United States: Not So Fast – Challenges In Reincorporating From California To Delaware

There are several reasons that a California corporation may want to reincorporate to Delaware. Venture capital funds or other investors may demand a reincorporation to Delaware as a condition to financing. Cumulative voting for director elections, required for California corporations but not required for Delaware corporations, may have become a problem. The corporation may want to take advantage of the flexibility of Delaware's business laws, the abundance of legal precedent and the availability of the Court of Chancery to resolve corporate disputes. Whatever the reason, reincorporating from California to Delaware may be more challenging than originally anticipated due to a few complicating factors: (1) California's long-arm statute, (2) the availability of exemptions from registration and qualification under state and federal securities laws and (3) restrictions under the company's contracts.1

California's Long-Arm Statute – CGCL Section 2115

Under California's long-arm statute, Section 2115 of the California General Corporation Law ("CGCL"), a foreign corporation may be considered a "quasi-California" or "pseudo-foreign" corporation depending on the level of the corporation's ties to California and, therefore, purportedly subject to certain provisions of the CGCL, including, without limitation, provisions with respect to the following:

  • cumulative voting for director elections;
  • fiduciary duties of directors;
  • dissenters' rights;
  • indemnification of directors, officers and others;
  • shareholder approval of mergers and other reorganizations; and
  • restrictions on distributions, dividends and share repurchases.

A two-part test is used to determine whether a foreign corporation is subject to CGCL Section 2115:

  1. The Voting Shares Test – Are more than 50% of the corporation's outstanding voting securities held of record by persons having addresses in California appearing on the books of the corporation?
  2. The Doing Business Test – Is the average of the corporation's (a) property factor, (b) payroll factor and (c) sales factor more than 50% during the corporation's last full income year?2  These three factors are defined in Sections 25129, 25132 and 25134 of the California Revenue and Taxation Code, and are calculated by completing Schedule R as part of the corporation's California state tax returns:
    1. Property Factor – A corporation's property factor is calculated by dividing (i) the average value of the corporation's real and tangible personal property owned or rented and used in California during the taxable year by (ii) the average value of all of the corporation's real and tangible personal property owned or rented and used during the taxable year.
    2. Payroll Factor – A corporation's payroll factor is calculated by dividing (i) total compensation paid in California during the taxable year by (ii) total compensation paid elsewhere during the taxable year.
    3. Sales Factor – A corporation's sales factor is calculated by dividing (i) total sales in California during the taxable year by (ii) total sales everywhere during the taxable year.3

If both the "voting shares test" and the "doing business test" are satisfied, then the surviving corporation following the reincorporation merger may subsequently become subject to Section 2115 of the CGCL, potentially frustrating the decision to reincorporate in Delaware, particularly if a primary reason is to escape cumulative voting.

Although CGCL Section 2115 seems problematic as written, its bark may be worse than its bite. California-based Delaware corporations have successfully challenged the enforceability of CGCL Section 2115 in court. For example, in VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (Del. 2005), the Delaware Supreme Court rejected CGCL Section 2115 on grounds that it violated the "internal affairs doctrine" under Delaware law, which provides that the law of the state of incorporation should govern any disputes regarding that corporation's internal affairs. Moreover, both California and Delaware courts have enforced forum-selection clauses set forth in the charter documents of Delaware corporations, and are even more likely to do so in the future following Delaware's adoption of Section 115 of the Delaware General Corporation Law ("DGCL") in 2015. DGCL Section 115 explicitly provides that the certificate of incorporation or bylaws of a Delaware corporation may require that any or all internal corporate claims be brought solely and exclusively in Delaware courts.

Exemption from Registration and Qualification under the Securities Laws

Under Rule 145(a)(2), a statutory merger in which the securities of the target corporation will be exchanged for securities of any other person will be deemed to be an offer and sale under the Securities Act of 1933, as amended (the "Securities Act"), unless the "sole purpose of the transaction is to change an issuer's domicile solely within the United States." What does "sole purpose" mean in this context? It does not mean that there can be no changes to the rights of shareholders in connection with the reincorporation. The SEC Staff has issued many no-action letters that have permitted changes to be made to shareholder rights in connection with a reincorporation merger while still falling within the Rule 145(a)(2) exception.4 However, it is not entirely clear how many changes can be made before one may question whether the "sole purpose" of the transaction is to change domicile, as opposed to some other purpose, such as eliminating important shareholder rights.

If the parties cannot get comfortable that the "sole purpose" of the transaction is to change the California corporation's domicile, as provided in Rule 145(a)(2), then the reincorporation merger must be analyzed as if it involves the offer and sale of shares by the Delaware corporation to the shareholders of the California corporation. Accordingly, under the Securities Act and applicable "blue sky" laws, the transaction must either be registered or qualified or exempt therefrom. In fact, blue sky laws must also be considered in the Rule 145(a)(2) scenario, because there may not be a similar exception to the definition of offer and sale under state law.

