In yesterday’s post, I commented on a recent ruling by former Vice Chancellor John W. Noble to the effect that “Delaware disclosure law which generally does not require disclosures to shareholders unless shareholder action is sought”. The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Transcript) (Del. Ch. Feb. 25, 2016).  I pointed out that California’s annual report requirement applies to a foreign corporation if it:

• Has its principal executive offices in California;

• Customarily holds meetings of its Board of Directors in California; or

• Is subject to California’s “pseudo-foreign corporation” statute.

The annual report requirement, however, does not apply if a corporation has fewer than 100 holders of records (as determined under Section 605 of the California Corporations Code) and expressly waives the annual report requirement in its bylaws. As a result, many California practitioners include such a waiver in their standard form of bylaws. However, I find that the option of waiving the annual report requirement is often overlooked in the case of foreign corporations. Although the title of this post refers to Delaware corporations, the statute can apply to any foreign corporation, as defined in Section 171 of the California Corporations Code.