Corporations and other business organizations : cases and materials / by Melvin Aron Eisenberg, James D. Cox.
2011
KF1414 .E357 2011 (Map It)
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Author
Title
Corporations and other business organizations : cases and materials / by Melvin Aron Eisenberg, James D. Cox.
Published
New York : Foundation Press Thomson/West, 2011.
Call Number
KF1414 .E357 2011
Edition
Tenth edition [unabridged].
ISBN
9781599414621 (hbk.)
1599414627 (hbk.)
9781609300463 (pbk. ; teacher's manual)
1609300467 (pbk. ; teacher's manual)
1599414627 (hbk.)
9781609300463 (pbk. ; teacher's manual)
1609300467 (pbk. ; teacher's manual)
Description
xlvii, 1,551 pages ; 27 cm + teacher's manual.
System Control No.
(OCoLC)741108125
Note
Accompanied by: Teacher's manual (278 pages ), 2012.
Bibliography, etc. Note
Includes bibliographical references and index.
Supplement Note
Kept up to date by supplements.
Series
Record Appears in
Added Author
Table of Contents
Preface
iii
Table of Cases
xxxiii
ch. 1
Agency; The Sole Proprietorship
1
1.
The Sole Proprietorship
1
2.
Agency
2
A.
The Authority of an Agent
2
Morris Oil Co. v. Rainbow Oilfield Trucking, Inc
2
Restatement Third [§][§] 2.01-2.03, 2.05, 3.01, 3.03, 3.06, 4.01-4.02, 6.01-6.03, 6.10, 8.14
6
Note on the Agency Relationship
6
B.
The Agent's Duty of Loyalty
20
Jensen & Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure
20
Tarnowski v. Resop
21
Restatement Third [§] 8.05, Illustration 1
24
Reading v. Attorney-General
25
Rash v. J.V. Intermediate, Ltd
26
Restatement Third [§][§] 8.01-8.05
26
ch. 2
A Primer on Accounting and Finance
27
1.
An Introduction to Accounting and Financial Statements
27
Lawrence A. Cunningham, Introductory Accounting, Financing and Auditing 31-32
27
David R. Herwitz & Matthew J. Barrett, Accounting for Lawyers 3, 8-14, 31-35
28
Note on the Link Between the Income Statement and the Balance Sheet
31
R. Hamilton, Fundamentals of Modern Business 154-55
32
Note on Accrual Accounting and the Conventions of Accountings
33
Note on Accounting and Audit Standard Setters and the Audit Opinion
36
2.
Present Value: Its Utility and Calculation
37
A.
Techniques of Determining Present Value
37
Problems
43
B.
Stock Valuation Model
43
3.
What Is Risk and Diversification?
45
W. Klein & J. Coffee, Business Organization and Finance 242-44
45
Note on Joy v. North
48
Howell E. Jackson, Louis Kaplow, Steven M. Shavell, W. Kip Viscusi & David Cope, Analytical Methods for Lawyers 250---258
49
Note on the Capital Asset Pricing Model, Systemic Risk, and Estimating Returns
53
4.
Market Efficiency: The Hypothesis and Qualifications
56
Richard A. Brealey, Stewart C. Myers & Franklin Allen, Principles of Corporate Finance 314, 317-318, 321, 324-328, & 329-333
66
Daines & Hanson, The Corporate Law Paradox: The Case for Restructuring Corporate Law
61
ch. 3
Partnerships
62
Introductory Note
62
1.
What Constitutes a General Partnerships
63
Hilco Property Services, Inc. v. United States
63
Uniform Partnership Act [§][§] 6, 7
63
Revised Uniform Partnership Act [§][§] 101(6), 202
63
Martin v. Peyton
63
Lupien v. Malsbenden
67
Note on the Formation of Partnerships
70
2.
The Legal Nature of a Partnership
71
Uniform Partnership Act [§] 6
71
Revised Uniform Partnership Act [§][§] 101(6), 201
71
Note on the Legal Nature of a Partnership: Entity or Aggregate Status
72
3.
The Ongoing Operation of Partnerships
74
A.
Management
74
Uniform Partnership Act [§][§] 18(e), (g), (h), 19, 20
74
Revised Uniform Partnership Act [§][§] 103, 401(f), (i), (j), 403
74
Summers v. Dooley
74
Sanchez v. Saylor
76
Note on the Management of Partnerships
77
Note on What Law Governs the Internal Affairs of Partnerships
79
B.
Indemnification and Contribution
80
Uniform Partnership Act [§][§] 18(a), (b), (c), (d), (f)
80
Revised Uniform Partnership Act [§][§] 401(a)-(e), (h)
80
Note on Indemnification and Contribution
80
C.
Distributions, Remuneration, and Capital Contributions
81
Uniform Partnership Act [§][§] 18(a), (b), (c), (d), (f)
81
Revised Uniform Partnership Act [§] 401(a)-(e), (h)
81
Question
81
D.
Capital Accounts and Draws
81
William Klein, John C. Coffee & Frank Partnoy, Business Organization and Finance 79-84
81
4.
The Authority of a Partner
85
Uniform Partnership Act [§][§] 3, 4(3), 9, 10, 11, 12, 13, 14
85
Revised Uniform Partnership Act [§][§] 301, 302, 303, 304, 305, 306, 308
85
RNR Investments Limited Partnership v. Peoples First Community Bank
85
Northmon Investment Company v. Milford Plaza Associates
89
Note on the Authority of a Partner
90
5.
Liability for Partnership Obligations
91
Uniform Partnership Act [§][§] 9, 13, 14, 15, 16, 17, 36
91
Revised Uniform Partnership Act [§][§] 305, 306, 307, 308
91
Davis v. Loftus
92
Note on Liability for Partnership Obligations
92
6.
Partnership Interests and Partnership Property
94
Uniform Partnership Act [§][§] 8, 18(g), 24, 25, 26, 27, 28
94
Revised Uniform Partnership Act [§][§] 203, 204, 501, 502, 503, 504
94
Rapoport v. 55 Perry Co.
94
Bauer v. Blomfield Co.
97
Note on Partnership Property
101
Note on Partnership Interests
103
7.
The Partner's Duty of Loyalty
105
Uniform Partnership Act [§] 21
105
Revised Uniform Partnership Act [§][§] 103(a), (b) (3), (5), 104, 403, 404, 405
105
Meinhard v. Salmon
105
Latta v. Kilbourn
109
Enea v. Superior Court
110
Robert W. Hillman, Allan W. Vestal & Donald J. Weidner, The Revised Uniform Partnership Act [§] 404, at 298-99.
114
Note on Suits by a Partner Against a Partnership
115
8.
Dissolution (I): Dissolution by Rightful Election
116
Uniform Partnership Act [§][§] 29, 30, 31(1), 38(1), 40
116
Revised Uniform Partnership Act [§][§] 601, 602, 603, 701, 801, 802, 803, 804, 807
116
Girard Bank v. Haley
116
Creel v. Lilly
117
Disotell v. Stiltner
123
McCormick v. Brevig
124
Farnsworth v. Deaver
128
Note on Distributions in Dissolution and "Services Partners"
130
Note on Joint Ventures
133
Page v. Page
134
Leff v. Gunter
137
Rosenfeld, Meyer & Susman v. Cohen
137
Note on Partnership Breakup Under the UPA
137
Note on Partnership Breakup Under RUPA
140
The Revised Uniform Partnership Act [§] 701, at 413, 416-417 / Donald J. Weidner
143
The Revised Uniform Partnership Act [§] 801, at 443-444, 449 / Donald J. Weidner
144
9.
