Assembly Bill 231, effective October 1, 2023, enacts the 2022 UCC amendments on emerging technologies, including the addition of a new Article 12 and amendments to Articles 1, 2, 2A, 3, 4A, 5, 7, 8, and 9.
Assembly Bill 126, effective May 30, 2023, amends (i) the entity laws regarding correction filings; (ii) the Private Corporations chapter regarding inspection of corporate records; capital stock, director protection of corporate or stockholder interests, controlling interest acquisitions, domestic amendment, restatement of articles, interested stockholder combinations and sale of assets; and (iii) the Mergers, Conversions, Exchanges and Domestications chapter regarding definitions and adoption of plans.
Senate Bill 408 (Laws of 2021), among other things, required applicants for registration as a pharmacist to undergo a criminal background check and revised the credentials for authorization for a person to manufacture, distribute, compound, sell or dispense any drug, poison, medicine or chemical. Due to the passage of SB 408 it is now required that any pharmacist, including nonresidents, compounding or dispensing any prescription of a controlled substance or dangerous drug to a patient located in Nevada must be registered with the Nevada State Board of Pharmacy.
Senate Bill 95, effective October 1, 2021, amends the Business Associations; Securities; Commodities title regarding service of process on nonresident managers with further amendments to (i) the Private Corporations chapter regarding forum selection clauses, director and officer fiduciary duties, stockholder inspection rights, distributions to stockholders and director liability for unlawful distributions, stockholder meetings and notices, record date of stockholders, voting trusts, and indemnification; (ii) the LLC chapter regarding definitions, management, contributions, distributions, insolvency, receivership, and reorganization; and (iii) the Mergers, Conversions, Exchanges and Domestications chapter regarding definitions, approval of mergers, and stockholder dissenters' rights.
Effect of Covid 19 on Asset Purchase Agreement
Lucky Lucy D LLC v. LGS Casino LLC, 139 Nev. Adv. Op. 26, decided August 24, 2023. The Nevada Supreme Court held that an LLC that had agreed to sell its casino did not breach the ordinary course covenant in the asset purchase agreement when it closed the casino as mandated by an emergency order from the Governor issued due to Covid 19. Because the LLC had generally complied with Nevada law before entering into the agreement, its closing in order to comply with the emergency order was generally consistent with how it operated its business previously.
Federal Housing Finance Agency v. Saticoy Bay LLC, No. 84370, decided July 6, 2023. The Nevada Supreme Court, answering a question certified from the U.S. Court of Appeals for the Ninth Circuit, held that a series created pursuant to Nevada’s LLC law must be sued in its own name for the court to obtain jurisdiction over it, and the “master LLC” under which the series was created cannot be sued instead.
Effect of Conversion
Mahban v. Prestige Default Services, LLC, No. 84166, decided March 9, 2023. The Nevada Supreme Court affirmed the district court’s judgment that a California LLC had a valid Nevada business license. The LLC obtained the license while it was a corporation. It later converted to an LLC. The court noted that when a corporation converts to an LLC, the corporation's rights are vested in the LLC. Because a Nevada business license is a right that vests in a converted entity, the district court did not err in concluding that the LLC had a vested right in the corporation’s Nevada business license, and thus, held a valid business license.
Business Judgment Rule
Guzman v. Johnson, 137 Nev. Adv. Rep. 13, decided March 25, 2021. The Nevada Supreme Court held that a shareholder who sues a corporate director individually for breach of fiduciary duty must, under Sec. 78.138(7) of the Nevada corporation law, rebut the business judgment rule and demonstrate that the alleged breach involved intentional misconduct, fraud, or a knowing violation of the law. The court rejected the shareholder’s contention that she rebutted the business judgment rule by alleging in her complaint that the individual directors were interested parties in the transaction, citing the inherent fairness standard adopted by the court in Foster v. Arata, 325 P.2d 759 (1958). Under that standard, the mere allegation that a director was an interested party in the transaction rebuts the business judgment rule as a matter of law and shifts the burden to the director to prove the inherent fairness of the transaction. According to the court Sec. 78.138(7) precludes such a standard.
Cotter ex rel. Reading International Inc. v. Kane, 136 Nev. Adv. Rep. 63, decided October 1, 2020. The Nevada Supreme Court held that a corporation does not have standing to challenge the merits of a shareholder derivative suit filed on its behalf but does have standing to challenge whether the plaintiff shareholder was an adequate representative of the corporation.
Director and Officer Liability
Chur v. Eighth Judicial District Court of Nevada, No. 7801, decided February 27, 2020. The Nevada Supreme Court held that a corporate director or officer may not be held individually liable for breaching his or her fiduciary duty of care through gross negligence. Statutorily a director or officer is not individually liable for harm resulting from official actions unless the director or officer engages in intentional misconduct, fraud or a knowing violation of law.
Oceania Insurance Corp. v. Cogan, No. 74958, decided February 19, 2020. The Nevada Court of Appeals held that where an LLC became the majority shareholder of a corporation by virtue of a court order to help satisfy a $ 5 million default judgment, it would violate public policy to allow the corporation to maintain a malpractice suit against the lawyer the corporation blamed for failing to get the default set aside. As majority shareholder, the LLC controlled the malpractice suit, which would require it to take the position that it should not have prevailed in the underlying action even though that victory is why the LLC is now involved in the malpractice suit.
There are no new notices at this time.