Why California Law Applies To Dividends Made By A Delaware Corporation (And Not To Some California Corporations)
Corporations incorporated under California's General Corporation Law are subject to the limitations on distributions set forth in Chapter 5 of that law. A foreign corporation may also be subject to Chapter 5 by virtue of Section 2115 of the Corporations Code. Many foreign corporations, however, either fail to meet the jurisdictional tests in Section 2115 or are exempted by Section 2115. California law may nonetheless apply to distributions to shareholders made by these corporations.
The California law in question is not Chapter 5 but the Uniform Voidable Transactions Act, Cal. Civ. Code §§ 3439 et seq. Claims under the UVTA are not governed by the internal affairs doctrine. Rather, they are "governed by the local law of the jurisdiction in which the debtor is located when the transfer is made or the obligation is incurred". Cal. Civ. Code § 3439.10(b). If a corporation has one place of business it is located there for purposes of the UVTA. If the corporation has more than one place of business, it is located at its chief executive office for purposes of the UVTA.
As a result of these provisions, a Delaware corporation may be subject to the UVTA regardless of whether it is subject to Chapter 5 of the Corporations Code. However, a California corporation that is subject to Chapter 5 may not be subject to the UVTA (if, for example, it has a single place of business in another state).