Dissolution (II): Dissolution by Judicial Decree and Wrongful Dissolution
145
Uniform Partnership Act [§][§] 31(2), 32, 38(2)
145
Revised Uniform Partnership Act [§][§] 601, 602, 603, 701, 801, 802, 803, 804, 807
145
Drashner v. Sorenson
145
Note on Wrongful Dissolution
149
Note on the Expulsion of a Partner
149
Levy v. Nassau Queens Medical Group
151
Crutcher v. Smith
152
10.
Limited Partnerships
153
A.
The Uniform Limited Partnership Acts
153
B.
Formation of Limited Partnerships
153
Revised Uniform Limited Partnership Act [§][§] 101, 201
153
Uniform Limited Partnership Act (2001) [§][§] 102, 201
154
Note
154
C.
Liability of Limited Partners
154
Revised Uniform Limited Partnership Act [§] 303
154
Uniform Limited [§] Act (2001) [§] [303]
154
Gateway Potato Sales v. G.B. Investment Co.
154
D.
Corporate General Partners
162
In re USACafes, L.P. Litigation
163
E.
The Taxation of Unincorporated Business Organizations
168
F.
Fiduciary Obligations
170
Gotham Partners, L.P. v. Hallwood Realty Partners, L.P.
170
Note on Gotham Partners v. Hallwood
179
11.
Limited Liability Partnerships
180
Revised Uniform Partnership Act [§][§] 101(5), 306(c), 1001
180
Note on Limited Liability Partnerships
180
Ederer v. Gursky
181
Bromberg & Ribstein, Limited Liability Partnerships, The Revised Uniform Partnership Act, and the Uniform Limited Partnership Act
188
Note on Liability for Involvement
189
ch. 4
The Foundations of a Corporation
191
1.
The Characteristics of a Corporation
191
2.
The Architecture of Corporate Law
192
3.
Which State's Law Governs a Corporation's Internal Affairs
193
VantagePoint Venture Partners 1996 v. Examen, Inc
194
Friese v. Superior Court
201
California Corporations Code [§][§] 2115, 25402, 25502, 25502.5
207
New York Business Corporation Law [§][§] 1317, 1318, 1319, 1320
207
4.
Selecting a State of Incorporation
207
5.
Organizing a Corporation
213
Del. Gen. Corp. Law [§][§] 101, 102, 103, 106, 107, 108, 109
213
Model Bus. Corp. Act [§][§] 2.01, 2.02, 2.03, 2.05, 2.06
213
Form of Minutes of Organization Meeting
215
Form of by-Laws
215
Form of Stock Certificate
215
Del. Gen. Corp. Law [§] 109
215
Model Bus. Corp. Act [§][§] 2.06, 10.20-10.21
216
6.
The Basic Types of Financial Securities
216
7.
The Seductive Qualities of Debt
220
Guide To Finance For Lawyers, 295-297 / John D. Ayer
220
Note on the Tax Shield of Debt
222
Note on Leverage and the Risk of Financial Distress
223
8.
Equitable Subordination of Shareholder Claims
225
Note on Equitable Subordination of Shareholder Claims
225
Benjamin v. Diamond
227
Uniform Fraudulent Transfer Act [§] 4(a)
228
Bankruptcy Code [§] 548
228
9.
Requisites for Valid Action by the Board
228
Del. Gen. Corp. Law [§][§] 141(b), (f), (i), 229
228
Model Bus. Corp. Act [§][§] 8.20, 8.21, 8.22, 8.23, 8.24
228
Note on Requisites for Valid Action by the Board
228
Note on Board Committees
231
10.
The Normal Requisites for Valid Shareholder Action
231
Del. Gen. Corp. Law [§][§] 211, 213, 214, 216, 222, 228
231
Rev. Model Bus. Corp. Act [§][§] 7.01, 7.02, 7.03-7.07, 7.21, 7.25-7.28
232
Note on the Normal Requisites for Valid Shareholder Action
232
11.
The Election of Directors
233
A.
Staggered Boards
233
Marcel Kahan & Edward Rock, Embattled CEOS
234
B.
Cumulative Voting
235
C.
Plurality Voting
239
Majority Election of Directors: Where Are We Today? / Bryn R. Vaaler
239
Embattled CEOS / Edward Rock
241
Del. Gen. Corp. Law [§] 141(c)
242
Model Bus. Corp. Act [§] 8.25
242
D.
Short Slates
242
Note on Short Slates
242
12.
Removal of Directors
242
Note on the Removal of Directors
243
13.
Requisites for Valid Action by Corporate Officers
244
Del. Gen. Corp. Law [§] 142
244
Model Bus. Corp. Act [§][§] 8.40, 8.41
244
Note on Authority
244
Note on the Authority of Corporate Officers
244
Schoonejongen v. Curtiss Wright Corp
248
14.
The Classical Ultra Vires Doctrine
248
Introductory Note
249
Del. Gen. Corp. Law [§][§] 101(B), 102(A)(3), 121, 122, 124
251
Model Bus. Corp. Act [§][§] 3.01(A), 3.02, 3.04
251
15.
The Objective and Conduct of the Corporation
251
A.
The Maximization of Shareholder Wealth
252
Hu, New Financial Products, The Modern Process of Financial Innovation, and the Puzzle of Shareholder Welfare
252
B.
Interests Other Than Maximization of Shareholders' Wealth
253
Note on Dodge v. Ford Motor Co
253
A.P. Smith Mfg. Co. v. Barlow
256
Del. Gen. Corp. Law [§] 122(9), (12)
261
Model Bus. Corp. Act [§] 3.02(12)-(14)
261
Note on the Conduct of the Corporation
261
The Social Responsibility of Business is to Increase Its Profits / Milton Friedman
262
Principles of Corporate Governance [§][§] 2.01. 6.02 / American Law Institute
262
Conn. Gen. Stats. Ann. [§][§] 33-756
262
Ind. Code Ann. [§] 23-1-35-1
262
N.Y. Bus. Corp. Law [§] 717
262
Pennsylvania Consol. Stats. Ann. Title 15, [§][§] 1711, 1715, 1716, 1717, 2502
262
Note on Other Constituencies Under Delaware Law
262
ch. 5
The Legal Structure of Publicly Held Corporations
267
The Structure of the Corporation 1 / Melvin A. Eisenberg
267
Introductory Note
267
1.
The Legal Distribution of Power Between the Board and the Shareholders, and Equitable Limits on the Board's Legal Power
268
A.
The Legal Distribution of Power Between the Board and the Shareholders
268
Del. Gen. Corp. Law [§] 141(a)
269
Model Bus. Corp. Act [§] 8.01(b)
269
Charlestown Boot & Shoe Co. v. Dunsmore
269
People ex rel. Manice v. Powell
270
Del. Gen. Corp. Law [§] 141(k)
271
Cal. Corp. Code [§][§] 303, 304
271
N.Y. Bus. Corp. Law [§] 706
271
B.
Equitable Limits on the Board's Legal Powers
271
Note on Condec Corp. v. Lunkenheimer Co.
