doing business in california corporate law...doing business in california corporate law part 2...

DOING BUSINESS IN CALIFORNIACorporate Law

Part 2 –Corporate Housekeeping and Piercing Corporate

Veil” (コーポレートハウスキーピングと法人格否認)

Presented by:Noriyuki ShimodaAdmitted in Japan and CaliforniaSquire Sanders (US) LLPPhone: 415-393-9894Email: [email protected]

October 17, 2012 and February 20, 2013Palo Alto Office

Presentation for Japanese Business Persons:

©Squire Sanders(US) LLP2

CORPORATE HOUSEKEEPING（会社の家事）

• What is Corporate Housekeeping （会社の家事とは何か）?

Compliance with corporate laws, and its own articles of incorporation

and bylaws – corporate governance (会社法と自分自身で設定した定款

と会社規則の遵守）

• Importance of Corporate Housekeeping（会社の家事の重要性）

Penalty?（罰則があるか？）

General Compliance（一般的な法律順守の重要性）

Due Diligence （デューデリジェンス）

Preservation of Corporate Formality – to keep limited liability（法人格

の維持。有限責任性の保持）


CORPORATE HOUSEKEEPING（会社の家事）

• Annual Filing of Statement of Information (by Domestic Stock

Corporation)（年次会社基本情報届け出）

• Annual or Special Meetings of Shareholders/Board of Directors or

Written Consent of Shareholders/Board in lieu of Actual Meetings

（年次、臨時株主総会、取締役会の開催、またはそれに代わる同意書）

• Maintenance of the Minute Book (ミニッツブックの管理）


Shareholders Meeting （株主総会）

• Shareholders Meeting （株主総会）Under California law, annual shareholder meetings or written consent

in lieu of such meetings should be held or taken. （年一回の総会が必要）

Unless otherwise provided in the articles of incorporation, thepresence in person or by proxy of persons entitled to vote a majority ofthe voting shares of a corporation constitutes a quorum （株式数原則過半数が定足数）

but in no event shall a quorum consist of less than one-third of theshares entitled to vote（定足数は3分の一以下には出来ない）

In lieu of a meeting, action by the shareholders may also be taken bythe written consent of the shareholders (実際の会議なしの書面決議も同意書によって可能）


Board of Directors Meeting （取締役会）

• Board of Directors Meeting （取締役会）

Although day-to-day management of the corporation is generally

delegated to its officers, matters of general operating policy should be

considered and authorized by the board of directors（一般的な会社経

営は取締役会の権限事項）

Unless otherwise provided in the articles of incorporation or bylaws, a

majority of the authorized number of directors constitutes a quorum of

the board（原則過半数が定足数）;

but in no event shall a quorum consist of less than one-third of the

authorized number of directors or less than two directors except for

one director company（3分の一以下には定足数を減らせない。）


Board of Directors Meeting （取締役会）

• Board of Directors Meeting （取締役会）Meetings may be held by a quorum of the directors in person or by

conference telephone, as long as all members can hear one another.（電話会議による取締役会も可能）

In lieu of a meeting, action by the board may also be taken by theunanimous written consent of the directors（実際の会議なしの書面決議も全員一致の同意書によって可能）

There is no statutory requirement with respect to how frequently theboard of directors should meet; as a matter of sound practice,however, regular board meetings should be held at least annually(年何回開催かの規定は無い。少なくとも年一回は不可欠）


Basic Procedures for Annual Meetings（年次株主総会、取締役会の開催手続き）

• Basic Procedures for Annual Meetings of Shareholders/Board ofDirectors（年次株主総会、取締役会の開催手続き）Shareholders Meeting（株主総会）

– Date and place– as specified in the Bylaws(日時と場所は会社規則に記載）

– Notice(開催通知）» Needs to be given 10 days to 60 days in advance

» Needs to specify the general nature of business to be transacted

» “No notice” is acceptable if waiver is signed

– Proxy（委任状）

– Quorum （定足数） is more than one half (which may be reduced to one thirdby Articles of Incorporation)

– Minutes (議事録）


Basic Procedures for Annual Meetings（年次株主総会、取締役会の開催手続き）

• Basic Procedures for Annual Meetings of Shareholders/Board ofDirectors（年次株主総会、取締役会の開催手続き）Board Meeting(取締役会）

– Date and place– as specified in the Bylaws （日時と場所は会社規則に記載）

– No notice is required if held at the date and place as specified in the Bylaws（会社規則に記載されている日時と場所での開催の場合には通知は不要）

– No proxy （委任状による出席不可）

– Quorum(定足数） is more than one-half (which may be reduced to one-thirdby Articles of Incorporation)

