PERSPECTIVE ON THE NEW CALIFORNIA RATIFICATION LAW BASED ON CALIFORNIA CORPORATE AND DELAWARE RATIFICATION PRACTICES

Written by Julia Reigel, Jack McBride, Angie Flaherty, and Nate Emeritz^*

California has adopted a ratification and validation statute, section 119 of the California General Corporation Law ("GCL") (Cal. Corp. Code § 119), which became effective January 1, 2023.¹ Section 119 provides for corporate ratification and judicial validation of noncompliant corporate actions, as an analogue to sections 204 and 205 of the Delaware General Corporation Law (Del. Code Ann. tit. 8, §§ 204-205, referred to herein collectively as the "Delaware Law"). Based on our experience with the GCL, the Delaware Law, and relevant California and Delaware case law, this article is intended to provide thoughts for consideration regarding the development of law and practice around section 119.

CONTEXT FOR SECTION 119 AND STATUTORY RATIFICATION

Section 119 has been added to the GCL to address shortcomings regarding common law ratification as a remedy for resolving void and voidable corporate issues.² Following Delaware’s adoption of the Delaware Law in 2013, other states enacted similar statutes for corporate ratification and judicial validation of invalid corporate actions.³ Although these statutes reflect a range of policy and drafting choices, they also reflect similarity in the underlying issues being addressed and primary operative features. We expect that an understanding of the Delaware Law will, therefore, be critical to informing implementation, interpretation, and development of section 119.