271
Schnell v. Chris-Craft Industries, Inc.
272
A.A. Berle & G. Means, The Modern Corporation and Private Property
274
Blasius Industries, Inc. v. Atlas Corp
274
Note on Further Proceedings in Blasius
282
Note on the Business Judgment Rule
282
C.
The Role of Bylaws in the Allocation of Power Between the Board and the Shareholders
283
CA, Inc. v. AFSCME Employees Pension Plan
285
SEC Proxy Rule 14a-8
294
Del. Gen. Corp. Law [§][§] 112, 113
294
2.
Corporate Governance and the Rise of Institutional Shareholders
294
A.
Shareholder Voting
294
Robert B. Thompson & Paul H. Edelman, Corporate Voting
294
Note on Weighted Voting in Publicly Held Corporations
297
New York Stock Exchange, Listed Company Manual [§] 313.00
299
Note on Empty Voting and Record Date(s)
299
B.
Financial Institutions and Their Advisors
302
Note on the Role of Shareholders Under Modern Corporate Practice
302
Note on the Problem of Free-Riding
312
Note on Impact of Activism on Shareholder Value
313
Brav, Jiang, Partnoy & Thomas, Hedge Fund Activism, Corporate Governance, and Firm Performance
314
3.
Vote Buying
317
Portnoy v. Cryo-Cell International, Inc
317
4.
Funding Proxy Contests
327
Rosenfeld v. Fairchild Engine and Airplane Corp
328
Heineman v. Datapoint Corp
335
5.
The Allocation of Power Between the Board and the CEO
335
Note on the Management of Publicly Held Corporations
335
The Embattled CEO / Edward Rock
337
Book Review [of Macey, The Overstated Promise of Corporate Governance] / Jill E. Fisch
339
Principles of Corporate Governance [§][§] 3.01, 3.02, 3.05, 3A.01-3A.05 / American Law Institute
340
New York Stock Exchange
340
Sarbanes-Oxley Act of 2002
340
Note on the Role of Takeovers in the Structure of the Corporation
340
ALI, Principles of Corporate Governance [§] 6.02
343
ch. 6
Shareholder Informational Rights & Proxy Voting
343
1.
Shareholder Information Rights Under State and Federal Law
343
A.
Inspection of Books and Records
343
Del. Gen. Corp. Law [§][§] 219, 220
343
Rev. Model Bus. Corp. Act [§][§] 7.20, 16.01-16.04
343
Cal. Corp. Code [§][§] 1600, 1601
343
N.Y. Bus. Corp. Law [§] 624
343
Saito v. McKesson HBOC, Inc
343
Note on Shareholders' Inspection Rights
348
B.
The Stockholder List in a Dematerialized World
351
Concept Release on the U.S. Proxy System
351
Note on Consents and Who's a Record Holder
358
F.
Balotti & J. Finkelstein, The Delaware Law of Corporations and Business Associations [§] 7.45
361
C.
Reporting Under State Law
362
Model Bus. Corp. Act [§][§] 16.20
362
Cal. Corp. Code [§] 1501
362
N.Y. Bus. Corp. Law [§] 624(e)
362
D.
An Overview of the SEC and the Securities Exchange Act
363
SEC, The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation
363
Securities Exchange Act [§] 12(a), (b), (g)
365
Securities Exchange Act Rule 12g-l
365
E.
Periodic Disclosure Under the Securities Exchange Act
365
Securities Exchange Act [§] 13(a)
365
Securities Exchange Act Rules 13a-l, 13a-ll, 13a-13
365
Securities Exchange Act Forms 8-K, 10-K, 10-Q
365
Note in Periodic Reporting by Registered Corporations
366
F.
Disclosure Under Stock Exchange Rules
367
New York Stock Exchange, Listed Company Manual [§][§] 202.01, 202.03, 202.05, 202.06
367
2.
The Proxy Rules: An Introduction
367
Securities Exchange Act [§] 14(a), (c)
367
Securities Exchange Act Rules 14a-l---14a-6, 14c-2, 14c-3, Schedule 14A, Schedule 14C
367
Note---An Overview of the Proxy Rules
368
Form of Proxy
369
3.
The Proxy Rules: Shareholder Access
374
A.
The Dissident's Access Provision: Rule 14a-7
374
Securities Exchange Act Rule 14a-7
374
B.
Shareholder Proposals Under Rule 14a-8
374
Securities Exchange Act Rule 14a-8
374
Note on No-Action Letters Interpreting Rule 14a-8
374
Standard Pacific Corp.
375
Randall S. Thomas & James F. Cotter, Shareholder Proposals In the New Millennium: Shareholder Support, Board Response, And Market Reaction
382
C.
Shareholder Access to the Nominating Process
384
4.
Materially Misleading Proxies and Rule 14a-9
386
Securities Exchange Act Rule 14a-9
386
Note on J.I. Case Co. v. Borak.
386
Wyandotte v. U.S.
386
Cort v. Ash
387
Mills v. Electric Auto-Lite Co.
387
Note on Further Proceedings in Mills v. Electric Auto-Lite
392
Note on Materiality: TSC Industries Inc. v. Northway, Inc.
393
Virginia Bankshares, Inc. v. Sandberg
394
Wilson v. Great American Industries, Inc.
404
Note on Causation, Reliance, and Standing in Private Actions Under the Proxy Rules
404
Note on the Standard of Fault in Private Actions Under the Proxy Rules
406
Note on State Law
407
ch. 7
Personal Liability in a Corporate Context
408
1.
Preincorporation Transactions by Promoters
408
Restatement (Third) of Agency [§] 6.04
410
Restatement (Second) of Contracts [§] 326
410
2.
Consequences of Defective Incorporation
410
Model Bus. Corp. Act [§][§] 2.03, 2.04
410
Del. Gen. Corp. Law [§][§] 106, 329
410
Note on Defective Incorporation
411
McChesney, Doctrinal Analysis and Statistical Modeling in Law: The Case of Defective Incorporation
414
3.
Limited Liability and Its Exceptions
415
Del. Gen. Corp. Law [§] 102(B)(6)
415
Model Bus. Corp. Act [§] 6.22(B)
415
Introductory Note on Limited Liability
415
Fletcher v. Atex, Inc
416
Walkovszky v. Carlton
422
Note on Further Proceedings in Walkovszky v. Carlton
427
Berle, The Theory of Enterprise Entity
427
Note on Limited Liability Against Tort Claimants
429
Minton v. Cavaney
434
Arnold v. Browne
436
Slottow Fidelity Federal Bank v. American Casualty Co.
436
Truckweld Equipment Co., Inc. v. Olson
437
Radaszewski v. Telecom Corp.
437
Sea-Land Services, Inc. v. Pepper Source
438
Kinney Shoe Corp. v. Polan
441
Eisenberg, Corporate Groups, in the Law Relating to Corporate Groups
443
Berkey v. Third Ave. Ry. Co.
444
Carte Blanche (Singapore) Pte., Ltd. v. Diners Club International, Inc.
444
Note on Variations Among States in Applying the Piercing-The-Veil Doctrine
445
Note on an Empirical Analysis of Piercing Cases
445
Note on Direct Liability
446
4.
The Corporate Entity and the Interpretation of Statutes and Contracts
450
Note on Interpretation
450
ch. 8
The Special Problems of Shareholders in Close Corporations
452
1.
