Last updated:  November 25, 2003

Corporations
Syllabus

Page references are to Allen & Kraakman, Commentaries and Cases on the Law of Business Organization (2003). Section references are generally to the Delaware General Corporation Law (D.G.C.L.) or to the New York Business Corporation Law ((N.Y.B.C.L.) (which is also available at Cornell's Legal Information Institute site), though some are to the 1984 Model Business Corporation Act (M.B.C.A.).

The statutes and related materials can be found in one of the many statutory supplements available. I have not assigned any supplement in particular. One of the less pricey versions is Klein, Ramseyer & Bainbridge, Business Associations: Agency, Partnerships, LLCs, and Corporations: 2003 Statutes and Rules; a more complete version is Eisenberg, Corporations and Other Business Organizations: Statues, Rules, Materials, and Forms 2002 (or 2003, when that version is published). If you want to try to get by without purchasing a supplement, I have also provided links above to web sites for the main corporations statutes that we will study. If you do not purchase a supplement, however, you will still have to get copies of the other materials, such as the M.B.C.A., agency and partnership provisions, and securities laws, some of which may not be on the web. (And you really do need to get copies. We will refer to the materials in class, and you will be tested on them.) There are also additional "handouts," which are indicated by the "H _" references, which in turn point to links at the bottom of the syllabus.

The readings assigned for each day are available on the assignments page.

Jump to current material.

I.  Introduction  
  A.  Underlying Principles 1-12
  B.  Forms of Business Organization 13-14, 39-40, 81-88, H 1 (for reference only)
  C.  Current Events: PeopleSoft-J.D. Edwards-Oracle PeopleSoft to shareholders: Shun Oracle, PeopleSoft customers wary of deal, PeopleSoft guarantees may be costly
 
II.  Agency 13-14
Restatement (Second) of Agency § 1
  A.  Nature and Formation of the Agency Relationship 14-19
Restatement (Second) of Agency § 14O
  B.  Agency, Authority, and Liability to Third Parties 19-30
Restatement (Second) of Agency §§ 7, 8, 8A, 8B, 26, 27, 82
  C.  Agency and Fiduciary Duties  30-32
H 2, H 3
Restatement (Second) of Agency §§ 379, 387-88
  D.  Termination of the Agency Relationship H 4
Restatement (Second) of Agency §§ 393-96
 
III.  Partnership 39-42
Uniform Partnership Act § 6(1)
  A.  Nature and Formation of the Partnership Relationship 47-50
Uniform Partnership Act §§ 7, 9
  B.  Liability to Third Parties 50-54
Uniform Partnership Act § 36(1)-(3)
  C.  Authority and Management of a Partnership 58-60
Uniform Partnership Act § 18(e),(g),(h)
  D.  Fiduciary Duties of Partners 42-47, H 5
Uniform Partnership Act § 21(1)
Revised Uniform Partnership Act §§ 404(a)-(d), 103(b)(3)-(5)
  E.  Dissolution of a Partnership 60-70
Uniform Partnership Act §§ 29, 31, 32(1), 38
 
IV. Incorporation 81-84
  A.  Creation of a Corporation  
    1.  Corporate Formalities 88-91
D.G.C.L. §§ 101(a), 102(a), (b)(5), (c), 106-09;
N.Y.B.C.L. §§ 401, 402(a)
    2.  Defective Incorporation M.B.C.A. §§ 2.03, 2.04
  B.  Purpose, Powers and Responsibility of a Corporation 286-91
D.G.C.L. §§ 101(b), 102(a)(3), 121-22, 124
N.Y.B.C.L. § 717(b)
  C.  Maintenance of a Corporation  
    1.  Corporate Formalities D.G.C.L. § 211(a),(b)
    2.  Corporate Veil-Piercing 147-62
D.G.C.L. § 102(b)(6)
N.Y.B.C.L. § 630(a),(c)
 
V.  Corporate Finance  
  A.  Debt, Equity, and Risk D.G.C.L. § 151(a),(c)-(d)
111-23
  B.  The Protection of Creditors 129-35
    1.  Dividends and  Creditors' Statutory Protections 135-38
    2.  Director Liability 138-40
    3.  Fraudulent Transfers 140-41
    4.  Equitable Subordination 141-47
    5.  Debtors' Contractual Protections H 6, H 7
 