If all of the shareholders of the California corporation are "accredited investors," as defined in Rule 501(a) of Regulation D promulgated under the Securities Act,5  then the analysis is relatively straight-forward.

Under Rule 506 of Regulation D, a safe harbor for establishing that an offer or sale of securities is a transaction not involving a public offering within the meaning of Section 4(a)(2) under the Securities Act, an issuer may offer and sell securities to an unlimited number of accredited investors and for an unlimited dollar value. Additionally, Rule 506 does not require the issuer to provide any particular information to accredited investors regarding the offering, though the issuer still needs to be mindful of anti-fraud rules, such as Rule 10b-5. Rule 506 has some other requirements, including the requirement to prepare and file with the Securities and Exchange Commission ("SEC") a notice on Form D no later than 15 days after the first sale of securities in the offering, but they are typically "easy bases to tag" for reincorporation transactions.

Securities issued under Rule 506 are "covered securities" under Section 18 of the Securities Act and therefore preempt regulation under state blue sky laws. However, states may require an issuer to file a notice informing the applicable state agency of the Rule 506 offering. For example, CGCL Section 25102.1(d) provides that the issuer must (1) file a copy of the Form D for any Rule 506 offering with the California State Commissioner, (2) file a consent to service of process pursuant to CGCL Section 25165 and (3) pay a filing fee. If the issuer has shareholders in states other than California, then the laws of those states must also be analyzed to see if a notice and/or fee is required.

The analysis gets more complicated if the California corporation has shareholders that do not qualify as "accredited investors." Although an issuer can still rely on Rule 506 if securities will be issued to fewer than 35 unaccredited investors, the compliance burden increases significantly because the issuer will be required to provide to unaccredited investors in advance of the sale of securities (i.e., before the purchase agreement, merger agreement or similar agreement is signed) certain disclosures meeting the line item requirements of Rule 502(b)(2) of Regulation D. This is true irrespective of whether the unaccredited investors have a "purchaser representative" as contemplated by Rule 506(b)(2)(ii).

The required disclosures for unaccredited investors under Rule 506 can be costly and time-consuming to prepare. These include prescribed financial statement information and non-financial statement information, including the information required by Form S-4 for business combinations. Some relief is given under Rule 502(b) in that such disclosure only needs to be provided "to the extent material to an understanding of the issuer, its business and the securities being offered." However, the fact that any disclosure needs to be prepared at all to rely on Rule 506 in an offering to unaccredited investors significantly increases the compliance burden.

In the event that the California corporation has more than 35 unaccredited investors – or if the issuer does not want to prepare the disclosures required by Rule 506 for unaccredited investors – there are alternatives to Rule 506 for an exemption under the Securities Act. For example, if the total value of securities to be issued is less than $5.0 million, then the issuer may be able to rely on Rule 504 of Regulation D for an exemption from registration.6 Alternatively, the issuer could conclude that the offer and sale of securities is a transaction not involving a public offering under Section 4(a)(2) of the Securities Act applying the Ralston Purina test.7 Neither Rule 504 nor Section 4(a)(2) requires the issuer to provide any particular disclosure to unaccredited investors, though as noted above an issuer must always be mindful of anti-fraud rules.

The drawback to using Rule 504 or a "naked" Section 4(a)(2) exemption (i.e., relying on Section 4(a)(2) without the Rule 506 safe harbor) is that the offered securities will not be "covered securities" under Section 18 of the Securities Act and therefore will be subject to regulation under state blue sky laws. In California, because the transaction will involve the exchange of securities incident to a merger, the transaction will need to be qualified under CGCL Section 25120 (not CGCL Section 25110), unless there is an available exemption.8

The two most promising exemptions from CGCL Section 25120 are typically CGCL Section 25103(c) and CGCL Section 25103(h).

CGCL Section 25103(c) is useful if a number of shareholders have addresses of record outside of California. CGCL Section 25103(c) provides that a transaction incident to a merger is exempt from qualification under CGCL Section 25120 if fewer than 25% of shareholders of each class of stock have addresses in California. However, for purposes of this calculation, under CGCL Section 25103(d), any securities held to the knowledge of the issuer in the names of broker-dealers or nominees of broker-dealers or any securities controlled by any one person who controls directly or indirectly 50% or more of the outstanding securities of that class shall not be considered outstanding. It is important to note that the exemption is based on shareholders with "addresses" in California, not "residences" in California, so there is a little room to maneuver there.