Introduction
452
Note on Legislative Strategies Toward the Close Corporation
452
Note on Non-Electing Corporations
454
2.
Voting Arrangements at the Shareholder Level
457
A.
Shareholder Voting Agreements
457
Del. Gen. Corp. Law [§][§] 212(e), 218(c)
457
Model Bus. Corp. Act [§][§] 7.22(d), 7.31
457
Cal. Corp. Code [§][§] 158(a), 705(e), 706
457
N.Y. Bus. Corp. Law [§][§] 609(f), 620
457
Ringling Bros.-Barnum & Bailey Combined Shows v. Ringling
457
Note on Shareholder Voting Agreements and Irrevocable Proxies
464
Haft v. Haft
467
B.
Voting Trusts
468
Del. Gen. Corp. Law [§] 218
468
Model Bus. Corp. Act [§] 7.30
468
Cal. Corp. Code [§] 706
469
Note on Voting Trusts
469
C.
Classified Stock
471
Del. Gen. Corp. Law [§][§] 102(A)(6), 212(A)
471
Model Bus. Corp. Act [§][§] 6.01, 7.21, 8.04
471
Note on Classified Stock
471
3.
Agreements Controlling Decisions That Are Within the Board's Discretion
472
McQuade v. Stoneham
472
Note on Clark v. Dodge
476
Galler v. Galler
476
Note on Further Proceedings in Galler v. Galler
482
Wasserman v. Rosengarden
483
Del. Gen. Corp. Law [§][§] 102(B)(1), 141(A), 142(B), 350, 351, 354
484
Model Bus. Corp. Act [§][§] 2.02(B), 2.06, 7.32, 8.01(B)
484
N.Y. Bus. Corp. Law [§] 620
484
Cal. Corp. Code [§][§] 158, 186, 300, 312
484
Adler v. Svingos
484
4.
Supermajority Voting and Quorum Requirements at the Shareholder and Board Levels
485
Sutton v. Sutton
485
N.Y. Bus. Corp. Law [§][§] 616, 709
488
Del. Gen. Corp. Law [§][§] 102(b)(4), 141(b), 216
488
Cal. Corp. Code [§][§] 204, 602
488
Model Bus. Corp. Act [§][§] 7.27, 7.32, 8.24
488
5.
Fiduciary Obligations of Shareholders in Close Corporations
489
Donahue v. Rodd Electrotype Co.
489
Note on Nixon v. Blackwell
496
Rosenthal v. Rosenthal
498
Wilkes v. Springside Nursing Home, Inc.
498
Zimmerman v. Bogoff
504
Smith v. Atlantic Properties, Inc.
505
Sletteland v. Roberts
509
Merola v. Exergen Corp.
510
6.
Valuation
513
Piemonte v. New Boston Garden Corp.
513
The Old Man and the Tree: A Parable of Valuation, in Corporations---Law and Policy 200-206 / Frank Partnoy
521
Le Beau v. M.G. Bancorporation, Inc.
527
Note
530
7.
Restrictions on the Transferability of Shares, and Mandatory-Sale Provisions
530
Introductory Note
530
F.B.I. Farms, Inc. v. Moore
531
Evangelista v. Holland
539
Del. Gen. Corp. Law [§][§] 202, 342, 347, 349
540
Cal. Corp. Code [§][§] 204(a)(3), (b), 418
540
Model Bus. Corp. Act [§] 6.27
540
Note on Restrictions on Transferability and Mandatory Sales of Stock
540
Gallagher v. Lambert
544
Jensen v. Christensen & Lee Insurance
547
Jordan v. Duff & Phelps, Inc.
547
Nemec v. Shrader
552
8.
Dissolution and Associated Remedies
554
A.
Dissolution for Deadlock
554
Del. Gen. Corp. Law [§][§] 273, 355
554
Model Bus. Corp. Act [§][§] 14.30, 14.34
554
N.Y. Bus. Corp. Law [§][§] 1002, 1104, 1111
555
Wollman v. Littman
555
Note on Dissolution for Deadlock
556
B.
Dissolution for Oppression and Mandatory Buy-Out
556
Model Bus. Corp. Act [§] 14.30, 14.34
556
Cal. Corp. Code [§][§] 1800, 1804, 2000
556
N.Y. Bus. Corp. Law [§][§] 1104-A, 1111, 1118
557
Note on Hetherington and Dooley
557
Matter of Kemp & Beatley, Inc.
558
Meiselman v. Meiselman
563
Note on Evolving Expectations
565
Thompson, The Shareholder's Cause of Action for Oppression
566
Haynsworth, The Effectiveness of Involuntary Dissolution Suits as a Remedy for Close Corporation Dissension
566
Note on the Duties of Care and Loyalty in Close Corporations
567
Mich. Comp. Laws [§] 450.1489
567
Minn. Stat. Ann. [§] 302A.751
568
McCallum v. Rosen's Diversified, Inc.
568
Muellenberg v. Bikon Corp.
570
Kelley v. Axelsson
571
Haynsworth, The Effectiveness of Involuntary Dissolution Suits as a Remedy for Close Corporation Dissension
571
Note on Dissolution
572
Note on Valuation of the Minority's Shares
574
Charland v. Country View Golf Club, Inc
575
Note on Minority and Marketability Discounts
579
Note on Matter of Pace Photographers
580
Friedman v. Beway Realty Corp.
581
9.
Custodians and Provisional Directors
583
Del. Gen. Corp. Law [§][§] 226, 352, 353
583
Cal. Corp. Code [§][§] 308, 1802
583
Giuricich v. Emtrol Corp.
583
Thompson, The Shareholder's Cause of Action for Oppression
584
Note on Custodians and Provisional Directors
584
10.
Arbitration
585
Ringling v. Ringling Bros. Barnum & Bailey Circus
585
Application of Vogel
585
Lane v. Abel-Bey
587
Shell, Arbitration and Corporate Governance
587
ch. 9
Limited Liability Companies
588
Delaware Limited Liability Company Act [§][§] 18-101, 18-107, 18-201, 18-206, 18-301, 18-303, 18-401, 18-402, 18-504
588
1.
Introduction
588
2.
Piercing the Veil and Derivative Action
593
Kaycee Land and Livestock v. Flahive
593
Tzolis v. Wolff
598
3.
Fiduciary Duties
602
Salm v. Feldstein
602
VGS, Inc. v. Castiel
603
Solar Cells, Inc. v. True North Partners, LLC
606
4.
Dissolution
611
In the Matter of 1545 Ocean Avenue, LLC
611
Haley v. Talcott
617
ch. 10
The Duty of Care and the Duty to Act in Good Faith
622
1.
The Duty of Care
622
A.
The Basic Standard of Care
622
1.
The Duty of Care---Continued Francis v. United Jersey Bank
622
Model Bus. Corp. Act [§][§] 8.30, 8.31
634
Cal. Corp. Code [§] 309
634
New York Bus. Corp. Law [§] 717
634
ALI, Principles of Corporate Governance [§][§] 4.01(a), (b), 4.02, 4.03
634
Aronson v. Lewis
634
Quillen, Trans Union, Business Judgment, and Neutral Principles
634
In re Emerging Communications, Inc. Shareholders Litigation
635
Note on Causation
636
B.
The Business Judgment Rule
638
Kamin v. American Express Co.
