Some readers may have skipped this week’s posts discussing director liability under California Corporations Code Section 316 on the theory that the statute applies only to directors of corporations incorporated under the General Corporation Law.  That could be a big mistake. California’s pseud0 foreign corporation statute, Corporations Code Section 2115, applies Section 316 to foreign corporations to the exclusion of the law of the state of incorporation. Directors of foreign corporations do get one break.  Section 2115 excepts liability for approval of loans and guarantees contrary to Section 315.  Also, corporations or associations chartered under the laws of the United States are not “foreign corporations” for the purpose of Section 2115.  Cal. Corp. Code § 171.

Reigning In SEC Rulemaking

Broc Romanek yesterday took issue with Section 631 of the proposed Financial Choice Act of 2016.  In particular, Broc objects to the requirement that Congress pre-approve major rules.  I am not so unsettled by the idea.  The U.S. Constitution makes no mention of independent agencies. More importantly, the U.S. Constitution right up front vests all legislative power in the Congress.  Const. Art. I, § 1.  Finally, Congress already has the authority to void “major rules” pursuant to the The Small Business Regulatory Enforcement Fairness Act of 1996.  See Can Congress Veto A Rule Adopted By The SEC?  A shift from post-effective veto to pre-approval isn’t that big of step.  Why is returning legislative power to the people’s elected representatives such a bad idea?