CGCL Section 25103(h) provides an exemption from qualification under CGCL Section 25120 if the following criteria are satisfied:

  • The transaction, had the exchange transaction involved the issuance of a security in a transaction subject to the provisions of Section 25110, would be exempt from qualification under Section 25102(f); and
  • Either:
    • Not less than 75% of shares voted for the transaction, not less than 10% of shares voted against the transaction and shareholders have dissenters' rights with respect to the transaction; or
    • The transaction is "solely for the purposes of changing the issuer's state of incorporation or organization" or form of organization, all securities of a similar class are treated equally, and the holders of nonredeemable voting equity securities receive nonredeemable voting equity securities.

Turning to the first prong of the test under CGCL Section 25103(h), the following criteria would need to be satisfied for a transaction to be exempt under CGCL Section 25102(f):

  • Sales of the security must not be made to more than 35 unaccredited investors, including persons not in California (no limit on accredited investors);
  • Each of the participants in the exchange must have a preexisting business relationship with the offeror or any of its partners, officers, directors or controlling persons, or by reason of his or her business or financial experience could be reasonably assumed to have the capacity to protect his or her own interests in connection with the transaction;
  • Each of the participants in the exchange must be purchasing for his or her own account and not with a view to or for the sale in connection with any distribution of the security; and
  • The offer and sale of the security must not be accomplished by the publication of any advertisement.

Other potential bars for the applicability of CGCL Section 25103(h) would be if dissenters' rights do not apply to the transaction. In that case, the Delaware corporation would not qualify for an exemption based on the requirement under CGCL Section 25103(h)(1)(A) that the proposed transaction provide for dissenters' rights. We note that a potential work-around here could be to contractually provide for dissenters' rights in connection with the reincorporation transaction.

In addition, whether a reorganization merger would be "solely for the purposes" of changing the state of incorporation, as required under CGCL Section 25103(h)(1)(B), could be challenged to the extent there are differences in shareholders' rights under the surviving corporation when compared to the disappearing corporation, such as the removal of cumulative voting of directors.

California law lacks helpful precedent on the issue of whether a reorganization merger would be "solely for the purposes" of changing the state of incorporation. As persuasive authority, the SEC has issued some no-action letters that address the issue of whether the "sole purpose" of a transaction is "to change an issuer's domicile solely within the United States," in the context of interpreting Rule 145(a)(2), as noted above. In such letters, the Staff granted no-action relief in certain situations where a change in the state of domicile was accompanied by revisions to the issuer's charter and bylaws that included provisions that could not have been adopted under the laws of the company's prior state of incorporation. It is unclear, however, whether California would grant similar relief.

Fairness Hearing

If Rule 506 does not work and you do not qualify for an exemption from qualification under the CGCL, you would need to apply for a permit to qualify the issuance of shares with the California Department of Business Oversight ("CDBO"). You would do so through the process of a fairness hearing, which is provided for under CGCL Section 25142.

During the fairness hearing, the DBO will examine all relevant factors in determining whether the transaction is fair and equitable, with the following factors considered to be the most material:

  • the primary reasons for the reincorporation;
  • whether there are any significant objections to the reincorporation;
  • how shareholders are treated in connection with the reincorporation;
  • whether adequate notice of the reincorporation was provided to shareholders; and
  • whether the reincorporation was approved by shareholders.

If the DBO determines that the transaction is fair, the Commissioner will issue a permit allowing the Delaware corporation to issue shares to the California corporation's shareholders in connection with the reincorporation merger. As an added bonus, the transaction would then qualify for an exemption under Section 3(a)(10) of the Securities Act based on the CDBO approving the issuance of shares through the fairness hearing process, so the reincorporation would also be covered on the federal side.

Other State Exemptions

As noted above (in the context of offerings to accredited investors), if some shareholders are located in states other than California, you would need to look at securities regulations in those states to determine whether the merger transaction would qualify for a securities exemption or would need to be registered and qualified in those states.

Contractual Approvals

Aside from procedural and securities law requirements of reincorporating a California corporation in Delaware, you need to consider the effect of the merger on the corporation's contracts.

As part of the merger transaction, the California corporation would be assigning its assets and liabilities by operation of law to the newly-formed Delaware corporation, including its existing contracts with customers, suppliers, landlords, lenders and other counterparties. To the extent that any of your agreements contain language restricting assignment – by operation of law or otherwise – reincorporating would constitute a technical breach of these agreements. As a result, before deciding to reincorporate, it is advisable to review your material contracts to confirm whether the merger transaction would require notice or consent, constitute an event of default, or otherwise constitute a breach. If so, it may be worth requesting counterparty consent for any material contracts prior to reincorporating.

Footnotes

1 The basic process for reincorporating your California corporation in Delaware is relatively straightforward. The first step is organizing a new corporation in the State of Delaware by submitting a Certificate of Incorporation with the Delaware Secretary of State. In conjunction with filing the Certificate of Incorporation, the Delaware corporation would adopt bylaws to establish the governing rules of the corporation in the reincorporation merger. Next, the California and the Delaware corporations would merge, with the California corporation as the disappearing corporation and the Delaware corporation as the surviving corporation.