638
ALI, Principles of Corporate Governance [§] 4.01(c)
642
Note on the Divergence of Standards of Conduct and Standards of Review in Corporate Law, and on the Business Judgment Rule
642
Smith v. Van Gorkom
648
Note on Substance and Process in the Duty of Care
665
C.
The Duty to Monitor, Compliance Programs, and Internal Controls
666
In re Caremark International Inc. Derivative Litigation
666
Note on Corporate Criminal Liability, the Sentencing Guidelines, and Compliance Programs
678
ABA Section of Business Law, Committee on Corporate Laws, Corporate Director's Guidebook
680
Eisenberg, The Board of Directors and Internal Control
682
Note on Civil Liability of Directors and Officers to Third Persons
683
D.
Liability Shields
683
Virginia Corporations Code [§] 13.1-690
684
Del. Gen. Corp. Law [§] 102(b)(7)
684
Model Business Corp. Act [§] 2.02(b)(4)
684
Emerald Partners v. Berlin
684
Malpiede v. Townson
684
E.
Directors' and Officers'---Liability Insurance
690
Form of Directors' and Officers' Liability Insurance
690
Note on Directors' and Officers' Liability Insurance
690
2.
The Duty to Act in Good Faith
693
In re the Walt Disney Company Derivative Litigation
693
Stone v. Ritter
698
3.
The Duty to Act Lawfully
700
Miller v. American Telephone & Telegraph Co.
700
Note on Criminal Liabilities of Directors and Officers
704
ch. 11
The Duty of Loyalty
708
1.
Self-interested Transactions
708
Gantler v. Stephens
708
Marsh, Are Directors Trustees?---Conflicts of Interest and Corporate Morality
715
Lewis v. S.L. & E., Inc
718
Note on Remedies for Violation of the Duty of Loyalty
726
Talbot v. James
728
Note on the Duty of Loyalty
735
Note on Associates of Directors and Senior Executives
736
ALI, Principles of Corporate Governance [§][§] 1.14, 1.25, 5.02, 5.07, 5.08
737
2.
Statutory Approaches
737
Cal. Corp. Code [§] 310
737
Del. Gen. Corp. Law [§] 144
738
Rev. Model Bus. Corp. Act [§][§] 8.60-8.63
738
N.Y. Bus. Corp. Law [§] 713
738
Cookies Food Products v. Lakes Warehouse
738
Note on the Effect of Approval of Self-interested Transactions by Disinterested Directors
746
Sutherland v. Sutherland
748
New York Stock Exchange Listed Company Manual [§] 312.03(B)
753
Note on Waste and Shareholder Ratification
753
3.
Compensation
756
Aggarwal, Executive Compensation and Corporate Controversy
756
In re the Walt Disney Company Derivative Litigation
758
In re Tyson Foods, Inc. (Tyson I)
758
Tyson Foods, Inc. (Tyson II)
763
Ryan v. Gifford
767
Del. Gen. Corp. Law [§][§] 141(H), 157
772
Model Bus. Corp. Act [§][§] 6.24, 8.11
772
ALI, Principles of Corporate Governance [§] 5.03
772
New York Stock Exchange Listed Company Manual [§] 312.03(a)
773
Note on Challenges to Compensation
773
Wilderman v. Wilderman
774
SEC Regulation S-K, Item 402
774
Note on CEO Compensation
774
Internal Revenue Code [§] 161(m) and Regulations Thereunder
776
Note on the Effect of Federal Income Tax Rules and Accounting Principles on the Forms of Executive Compensation
777
Note on the Compensation of Nonexecutive Directors
778
4.
Use of Corporate Assets: The Corporate Opportunity Doctrine
780
Hawaiian International Finances, Inc. v. Pablo
780
Forkin v. Cole
783
American Law Institute, Principles of Corporate Governance [§] 5.04
784
Restatement (Second) of Agency [§] 388
784
Northeast Harbor Golf Club, Inc. v. Harris
784
Note on Further Proceedings in Northeast Harbor Golf Club, Inc. v. Harris
792
Broz v. Cellular Information Systems, Inc.
794
Model Business Corporation Act [§] 8.70
798
ALI, Principles of Corporate Governance [§][§] 5.05, 5.06
798
Note on the Corporate Opportunity Doctrine
798
In re eBay, Inc. Shareholders Litigation
802
5.
Duties of Controlling Shareholders
804
ALI, Principles of Corporate Governance [§][§] 5.10-5.12
804
Zahn v. Transamerica Corporation
804
Note on Further Proceedings in Zahn v. Transamerica Corp.
810
Nemec v. Shrader
811
Note on the Duty of Disclosure by Controlling Shareholders Under Delaware Law
811
Note on the Target of Suits by Minority Shareholders
813
Sinclair Oil Corporation v. Levien
814
David J. Greene and Co. v. Dunhill International, Inc.
819
Kahn v. Lynch Communication Systems, Inc.
820
Levco Alternative Fund v. The Reader's Digest Ass'n, Inc.
831
Jones v. H.F. Ahmanson & Co.
833
In re Trados Inc. Shareholder Litigation
834
6.
Sale of Control
842
Zetlin v. Hanson Holdings, Inc.
842
Andrews, The Stockholder's Right to Equal Opportunity in the Sale of Shares
843
Javaras, Equal Opportunity in the Sale of Controlling Shares: A Reply to Professor Andrews
845
Gerdes v. Reynolds
846
Note on Further Proceedings in Gerdes v. Reynolds
852
Perlman v. Feldmann
853
Note on Further Proceedings in Perlman v. Feldmann
857
Note on the Theory of Corporate Action
858
Brecher v. Gregg
859
Essex Universal Corp. v. Yates
862
Note on Essex Universal Corp. v. Yates
870
Note on Tag-Along and Drag-Along Provisions
870
Securities Exchange Act Rule 14F-1
870
ALI, Principles of Corporate Governance [§] 5.16
870
ch. 12
The Antifraud Provision: Section 10(b) and Rule 10b-5
871
1.
An Introduction to Section 10(b) and Rule 10b-5
871
Securities Exchange Act [§] 10(b)
871
Securities Exchange Act Rule 10b-5
871
The Wharf (Holdings) Limited v. United International Holdings, Inc.
871
Note on Private Actions Under Rule 10b-5
874
2.
The Private Securities Litigation Reform Act and Securities Litigation Uniform Standards Act
875
3.
The Elements of Standing, "In Connection With" and Scienter
878
Note on Standing and "In Connection With"
878
Note on the Scienter Requirement and Its Pleading
882
Note on Scienter and the Forward Looking Statement
887
4.
Duty to Speak
889
Gallagher v. Abbott Laboratories
891
5.
Primary Participants After Central Bank
895
Pacific Investment Management Co. LLC v. Mayer Brown LLP
897
Pugh v. Tribune Company
905
6.
Causal Relationship
909
Affiliate Ute Citizens v. United States
912
Basic Inc. v. Levinson
915
Cammer v. Bloom
923
Metzler Investment Gmbh v. Corinthian Colleges, Inc.
924
7.
The Junction of Breaches of Fiduciary Duty and Rule 10b-5
928
Santa Fe Industries, Inc. v. Green
928
Note on Goldberg v. Meridor
935
8.
Remedies in Private Actions Under Rule 10b-5
939
Note on Proportionate Liability
941
ch. 13
Insider Trading
943
1.