VI.  Corporate Governance: Management and Voting 180-81, 185-87, H 8
D.G.C.L. §§ 211, 212, 216, 228, 102(b)(4)
  A.  Allocation of Authority 97-105, 171-81
D.G.C.L. §§ 141(a)-(c),(f), 142 
  B.  Voting
    1.  State Corporate Law  
      a.  Voting Trusts and Agreements
N.Y.B.C.L. §§ 609(e), 620(a)-(b), 621(a)
      b.  Proxy Voting and Its Costs 182-85
Securities Exchange Act Rule 14a-7(a)(2)
      c.  Inspection Rights 187-90
D.G.C.L. § 220
      d.  The Duty of Candor 236-37
    2.  Federal Securities Law  
      a.  Proxy Solicitation 210-11, 214-15, 227-29
Securities Exchange Act § 14(a)
Securities Exchange Act Rules 14a-4 (skim), 14a-9
      b.  Shareholder Proposals 217-27
Securities Exchange Act Rule 14a-8
  C.  Close Corporations  
    1.  Dissolution Statutes H 9
N.Y.B.C.L. §§ 1104, 1104-a, 1111
 
VII.  Corporate Governance: Fiduciary Duties  
  A.  Duty of Care 239-42, 248-54, 243-48, 254-84
D.G.C.L. § 102(b)(7), N.Y.B.C.L. § 402(b)
  B.  Duty of Loyalty  
    1.  General Principles 291-97, 303-18
D.G.C.L. §§ 141(h), 144
N.Y.B.C.L. § 713
    2.  Corporate Opportunities 329-37
D.G.C.L. § 122(17)
ALI, Principles of Corporate Governance § 5.05
    3.  Management Compensation 318-25, H 10, H 11, H 12
    4.  Controlling Shareholders 297-302, H 13
    5.  Close Corporations 337-48
D.G.C.L. §§ 341-343
 
VIII. Shareholder Litigation 349-50
  A.  The Nature of the Derivative Suit
351-57
N.Y.B.C.L. §§ 626(a),(b),(d),(e), 627
  B.  Demand on the Board 363-68, 374-84
N.Y.B.C.L. § 626(c)
Fed. R. Civ. P. 23.1s
  C.  Settlement and Indemnification  384-89
D.G.C.L. § 145(a)-(g)
 
IX. Fundamental Transactions
  A.  Control Transactions 393-421
Securities Exchange Act §§ 13(d) (skim), 14(d) (skim), 14(e)
  B.  Mergers and Acquisitions 423-29
    1.  Form of Transaction

      a.  Transaction Types
431-39
D.G.C.L. §§ 251(a)-(f), 271
      b.  De Facto Mergers
459-63
      c.  Transaction Provisions
439-48
    2.  Appraisal
452-59
D.G.C.L. § 262(a)-(d),(h)
N.Y.B.C.L. § 623(g)
    3.  Duty of Loyalty

      a.  Negotiated Mergers
463-83
D.G.C.L. § 253
      b.  Tender Offers
483-95
  C.  Hostile Takeovers 497-500
    1.  Federal Regulation Securities Exchange Act §§ 13(d) (skim), 14(d) (skim), 14(e)
    2.  The Delaware Cases D.G.C.L. § 203 (skim)
      a.  Tender Offers
500-13, 519-23
      b.  Proxy Contests
558-72
    3.  State Legislation 548-57
N.Y.B.C.L. § 717(b)
ALI, Principles of Corporate Governance § 6.02(a),(b)
    4.  Recent Issues
572-76

X. Securities Law

  A.  Insider Trading

    1.  State Law
577-87
    2.  Federal Law: Short-Swing Trading Rules
587-89
Securities Exchange Act § 16(a),(b)
    3.  Federal Law:  Rule 10b-5
589-98, 604-29
Securities Exchange Act § 10(b)
Securities Exchange Act Rules 10b-5
  B.  Corporate Misstatements
629-32, 635-40
  C.  Offering Requirements
H 14, H 15
 

 

Handouts

1. Other Forms of Business Organization
2. General Automotive Manufacturing Co. v. Singer, 19 Wisc. 2d 528 (1963)
3. Douglas v. Steele d/b/a The Travel Haus, Inc., 816 P.2d 586 (Okla. App. 1991)
4. Bancroft-Whitney Co. v. Glen, 64 Cal. 2d 327 (Cal. 1966)
5. Bohatch v. Butler & Binion, 977 S.W.2d 543 (Tex. 1998)
6. Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039 (2d Cir. 1982)
7. Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 716 F. Supp. 1504 (S.D.N.Y. 1989)
8. Special Shareholder Voting Arrangements
9.
In re Radom & Neidorff, 307 N.Y. 1, 119 N.E.2d 563 (N.Y. 1954)
10.
In re The Walt Disney Company Derivative Litigation, 825 A.2d 275 (Del. Ch. 2003)
11.
Sarbanes-Oxley Act of 2002, § 402
12.
Sarbanes-Oxley Act Interpretive Issues Under § 402 – Prohibition of Certain Insider Loans (skim)
13.
Zahn v. Transamerica Corp., 162 F.2d 36 (3d Cir. 1947)
14.
Introduction to the Securities Act of 1933 (handed out in class)
15.
Escott v. Barchris Construction Corp., 283 F. Supp. 643 (S.D.N.Y. 1968)
(you can skim the material on the different individuals, though you should read the portions on Birnbaum and Grant)