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Share Repurchases Authorized by Committee Authority

Tuesday, May 4, 2021 Section 311 of the California Corporations Code authorizes the creation of one or more committees.  Unlike Delaware, a committee of the board must have two or more members.  The board of directors may vest all of the authority of the board in a committee except with respect to seven specified actions.  One of these actions is authorization of a distribution to the corporation s shareholders. Because Section 166 defines distribution to its shareholders to include a corporation s purchase or redemption of its own shares, a board may not delegate to a committee of the board its authority with respect to share repurchases.  The statute, however, includes an exception to the limitation.  Subdivision (f) of Section 311 permits such a delegation if the repurchase or redemption is within a price range set forth in the articles or determined by the board .   

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