The Common Law Background
943
Note on the Duties of Directors and Officers Under the Common Law When Trading in Their Corporation's Stock
943
2.
The Federal Disclose or Abstain Requirement
946
In the Matter of Cady, Roberts & Co.
946
Securities and Exchange Commission v. Texas Gulf Sulphur Co.
947
SEC v. Texas Gulf Sulphur Co.
962
Note on the "Use" Test Under Rule 10b-5
967
Chiarella v. United States
968
After the Fall
975
Securities Exchange Act [§] 14(e) and Rule 14(e)(3)
976
United States v. O'Hagan
976
Note on Who's a Misappropriator?
987
SEC Rule 10b5-2
990
Dirks v. Securities and Exchange Commission
991
After the Fall
1000
SEC, Selective Disclosure and Insider Trading
1003
Note on Insider Trading Enforcement
1004
3.
Liability for Short-Swing Trading Under [§] 16(b) of the Securities Exchange Act
1005
Securities Exchange Act [§] 16
1005
Securities Exchange Act Rules 3a-ll-l, 3b-2, 16a-l, 16a-2, 16a-3, 16a-10, 16b-3, 16b-5, 16b-6, 16b-7, 16b-9; Form 3; Form 4; Form 5
1005
Report of the Task Force on Regulation of Insider Trading, Part II: Reform of Section 16
1007
Gratz v. Claughton
1009
Note on the Computation of Profits Under [§] 16(b)
1012
Note on the Interpretation of [§] 16(b)
1014
Kern County Land Co. v. Occidental Petroleum Corp.
1015
Note, Short-Swing Profits in Failed Takeover Bids---The Role of Section 16(b)
1027
Colan v. Mesa Petroleum Co.
1027
Note on Attribution of Ownership Under Sections 16(a) and (b)
1029
Note on Statutory Insider Status at Only One End of a Swing
1031
Note on Who Is an "Officer" Under [§] 16(b)
1033
Note on Deputization
1035
4.
Corporate Recoveries for Inside Trading Under State Law
1036
Diamond v. Oreamuno
1036
ch. 14
Shareholder Suits
1044
1.
Introduction
1044
Background Note
1044
Federal Rules of Civil Procedure, Rule 11
1046
Macey & Miller, The Plaintiffs' Attorneys' Role in Class Actions and Derivative Litigation: Economic Analysis and Recommendations for Reform
1046
American Law Institute, Principles of Corporate Governance [§][§] 7.04(a)(1), (b), (d)
1048
Note on the Empirical Studies of Shareholder Litigation
1048
ALI, Principles of Corporate Governance [§] 7.15
1054
Note on Who Can Bring a Derivative Action
1054
Note on Personal Defenses
1056
Note on the Corporation as an Indispensable Party
1057
2.
The Nature of the Derivative Action
1057
Tooley v. Donaldson, Lufkin, & Jenrette, Inc.
1057
Note on the Distinction Between Derivative and Direct Actions
1064
American Law Institute, Principles of Corporate Governance [§] 7.01
1065
Barth v. Barth
1065
3.
Individual Recovery in Derivative Actions
1069
Glenn v. Hoteltron Systems, Inc.
1069
Perlman v. Feldmann
1070
Note on Individual Recovery in Derivative Actions
1070
4.
The Contemporaneous-Ownership Rule
1073
Federal Rules of Civil Procedure, Rule 23.1
1073
Delaware Gen. Corp. Law [§] 327
1073
Model Bus. Corp. Act [§] 7.41
1073
Cal. Corp. Code [§] 800(b)(1)
1073
ALI, Principles of Corporate Governance [§] 7.02(a)
1074
Bangor Punta Operations, Inc. v. Bangor & Aroostook R.R.
1074
Rifkin v. Steele Platt
1080
Note on the Contemporaneous-Ownership Rule
1081
5.
Right to Trial by Jury in Derivative Actions
1084
6.
The Demand Requirement
1085
Cal. Corp. Code [§] 800(b)(2)
1085
Federal Rules of Civil Procedure Rule 23.1
1085
Introductory Note
1086
Marx v. Akers
1086
Auerbach v. Bennett
1096
Zapata Corp. v. Maldonado
1103
Aronson v. Lewis
1109
Grobow v. Perot
1111
Note on Cuker v. Mikalauskas
1111
In re PSE & G Shareholder Litigation
1114
Model Business Corporation Act [§][§] 7.42-7.44
1114
American Law Institute, Principles of Corporate Governance [§][§] 7.03, 7.04, 7.08-7.13
1114
Note on Independence
1114
7.
Demand on the Shareholders
1118
8.
Indemnification and Insurance
1120
A.
Indemnification
1120
Del. Gen. Corp. Law [§] 145
1121
Model Bus. Corp. Act [§][§] 8.50-8.59
1121
N.Y. Bus. Corp. Law [§][§] 721-726
1121
Cal. Corp. Code [§] 317
1121
ALI, Principles of Corporate Governance [§] 7.20
1121
Waltuch v. Conticommodity Services, Inc.
1121
Note on the Scope of Indemnification Provisions
1134
Note on Advances
1137
B.
Insurance
1137
9.
The Role of Corporate Counsel
1137
Bell Atlantic Corp. v. Bolger
1137
Note on Problems Concerning the Law Governing Lawyers in Derivative Actions
1141
ABA Model Rules of Professional Conduct, Rules 1.6, 1.7, 1.13
1144
American Law Institute, Principles of Corporate Governance, Introduction to Part VII, Reporter's Note
1144
10.
Settlement of Derivative Actions
1144
Clarke v. Greenberg
1144
Background of the Purpose and Consequences of Court Approval of Settlements
1146
Federal Rules of Civil Procedure, Rule 23.1
1148
Model Business Corporation Act [§] 7.45
1148
New York Bus. Corp. Law [§] 626(d), (e)
1148
In re Caremark, International, Inc. Derivative Litigation
1148
ALI, Principles of Corporate Governance [§][§] 7.14-7.16
1148
Desimone v. Industrial Bio-Test Laboratories, Inc.
1148
Background Note on Judicial Approval of Settlements
1149
Macey & Miller, The Plaintiffs' Attorneys' Role in Class Actions and Derivative Litigation: Economic Analysis and Recommendations for Reform
1150
Note on Settlements Without the Plaintiff's Consent
1151
11.
Plaintiff's Counsel Fees
1152
Tandycrafts, Inc. v. Initio Partners
1152
Sugarland Ind., Inc. v. Thomas
1154
ALI, Principles of Corporate Governance [§] 7.17
1155
G & N Aircraft, Inc. v. Boehm
1155
Macey & Miller, The Plaintiffs' Attorneys' Role in Class Actions and Derivative Litigation: Economic Analysis and Recommendations for Reform
1155
Background Note on the Award of Counsel Fees to Successful Derivative-Action Plaintiffs
1157
Goodrich v. E.F. Hutton Group
1160
Further Note on Plaintiff's Counsel Fees
1162
12.
Security for Expenses
1164
N.Y. Bus. Corp. Law [§] 627
1164
Cal. Corp. Code [§] 800(c)-(f)
1164
Securities Act [§] 11(e), 27(c)
1164
Securities Exchange Act [§] 21D(c)
1164
West Hills Farms, Inc. v. RCO AG Credit, Inc.
1164
Background Note on Security-for-Expenses Statutes
1166
13.
