Recent Federal Court Decision Allows CA Reject Foreign Corporations

According to a recent decision from a U.S. District Court, California may restrict licenses for Check Sellers Law to California corporations.[1]  For many out-of-state companies doing business in California, this is a troubling decision.

SJW Corp. recently sought shareholder approval to reincorporate from California to Delaware.  When it was subsequently investigated by the Commissioner of Business Oversight for violations of the Check Sellers law, it argued that the law discriminated against foreign businesses. 

The Court disagreed, finding no problem with the state requiring out-of-state businesses to form an in-state subsidiary to obtain a license.  Regarding discrimination, it found that all businesses were treated equally in the sense that they must all organize in California Corporation before they can obtain a license.

Any decision that curbs the right of out-of-state businesses to do business in California threatens the ability of California entities to take their products into other jurisdictions.  Selman Breitman remains committed to ensuring that our clients have all of the resources they need to maximize the potential of their brands.  If you have any questions about how you can expand your exposure outside of California, contact us today.

 

[1] Nationwide Biweekly Admin, Inc. v. Owen, 2015 U.S. Dist. LEXIS 34558 (N.D. Cal. March 18, 2015).