– Directors may attend the meeting by phone, video conference, as long as althe participating directors hear each other （電話による参加可能）

– Minutes （議事録）


Basic Procedures for Special Meetings ofShareholders （臨時株主総会開催の基本手続き）

• Basic Procedures for Holding the Special Meetings of

Shareholders （開催の基本手続き）

Who may call?（誰が召集するか）

– Board of Directors

– Chairman

– President

– 10% Shareholder


Basic Procedures for Special Meetings ofShareholders （臨時株主総会開催の基本手続き）

• Basic Procedures for Holding the Special Meetings of

Shareholders （臨時株主総会の基本手続き）

Notice （通知）

– Needs to be given 10 days to 60 days in advance

– Needs to specify the date, place, and the general nature of business to betransacted

– “No notice” is acceptable if waiver is signed

– Proxy （委任状）

Minutes （議事録）


Basic Procedures for Special Meetings ofBoard of Directors（臨時取締役会の基本手続き）

• Basic Procedures for Holding the Special Meetings of Board of

Directors（臨時取締役会の基本手続き）

• Who may call? （誰が召集するか）

– Chairman

– President

– Vice President

– Two directors


Basic Procedures for Special Meetings ofBoard of Directors（臨時取締役会の基本手続き）

• Basic Procedures for Holding the Special Meetings of Board ofDirectors（臨時取締役会の基本手続き）

• Notice （通知）– May be given by one of the following methods:

» By mail 4 days in advance

» By phone, fax, voice message, or email 48 hours in advance, provided, that itneeds to be recorded electronically

– Needs to specify the date, place, but no need to specify nature of businessto be transacted

– “No notice” is acceptable if waiver is signed

No proxy （委任状による出席は不可）

Directors may attend the meeting by phone, video conference, as longas al the participating directors hear one another （電話による出席可）

Minutes （議事録）


Written Consents in Lieu of ActualMeetings（実際の会議に変わる同意書）

• Written Consents in Lieu of Actual Meetings（実際の会議に代わる

同意書）

Shareholder action may be taken by written consent of the

shareholders without a meeting（株主総会に代わる同意書による決議）

Board action may be taken by unanimous written consent of all the

directors without a meeting（取締役会に代わる全員一致の同意書による

決議）

Written Consent method is standard for a private company, especially

for a 100% subsidiary of a Japanese company.（日系子会社の場合は、

同意書方式がスタンダード）


Common matters for shareholder approval（株主総会決議事項）

• Common matters on which the corporation code requires orprovides for shareholder approval and the vote required includethe following（株主総会決議事項）:Election of directors (取締役の選任）;

Amendment of the articles of incorporation （定款の変更）(for filing, twoofficers’ signatures are required);

– Corporate name change （会社名の変更）

– Increase of number of authorized shares（授権株式数の増加）

– Indemnification of director, officer, employee, or other agent（取締役などへの責任補償）

– Additional class of stock (such as preferred stock) （新しい種類の株式の発行）

– Special rights and preferences for preferred stock （優先株式に優先的権利の内容）



• Common matters on which the corporation code requires or

provides for shareholder approval and the vote required include

the following （株主総会決議事項） :

Adoption, amendment, or repeal of bylaws(付属定款、会社規則）

including adoption of bylaw specifying or changing fixed number, or

limits of variable number, of directors;

Transactions between corporation and director (取締役との取引）;

Loans or guaranties of loans to directors/officers（取締役、役員へのロ

ーン）;

Adoption of a corporate stock purchase plan, stock option plan, or

employee benefit plan that includes officers or directors （取締役、役員

のためのストックオプションの採用）;



• Common matters on which the corporation code requires or

provides for shareholder approval and the vote required include

the following （株主総会決議事項） :

Sale or transfer of substantially all of the assets (ほとんどすべての資

産の売却）;

Merger (合併）;

Decrease of capital (Quasi reorganization)（減資）; and

Dissolutions (解散）


Actions that require approval of board ofdirectors（取締役会決議事項）

• Actions that generally require approval of, or that may be taken by,

the board of directors include the following （取締役会決議事項）:

Electing officers of the corporation （役員の選任）;

Adopting, amending, or repealing bylaws except for specifying or

changing fixed number, or limits of variable number, of directors （取締

役の人数をのぞいた会社規則の採用、変更等）;

Electing directors to fill vacancies on the board （欠員の取締役の選任）;

Adopting business policies and plan （事業計画の採用）;

Designating committees of the board and allocating authority to the

committees （各種委員会の設立と担当取締役の選任）;



• Actions that generally require approval of, or that may be taken

by, the board of directors include the following （取締役会決議事

項）:

