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Where To Find Common Stock In The California General Corporation Law

As discussed in this post, the California General Corporation Law defines and uses the term "common shares" rather than "common stock".   Common shares are shares that have no preference over other shares with respect to distribution of assets on liquidation or with respect to payment of dividends.  Cal. Corp. Code § 159.  Simply being entitled to a greater dividend per share does not mean that the class or series has a preference over another class or series.  Entitlement to be paid more is not the same as entitlement to be paid before.

The General Corporation Law does include one aberrant reference to "common stock" in Section 907(c), which specifies the nomenclature that is applicable to shares when the articles of incorporation are amended to change the statement of authorized shares from a single class of shares to two classes.  Oddly, the classification of shares as "common stock" pursuant to Section 907(c) because the shares have limited or no voting rights is at odds with the definition of "common shares" in Section 159 which makes no reference to differences in voting power.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 267
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About this Author

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