Private Ordering and Shareholder Suits
1167
ch. 15
Corporate Combinations, Tender Offers and Defending Control
1169
1.
Corporate Combinations
1169
A.
Sale of Substantially All Assets
1169
Del. Gen. Corp. Law [§] 271
1169
Model Bus. Corp. Act [§][§] 12.01, 12.02, 13.02(3)
1169
Hollinger, Inc. v. Hollinger International, Inc.
1169
Note on Sale of Substantially All Assets
1177
B.
The Appraisal Remedy
1177
Del. Gen. Corp. Law [§] 262
1177
Model Bus. Corp. Act [§][§] 13.01-13.03, 13.20-13.26, 13.30-13.31
1177
ALI, Principles of Corporate Governance [§][§] 7.21-7.23
1177
Cal. Corp. Code [§][§] 1300, 1311
1177
Note on the Appraisal Remedy
1177
Piemonte v. New Boston Garden Corp.
1179
Note on Appraised Value: The Battling Experts
1179
New York Bus. Corp. Law [§] 623(h)(4)
1182
Charland v. Country View Golf Club, Inc.
1182
Note on Discounts and Premiums in Appraisal Proceedings
1182
Note on Exclusivity of the Appraisal Remedy
1186
Cal. Corp. Code [§] 1312
1189
Model Bus. Corp. Act [§] 13.02(d)
1189
ALI, Principles of Corporate Governance [§][§] 7.24, 7.25
1189
C.
Statutory Mergers
1190
(1).
Classical Mergers
1190
Del. Gen. Corp. Law [§][§] 251(a)-(e), 259-261
1190
Model Bus. Corp. Act [§][§] 11.01, 11.02, 11.04, 11.06, 11.07
1190
(2).
Small-Scale Mergers
1191
Del. Gen. Corp. Law [§] 251(f)
1191
Model Bus. Corp. Act [§] 11.04(g)
1191
E.
Welch, A. Turezyn II & R. Saunders, Folk on the Delaware General Corporation Law [§] 251.2.2.1
1191
Del. Gen. Corp. Law [§] 253
1192
Model Bus. Corp. Act [§] 11.05
1192
(3).
Short-Form Mergers
1192
D.
Tax Aspects of Corporate Combinations
1193
E.
The Stock Modes and the De Facto Merger Theory
1194
Hariton v. Arco Electronics, Inc.
1196
Note on Another Approach to Legislative Intent: Rath v. Rath Packing Co.
1198
Note on Heilbrunn v. Sun Chemical Corporation
1199
Farris v. Glen Alden Corp.
1200
Note on Farris
1206
New York Stock Exchange, Listed Company Manual [§] 312.00
1207
Cal. Corp. Code [§][§] 152, 160, 168, 181, 187, 194.5, 1001, 1101, 1200
1207
Model Bus. Corp. Act [§] 6.21(f)
1207
Note on the Survivor's Liability to the Transferor's Creditors
1207
F.
Triangular Mergers and Share Exchanges
1209
Terry v. Penn Central Corp.
1209
Note on Triangular Mergers and Share Exchanges
1212
G.
Freezeouts
1215
Note on Freezeout Techniques
1215
Weinberger v. UOP, Inc.
1216
Kahn v. Lynch Communication Systems
1230
Note on Substitutes, Opportunism and the Purpose Test
1230
Glassman v. Unocal Exploration Corp.
1232
Solomon v. Pathe
1234
In re Pure Resources, Inc. Shareholder Litigation
1235
Note on "Going Dark"
1241
Securities Exchange Act Rule 13e-3 and Schedule 13E-3
1243
2.
Hostile Takeovers and Defending Control
1243
Securities Exchange Act [§][§] 13(d), (e), 14(d), (e)
1243
Securities Exchange Act Rules 13d-l, 13d-3, 13d-5, 13e-l, 13e-4, 14dl to 14d-4, 14d-6 to 14d-10, 14e-l to 14e-3, 14e-5
1243
Schedule TO
1243
Schedule [I4D-9]
1243
Hart-Scott-Rodino Act
1243
The Lexicon of the Battle for Control
1244
Note on the Williams Act
1247
Unocal Corp. v. Mesa Petroleum Co.
1253
Note on Unitrin, Inc. v. American General Corp.
1262
Note on Unocal
1265
ALI, Principles of Corporate Governance [§] 6.02
1266
Moran v. Household International, Inc.
1266
Note on Carmody v. Toll Brothers, Inc.
1275
Quickturn Design Systems, Inc. v. Shapiro
1278
Air Products and Chemicals, Inc. v. Airgas, Inc.
1283
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
1291
Paramount Communications, Inc. v. Time Inc.
1301
Note on Revlon in Operation
1315
Note on Defensive Maneuvers Outside of Delaware
1321
3.
Protecting the Deal
1324
Omnicare, Inc. v. NCS Healthcare, Inc.
1324
Note on Termination Fees
1338
4.
State Takeover Statutes
1339
5.
Restructurings and the Bondholders
1344
Sharon Steel Corporation v. The Chase Manhattan Bank
1345
Metropolitan Life Insurance Company v. RJR Nabisco, Inc.
1352
Katz v. Oak Industries, Inc.
1360
ch. 16
Distributions to Shareholders
1365
1.
Dividend Policy
1365
A.
The Elements of Dividend Policy
1366
Principles of Corporate Finance / Franklin Allen
1366
Brav, Graham, Harvey & Michaely Payout Policy in the 21st Century
1369
B.
Judicial Review of Dividend Policy
1370
(1).
Publicly Held Corporations With a Controlling Shareholder
1370
Baron v. Allied Artists Pictures Corporation
1370
Note on SV Investment Partners, LLC v. Thoughtworks, Inc.
1376
(2).
Close Corporations
1376
Smith v. Atlantic Properties, Inc.
1376
Dodge v. Ford Motor Co.
1376
Note on Compelling Dividends in Close Corporations
1377
2.
Limitations on Dividends Under Creditors' Rights Law
1378
N.Y. Bus. Corp. Law [§][§] 102(a)(8), 510(a), (b)
1379
Uniform Fraudulent Transfer Act [§][§] 1, 2, 4, 5
1379
Bankruptcy Code [§][§] 101(32), 548(a)
1379
Background Note on the Law of Creditors' Rights
1379
3.
Limitations on Dividends Under the Corporate Statutes
1381
A.
Introduction
1381
B.
Traditional Statutes---Capital-Impairment Statutes
1382
(1).
The Capital-Impairment Test and Its Meaning
1382
Del. Gen. Corp. Law [§][§] 141(e), 154, 170
1382
N.Y. Bus. Corp. Law [§][§] 102(a)(9), (12), (13), 506, 510
1382
Note on Revaluation of Assets and Klang v. Smith's Food & Drug Centers, Inc.
1384
Note on Balance Sheet Accounting for Corporate Equity
1386
(2).
Exceptions to the Basic Capital-Impairment Test
1387
(a).
Nimble Dividends
1387
Del. Gen. Corp. Law [§] 170
1387
(b).
Wasting-Asset Corporations
1388
Note on Wasting-Asset Corporations
1388
(c).
Dividends out of Capital Surplus
1388
N.Y. Bus. Corp. Law [§][§] 102(a)(9), (13), (14), 510, 516, 520
1388
Del. Gen. Corp. Law [§][§] 154, 170, 242(a)(3), 244
1389
Note on Dividends Out of Capital Surplus
1389
C.