Indemnification of corporate directors, officers, and agents （役員への

責任補償）;

Issuance and sale of corporate securities （株式の発行）;

Calling shareholder meetings （株主総会の招集）;

Declaring dividends and other shareholder distributions, and share

redemptions （配当決議）;

– Note new dividend rule was adopted on1/1/2012: See next slide (2012年1月1日に配当要件が改正、次のスライド参照）


New dividend rule adopted on1/1/2012（2012年1月1日に改正された配当要件）

• New dividend rule adopted on1/1/2012（2012年1月1日に改正され

た配当要件）:

California Corporate Code Section 500 was amended to provide for

the following (カリフォルニア会社法500条が以下の通り改正）:

Needs to satisfy one the following （以下の二つの要件を満たす必要が

ある。）

– (1) The amount of retained earnings of the corporation immediately prior tothe distribution equals or exceeds the sum of (A) the amount of theproposed distribution plus (B) the preferential dividends arrears amount. （剰余利益額が、配当金と発生済み優先株主が権利をもつ優先的配当金額をたした金額と同じか超えていること）

– (2) Immediately after the distribution, the value of the corporation‘s assetswould equal or exceed the sum of its total liabilities plus the preferentialrights amount. （配当金支払い直後に総資産額が、総負債額と優先株主の権利額をたした金額と同じか超えていること）



• Actions that generally require approval of, or that may be takenby, the board of directors include the following （取締役会決議事項）:Amending the articles of incorporation (both of board resolution and

shareholders’ resolution are required.) （定款の変更ー株主総会の決議も必要）;

Sale, lease, conveyance, exchange, transfer, or other disposition ofsignificant corporate property and assets （重要な会社資産の処分）;

Mergers （合併）;

Decrease of capital (Quasi reorganizations)（減資）;

Adoption or amendment of pension, 401K plan, profit-sharing, andother employee benefit plans （401kプランなどの採用）;

Significant contracts （重要な契約）;



• Actions that generally require approval of, or that may be taken

by, the board of directors include the following （取締役会決議事

項）:

Significant corporate borrowing and loans （大きな金額のローン）;

Opening corporate bank accounts and designation of authorized

signatories （銀行口座の開設と署名権限者の指定）;

Establishment of branch or qualification to do business in other states

（支店の設立）; and

Change of principal office （本店住所の変更）.


“Piercing the Corporate Veil”（法人格否認）

• Significance of Corporate Form （法人格の重要性）

The most important aspect of a corporation is its separate legal

status, as distinguished from its shareholders － Limited Liability(有

限責任の重要性）



• Overview （総論）

There is an important exception to this legal principle, described

variously as “piercing or lifting the corporate veil,” “disregarding the

corporate form,” or the corporation being the “alter ego” of its

shareholders. （有限責任の原則の例外が法人格否認）

Under special circumstance, the court will ignore the presence of a

properly constituted corporation to hold the owners personally liable

for the acts of the corporation.（特別な場合に、裁判所は法人格を無視

して株主に直接責任を負わせることができる。）



• Factors for Piercing the Corporate Veil（法人格否認法理の判断要素）Piercing the corporate veil depends on the facts of each case. So it

is very difficult to predict when a court will pierce the corporate veil. （法人格が否認されるかどうかは個別の事実次第であり、裁判所の判断を予想することは簡単ではない。）

Courts have considered the following factors（裁判所が法人格を否認するかどうかを判断する際に重視する事実は以下のとおり）.

1. Inadequate capitalization. （過小資本）

2. Commingling of funds and assets; failure to segregate funds; unauthorizeddiversion of funds or assets to non-corporate uses.（会社資産の別管理の不十分さ、流用、会社目的以外の使用、等）

3. Failure to issue stock at inception of the corporation. （株式の未発行）



• Factors for Piercing the Corporate Veil（法人格否認法理の判断要素）Courts have considered the following factors（裁判所が帆運人格を否認するかどうかを判断する際に重視する事実は以下のとおり）.

4. Failure to maintain minutes or adequate corporate records.（議事録等の会社の記録の未作成）

5. Significant overlap of management and directors.（親子会社の経営陣が同じ）6. Complete domination by shareholder of corporation.（株主による完全な支配）7. Use of same office or business location, or employment of same

employees, by shareholder and corporation.（事務所や従業員の共用）8. Failure to observe legal formalities and arm’s-length relationship between

shareholder and corporation.（法人格の形式を保持のための要件を無視、会社と株主間でアームズレングスの関係を維持しない。）



• An Exceptional Remedy （例外的な救済手段）

The corporate form is an established legal doctrine that courts do not

disregard lightly.（裁判所も簡単には法人格否認は認めない。）

Piercing the corporate veil requires satisfaction of two factors （二つの要

件）:

