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Ten Years Go By Without The DOJ Receiving Even One Of These Notices

In wake of the Sarbanes-Oxley Act, the California legislature saw fit to add Section 2207 to the California Corporations Code.  The statute threatens corporations with a $1 million civil penalty if they have actual knowledge that an officer, director, manager, or agent has done one of several specified acts and fails to notify the California Attorney General or "appropriate government agency" and its shareholders in writing.   The statute applies only to corporations that are issuers, as defined by Section 2 of the Sarbanes-Oxley Act.  Cal. Corp. Code § 2207(f).  

I recently contacted the California Department of Justice to inquire about the number of notifications that it has received pursuant to Section 2207 in the last ten years.   The Department reported that it had conducted a search of its  "legal indexes, knowledgeable persons, and logical places" but was "unable to locate any responsive records".   One might argue that the legislature should repeal Section 2207 by reason of desuetude, but that assumes that the statute was once used.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 166
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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...

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