Traditional Statutes---Earned-Surplus Statutes
1389
Note on the Earned-Surplus Test
1389
4.
The Modern Dividend Statutes
1390
Cal. Corp. Code [§][§] 114, 166, 500-503, 507
1390
Model Bus. Corp. Act [§][§] 1.40(6), 6.40
1390
Kummert, State Statutory Restrictions on Financial Distributions by Corporations to Shareholders
1391
5.
Contractual Restrictions on the Payment of Dividends
1391
Form of Bond Indenture Provision Restricting Dividends
1392
6.
Liability of Directors for Improper Dividends
1392
N.Y. Bus. Corp. Law [§] 719
1392
Model Bus. Corp. Act [§] 8.33
1393
Del. Gen. Corp. Law [§][§] 172, 174
1393
Note on Liability of Directors for Improper Dividends
1393
7.
Liability of Shareholders for Improper Dividends
1393
Del. Gen. Corp. Law [§] 174(c)
1393
Model Bus. Corp. Act [§] 8.33(b)
1394
N.Y. Bus. Corp. Law [§] 719(d)
1394
Cal. Corp. Code [§] 506
1394
Uniform Fraudulent Transfer Act [§] 7
1394
Note on Shareholder Liability for Improper Dividends
1394
8.
Repurchase by a Corporation of Its Own Stock
1396
A.
Financial Limitations on Stock Repurchases
1397
N.Y. Bus. Corp. Law [§][§] 513, 515
1397
Del. Gen. Corp. Law [§] 160(a)
1397
Model Bus. Corp. Act [§][§] 1.40(6), 6.40
1397
Cal. Corp. Code [§] 510(a)
1397
Model Bus. Corp. Act [§] 6.40(e)
1398
Cal. Corp. Code [§] 166
1398
Note on Liability for Repurchases in Violation of Statutory Financial Provisions
1398
B.
Non-financial Rules Concerning Stock Repurchases
1399
Securities Exchange Act [§] 9(a)(2) and Rules 10b-5, 10b-6, and 10b-18
1399
Note on Status of Repurchased Shares
1399
Note on Non-Financial Limitations on Stock Repurchases
1400
9.
Liability for Watered Stock and Related Issues
1403
ch. 17
The Public Distribution of Securities
1407
1.
Introduction
1407
A.
An Overview of the Securities Markets
1407
Securities Regulations: Cases and Materials 1-2 / Donald C. Langevoort
1407
B.
An Overview of the Securities Act
1409
Securities and Exchange Commission, the Investor's Advocate: How the SEC Protects Investors and Maintains Market Integrity
1409
SEC, Q & A: Small Business and the SEC
1410
C.
An Overview of the Underwriting Process
1412
L.
Loss & J. Seligman, Fundamentals of Securities Regulation 73-86
1412
Coffee & Sale, Securities Regulation---Cases and Materials 80-81
1414
2.
What Constitutes a "Security"
1415
Securities Act [§] 2(1)
1415
McGinty, What Is a Security?
1415
Note on the Meaning of "Investment Contract"
1416
Note on What Is "Stock": Landreth Timber Co. v. Landreth
1421
Reves v. Ernst & Young
1423
3.
What Constitutes a "Sale" and an "Offer to Sell"
1427
Securities Act [§][§] 2(a)(3), 3(a)(9); Securities Act Rule 145
1427
Note on the Meaning of "Sale" and "Offer to Sell"
1427
4.
The Requirement of Registration
1428
A.
The Broad Sweep of Section 5
1428
Securities Act [§][§] 2(10), 5
1428
B.
The Intrastate Exemption
1429
Securities Act [§] 3(a)(11); Securities Act Rule 147
1429
Securities Act Release No. 4434 (1961)
1429
Securities Act Release No. 5450 (1974)
1432
SEC, Q & A: Small Business and the SEC
1433
C.
Private Placements
1434
Securities Act [§] 4(2)
1434
S.E.C. v. Ralston Purina Co.
1434
Note on Doran v. Petroleum Management Corp.
1437
SEC, Q & A: Small Business and the SEC
1439
D.
Limited Offerings
1440
Securities Act [§][§] 2(a)(15), 3(b), 4(2), 4(6)
1440
Securities Act Rule 215; Regulation D (Rules 501-508)
1440
T. Hazen, Securities Regulation in a Nutshell 71-72
1440
SEC, Q & A: Small Business and the SEC
1441
T. Hazen, Securities Regulation in a Nutshell
1444
E.
Regulation A
1444
Securities Act [§] 3(b); Securities Act Reg. A [Rules 251-263]
1444
SEC, Q & A: Small Business and the SEC
1444
Larry Sonsini, Regulation A
1445
Securities Act Release No. 6949 (1992)
1447
Note on the Significance of Exemptions
1448
Note on the Integration of Securities Issues
1449
F.
Transactions Not Involving an Issuer, Underwriter, or Dealer
1450
Securities Act [§][§] 2(a)(11), 4(1), 4(3)
1450
(1).
Who Is a Statutory Underwriter
1451
Note on the Meaning of Term "Offers or Sells for an Issuer in Connection With ... The Distribution of Any Security"
1451
Note on the Meaning of the Term "Any Person Who Has Purchased From an Issuer With a View to ... Distribution"
1452
(2).
Sales by Controlling Persons
1453
Note on Offers or Sales by Controlling Persons
1453
(3).
Rules 144 and 144A
1457
Securities Act Rule 144
1457
Revisions to Rule 144
1457
Securities Act Rule 144A
1460
Securities Act Release No. 6862 (1990)
1460
Note on the "4 1-1/2" Exemption
1462
Note on Exempted Securities
1462
5.
Mechanics of Registration
1462
Securities Act Forms S-l, S-2, and S-3
1462
Note on the Registration Process
1463
Note on the Integration of Disclosure Under the 1933 and 1934 Acts
1463
Securities Act Rules [§] 176, 415
1466
Note on Shelf Registration
1466
6.
Duties and Prohibitions When a Security is in Registration
1467
A.
Overview
1468
Securities Act Release No. 4697 (1964) [Offers and Sales of Securities by Underwriters and Dealers]
1468
B.
The Pre-Filing Period
1470
Securities Act [§][§] 2(a)(3), 5
1470
Securities Act Rules 135, 137, 139
1471
Note on in the Matter of Carl M. Loeb, Rhoades & Co. and Chris-Craft Industries v. Bangor Punta Corp.
1471
Note on SEC's Guidance for Communications During Quiet Period
1474
C.
The Waiting Period
1476
Securities Act [§][§] 2(a)(10), 5, 8, 10; Securities Act Rules 134, 152c-8, 430, 431, 460
1476
D.
The Post-Effective Period
1478
Securities Act [§][§] 2(3), 2(10), 4(3), 5, 10; Securities Act Rules 153, 174, 427
1478
7.
Liabilities Under the Securities Act
1480
Securities Act [§][§] 11, 12, 17, 21d(g), 27A; Securities Act Rules 175, 176
1480
Note on Liabilities Under the Securities Act
1480
Escott v. Barchris Constr. Corp.
1483
8.
Blue Sky Laws
1500
Note on Blue Sky Laws
1500
Index
1503