advertisement

January 31, 2023

Subscribe to Latest Legal News and Analysis

January 30, 2023

Subscribe to Latest Legal News and Analysis

California Bill Aims To End The Asymmetry Of Corporate Time

"It’s a mercy that time runs in one direction only, that we see the past but darkly and the future not at all.”1

For the last eight years, Delaware corporations have been been able to escape the "asymmetry of time" through either ratifying past corporate acts or obtaining validation from the Delaware Court of Chancery.  Del. Gen. Corp. Law §§ 204 & 205.  Similar procedures have been available to Nevada Corporations since 2015.  NRS § 78.0296.  Meanwhile, the California General Corporation Law currently provides no mechanism by which a corporation rectify a defective corporate act nunc pro tunc.

In 2021 Senator Brian Jones introduced SB 218 (Jones) to provide California corporations with implements of correction similar to those available to Delaware and Nevada corporations:

This bill would enact a method for California corporations to ratify or validate otherwise-lawful past corporate actions that are defective in some respect, and thereby correct the defects.  Crucially, any such ratification or validation would relate back to the date on which the original, defective action was taken.  That is, the corrections take effect retroactively; as a matter of law, it is as though the corporation had always taken the proper action.  Further, in the absence of fraud or a court order to the contrary, a ratification or validation under this measure is conclusive as to the correctness of the corporate action in question.  As a result, the corporate action can be safely relied on in the future.

Bill Analysis, Assembly Committee on Judiciary (Jan. 10, 2022).  

Olivia Laing, To the River: A Journey Beneath the Surface.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 73
Advertisement
Advertisement
Advertisement

About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
Advertisement
Advertisement
Advertisement