1. The existence of such unity of interest and ownership that the separatepersonalities of the corporation and the owner no longer exist.（二つの別の法人格を認めがたいような利害の一致が存在）

2. An inequitable result will follow if the acts are treated as those of thecorporation alone（法人格の分離を認めることによって不当な結果が発生する。）



• How to prevent piercing of corporate veil （どのようにしたら法人格否認を防げるか）

1. Adequate capitalization. （適切な資本）2. No-commingling of funds and assets; appropriate use of

corporation’s funds. （会社資産の別管理、適切な使用）3. Issue stock at inception of the corporation. （株式の発行）4. Maintain minutes or adequate corporate records.（議事録等の会社の記録の作成）

5. No-significant overlap of management and directors.（親子会社の経営陣をまったく同じにしない。）

6. Avoid complete domination by shareholder of corporation.（株主による完全な支配を避ける）

7. Avoid use of same office or business location, or employment ofsame employees, by shareholder and corporation.（事務所や従業員の共用を避ける。）

8. Observe legal formalities and arm’s-length relationship betweenshareholder and corporation.（法人格の形式を保持の、会社と株主間でアームズレングスの関係の維持。）


Directors’ Duty and Liability(取締役の義務と責任）

• Directors are subject to fiduciary duty (受託者としての義務）to

corporation and shareholders. Fiduciary duty consists of “duty of

loyalty” (忠実義務） and “duty of care.” (注意義務）

• “Business affairs of a corporation are to be managed by or under

the direction of its board of directors.”（ビジネス判断は取締役会に

よって行われる）

• To encourage the full exercise of managerial powers, corporate

law protects the directors of the corporation through the business

judgment rule. (経営判断の原則によって取締役は責任追及から保護され

る。）.

• Rule – Presumption that in making a business decision, the

directors of a corporation acted on an informed basis, in good

faith and in the honest belief that the action taken was in the best

interest of the company（取締役の経営判断は、十分な情報に基づ

いて、会社のためになると善意で信じて行ったものと推定される。）


Business Judgment Rule(経営判断の原則）

• The business judgment rule shields corporate directors from

personal liability for their business decisions, even if the

decisions lead to bad results, so long as the decisions are made

in good faith, and with reasonable care and diligence.(経営判断の原

則によって、取締役は合理的な注意を持って誠実に判断を行った以上悪

い結果になっても責任追及から保護される。）

• Lawyers have generally believed that the protection of the

business judgment rule extends to corporate officers as well as

directors.（従来その保護はofficersにも及ぶと解釈されていた）

• However, a recent federal district court decision （Federal

Deposit Insurance Corporation v. Perry, 12/13/2011) held that

under California law, the business judgment rule does not insulate

officers from liability for their mistaken decisions. （しかし、2011年

12月13日のＣＡの地方裁判所の判決ではCA会社法においては経営判断の

原則による保護はOfficersに及ばないと判断された。）


Derivative Actions（株主代表訴訟）

• Derivative Action （株主代表訴訟）Shareholder’s action to enforce a corporate right that the corporation

has refused （会社が行使を拒否した権利の株主による行使）

• Requirements （要件）Plaintiff must generally be a stockholder of the corporation at the time

of the alleged wrong and remained so throughout the duration of thederivative suit (原則として、問題となった行為が行われたときに株主であったこと、および、訴訟終了まで株主であること）

Plaintiff must make an efforts to require the board of directors of thecorporation to take an action with specific facts and the board to takean action within certain time period. （具体的な事実の主張とともに、取締役会に会社の権利の交渉を要求し会社としてその権利の行使を拒否したこと）

Plaintiff may be required to furnish a bond up to $50,000 (原告は5万ドルまでの金額の保証金を積みことが必要になる場合がある。）

Worldwide Locations

• Cincinnati

• Cleveland

• Columbus

• Houston

• Los Angeles

• Miami

• New York

• Northern Virginia

• Palo Alto

• Phoenix

• San Francisco

• Tampa

• Washington DC

• West Palm Beach

• Bogotá+

• Buenos Aires+

• Caracas+

• La Paz+

• Lima+

• Panamá+

• Santiago+

• Santo Domingo

• Beirut+

• Berlin

• Birmingham

• Bratislava

• Brussels

• Bucharest+

• Budapest

• Frankfurt

• Kyiv

• Leeds

• London

• Madrid

• Manchester

• Moscow

• Paris

• Prague

• Riyadh

• Warsaw

• Beijing

• Hong Kong

• Perth

• Seoul

• Shanghai

• Singapore

• Sydney

• Tokyo

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