To complete the merger, you would be required to comply with the requirements under both California and Delaware corporate law. Under California law, both board and shareholder approval must be obtained. Although CGCL Section 1201(b) provides that shareholder approval is not required if the shareholders of the disappearing corporation possess more than five-sixths of the voting power of the surviving corporation, CGCL Section 1201(d) states that the principal terms of the merger must be approved by shareholders if the shareholders receive shares of the surviving corporation having different rights, preferences, privileges or restrictions than the shares surrendered. CGCL Section 1201(d) also states that shares in a foreign corporation received in exchange for shares in a domestic corporation are necessarily considered to have different rights, preferences, privileges or restrictions.

After board and shareholder approval of the merger is obtained, the California corporation would file a Certificate of Ownership with the California Secretary of State. The filing would be accompanied by a resolution or plan of merger adopted by the board of the California corporation, authorizing the merger and setting forth its terms. As a final step, upon receipt of the Certificate of Ownership and Merger from the Delaware Secretary of State, the California corporation would submit a certified copy of the Certificate of Ownership and Merger to the California Secretary of State to complete the merger filings in California.

In Delaware, only board approval and Secretary of State filings are required. To complete the merger in Delaware, the Delaware corporation would file a Certificate of Ownership with the Delaware Secretary of State as well as the merger authorizing resolutions adopted by its board. Shareholder approval would not be required because, under DGCL Section 253(a), the California corporation would own more than 90% of the outstanding shares of the Delaware corporation upon its formation.

2 Because the "doing business test" calculations are dependent on the availability of year-end financial information, the requirements of CGCL Section 2115(b) become applicable only upon the first day of the first income year of the corporation commencing on or after the 135th day of the income year immediately following the latest income year with respect to which the "voting shares test" and the "doing business test" have been met, per Section 2115(d) of the CGCL.

3 Schedule R and its accompanying instructions can be located on the California Franchise Tax Board's website (Schedule R for 2017: https://www.ftb.ca.gov/forms/2017/17_100r.pdf; instructions for Schedule R for 2017: (https://www.ftb.ca.gov/forms/2017/17_100rins.pdf).

4 For example, Russell Corp. (March 18, 2004) (https://www.sec.gov/divisions/corpfin/cf-noaction/russellcorp031804.pdf).

5 "Accredited investor" is defined in Rule 501(a) of Regulation D, and includes the following main categories:

  1. Directors, executive officers, and general partners of the issuer.
  2. Any natural person whose net worth either individually or jointly with their spouse equals or exceeds $1 million.
  3. Natural person investors who have income in excess of $200,000 in each of the two most recent years and who reasonably expect an income in excess of $200,000 in current year (or $300,000, jointly with their spouse).
  4. Any trust not organized for the specific purpose of acquiring the securities offered, in which case each beneficial owner of the security is counted separately.

6 As with an offering exempt from registration under Rule 506 of Regulation D, Form D must be filed in connection with an offering that relies on Rule 504 of Regulation D for an exemption from registration.

7 Under the Ralston Purina test, an offering is exempt from registration if it would be considered a "private offering" as opposed to a "public offering," with a balancing of four factors: (a) the number of offerees and their relationship to each other and the issuer, (b) the number of securities offered, (3) the size of the offering and (4) the manner of the offering. The relationship of the offerees to the issuer is significant, where an offering to members of a class who should have special knowledge based on their relationship to the issuer being less likely to be a public offering than an offering to members of a class who do not have that advantage.

8 Transactions subject to CGCL Section 25120 are not also subject to CGCL Section 25110. Per Section 4.5 of the Guide to California Securities Law Practice, Corporations Committee of the Business Law Section of the State of California, "by its express terms, [CGCL Section] 25110 applies only to those issuer transactions that are not subject to [CGCL Section] 25120. If an issuer transaction is subject to [CGCL Section] 25120 et seq., then [CGCL Section] 25120 and the regulations related thereto, and not [CGCL Section] 25110, apply to the transaction."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Sep 2018, Seminar, San Francisco, United States

Please join us for Sheppard Mullin's Labor & Employment Law Update & Happy Hour Seminar Series.

28 Sep 2018, Other, Los Angeles, United States

Leaders today don't just have to worry about nefarious cybercriminals getting "inside" their firewalls; there's an entire ecosystem of SAAS partners, third party vendors and suppliers, and all the hardware from switches to POS terminals that need to be monitored.

9 Oct 2018, Other, Los Angeles, United States

Sheppard, Mullin, Richter & Hampton LLP has opened for business in Dallas to proudly serve the Texas business community.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions