California Codes

Cal. Corporations Code § 2116 (2026)

✓ current as of May 2026

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The directors of a foreign corporation transacting intrastate business are liable to the corporation, its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the making of unauthorized dividends, purchase of shares or distribution of assets or false certificates, reports or public notices or other violation of official duty according to any applicable laws of the state or place of incorporation or organization, whether committed or done in this state or elsewhere. Such liability may be enforced in the courts of this state.

Notes of Decisions

Cited in 23 cases (4 in the last 5 years), 1983–2025 · leading case: In re Wells Fargo & Co. S'holder Derivative Litig., 282 F. Supp. 3d 1074 (N.D. Cal. 2017).

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In re Wells Fargo & Co. S'holder Derivative Litig., 282 F. Supp. 3d 1074 (N.D. Cal. 2017). · cites it 3× “The internal affairs doctrine is codified in California Corporations Code Section 2116 : The directors of a foreign corporation transacting intrastate business are liable to the corporation , its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the…”

Drulias v. 1ST Century Bancshares, Inc., 241 Cal. Rptr. 3d 843 (Cal. Ct. App. 5th 2018). · cites it 2× “) For the following reasons, Drulias's construction of Corporations Code section 2116 is unpersuasive.”

In Re Sagent Tech., Inc., Derivative Litig., 278 F. Supp. 2d 1079 (N.D. Cal. 2003). · cites it 2× “See Cal. Corp.Code § 2116 (directors of foreign corporation transacting intrastate business are liable to corporation for making of unauthorized dividends, purchase of shares or distribution of assets of false certificates, reports or public notices or other violation of…”

Vaughn v. LJ Int'l, Inc., 174 Cal. App. 4th 213 (Cal. Ct. App. 2009). · cites it 2× “) Corporations Code section 2116 codifies the modem view of the common law doctrine, whereby a court will entertain an action involving the internal affairs of a foreign corporation.”

Charter Twp. of Clinton Police & Fire Ret. Sys. v. Martin, 219 Cal. App. 4th 924 (Cal. Ct. App. 2013). · cites it 3× “) ―[T]here is no dispute that Delaware substantive law applies in this case pursuant to the internal affairs doctrine, codified at Corporations Code section 2116, which provides that the law of the place of incorporation governs the liability of directors to the corporation and…”

In Re Verisign, Inc., Derivative Litig., 531 F. Supp. 2d 1173 (N.D. Cal. 2007). “See Cal. Corp.Code § 2116 (directors of foreign corporation transacting intrastate business are liable to corporation for making of unauthorized dividends, purchase of shares or distribution of assets of false certificates, reports or public notices or other *1215 violation of…”

In re Facebook, Inc., 367 F. Supp. 3d 1108 (N.D. Cal. 2019). “*1121 Finally, Plaintiffs claim that this Court has "more interest and expertise" than the Delaware Court of Chancery in adjudicating California's insider trading statutes ( California Corporations Code §§ 25402 and 25403 ).”

In Re Brocade Commc'ns Sys., Inc. Derivative Litig., 615 F. Supp. 2d 1018 (N.D. Cal. 2009). “2007); Cal. Corp. Code § 2116 (codifying the internal affairs doctrine for claims brought against “directors”).”

Kruss v. Booth, 185 Cal. App. 4th 699 (Cal. Ct. App. 2010). “3d 166 ] [“Corporations Code section 2116 codifies the modem view of the common law doctrine, whereby a court will entertain an action involving the internal affairs of a foreign corporation.”

Villari v. Mozilo, 208 Cal. App. 4th 1470 (Cal. Ct. App. 2012). “) Corporations Code section 2116 codifies that rule in California.”

Laborers' Local v. Intersil, 868 F. Supp. 2d 838 (N.D. Cal. 2012). “2003); see Cal. Corp.Code § 2116. Additionally, the demand requirements for a shareholder derivative suit are determined by the law of the state of incorporation.”

Dye v. Sachs (In Re Flashcom, Inc.), 308 B.R. 485 (C.D. Cal. 2004). “See Cal. Corp.Code § 2116. This does not mean that California has no role in governing the conduct of foreign corporations.”

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