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Unformatted text preview: Corporations Long Outline 1 Corporations Outline Review Statutes, Supplemental reading, practice problems. Tab statutes REGULATION FO BUSINESS ACTIVITIES: LEGAL FUNDAMENTALS Organization and Regulation of Business Activities Legal fiction of corporate personhood: corporations not composed of one set of interests, but different people with different interests. Dichotomy between the entity and the aggregate interests of different people. Mandatory Rule: A rule that says there is something that you must do (eg tax law) Enabling Law: laws that tell you how to go about achieving a certain legal end (eg contract law) State law usually regulates the internal structure of a corporation. (focus here on DE law) Del. 101 (b) : A corporation may be incorporated or organized under this chapter to conduct or promote any lawful business or purposes, except as may otherwise be provided by the constitution or other law of this State. Federal law governs securities law. Owner: has equity or residual interest in the businesssubject to greater risk, has control. Includes employee with bonus based on profits. Lender: fixed claimperiodic interest and ultimate repayment Participants in a business arrangement will bargain over risk of loss, return, control and duration of relationship. Arrangmetn subject to 3 constraints: o Conflict of interest o Government regulation o Limits on ability to est. all terms of relation on the outset CTS Corporation v. Dynamics Corporation of America: hostile takeoverto takeover a company, instead of dealing with managers, appeal directly to shareholders with limited time offer to get shareholders to tender enough shares that other corp could buy out target corporate. Managers went to state legislature to get laws passed to discourage hostile takeovers. Any company that buys a certain percentage that is not an Indiana company does not get voting shares. Challenged under the supremacy clause and commerce clause. Federal act trumps inconsistent state acts. Here, the Williams Act gives shareholders disclosure Challengers claim that changing the rules violated the underlying policy of the Williams Act. Sup Ct upholds Indiana restrictions since not seen as being severe so state law not pre-empted by Williams Act. State law only pre-empted where inconsistent with a federal law frustrates the purpose of federal law. Agency Principles No contract is needed to create an agency relationship, but a fiduciary duty is created. o Restatement, 13: an agent is only a fiduciary with respect to matters within the scope of his agency. Corporations Long Outline 2 Always run risk that agent put his interests before those of the principal....
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- Fall '07