THE CATHOLIC UNIVERSITY OF AMERICA
COLUMBUS SCHOOL OF LAW
CORPORATIONS
SUMMER 2012 SYLLABUS
LAW 205 (Section 1)
Monday, Tuesday, Thursday, 6:20-8:50 p.m.
Office Hours: Tuesday and Thursday, 4:00-5:00
Appointments at other times are always welcome
Professor Raymond J. Wyrsch
(202) 319-6604
wyrsch@law.edu
Course Approach:
This course focuses on the legal, policy and practical aspects of conducting business as a
corporation, with special emphasis being placed on the role and context of attorneys providing
advice to corporate clients. The course will address the nature, purpose, types and historical
development of corporations, also distinguishing corporations from other forms of business
organizations such as partnerships. We will also study the formation, operation and management
of corporations, including the respective roles, powers, rights and responsibilities of shareholders, directors and officers. The corporate financial structure and applicable accounting/
finance issues will be addressed, including an introduction to the federal regulation of
corporations issuing securities. Both the merging and termination of corporations will also be
studied. All of these topics will be studied in the context of a closely-held versus publicly-held
corporation. Current events, recent developments and news stories also will be discussed.
Required:
1. Textbook:
Bauman, Corporations Law and Policy, Materials and Problems, 7th Ed.,
West-American Casebook Series (2010).
2. Statutes:
O’Kelley and Thompson, Corporations and Other Business Associations,
Selected Statutes, Rules and Forms, Aspen (2011 Ed.).
3. Course Materials Manual:
4. Handout:
Corporations Law, Prof. Raymond J. Wyrsch (Copy Room)
Assigned Outside Cases (to be distributed in class)
Recommended Guides: 1. Palmiter, Corporations, Examples and Explanations,
Aspen Law and Business ( 6th Ed. 2009).
2. Pinto and Branson, Understanding Corporate Law,
LexisNexis (3rd Ed. 2009).
Other interesting and
relevant readings
1. Macey, Editor, The Iconic Cases in Corporate Law,
ThomsonWest, American Case Book Materrials (2008).
2. Ramseyer, Editors, Corporate Law Stories,
Foundation Press (2009).
CLASS ASSIGNMENTS
NOTE: Read all cases and materials within the assigned pages unless otherwise excluded.
A. INTRODUCTION AND BACKGROUND
(Chapter 2)*
Basic Features and Types
Governing law
Basic Framework and Major Players
Accountability vs. Protection
Read: Statutes Book:
(Table of Contents)
See: Model Business Corporation Act
Delaware General Corporation Law
(See Statutes Book pp. 3 and 203)
Textbook: pp. 16-24, 33-38
CMM:
Course Syllabus:
pp. 1, 18
Other Intro Materials: pp. 20-28
Exclude:
Bayer case (p. 25)
Equitable Limitations on Corporate Actions (pp. 30-33)
*Students are not responsible for Chapter 1 (Economics of the Firm)
B. CORPORATE FEDERALISM
Nature, Background and History
Read:
Textbook: pp. 39-40
TWEN: History of Corporations
CMM:
p. 30
Internal Affairs Doctrine
Read:
Textbook: pp. 41-45
CMM:
p. 29
Exclude: Anti-Takeover Statutes (pp. 45-62)
State Competition
Read:
Textbook: pp. 62-74
(Chapter 3)
C. THE CORPORATION AND SOCIETY
(Chapter 4)
A Corporation's Role in Society: Social Responsibility vs. Profit-Making?
Read:
Textbook: pp. 75-91
CMM:
pp. 32-36
Exogen, Inc. Problem - Part 1: Textbook: pp. 76-77
B. The Role of the Lawyer:
Read:
Textbook: pp 91-101
Exogen, Inc. Problem - Part 2: Textbook: p. 92
C. Specific Corporate Expenditures: Contributions
Read:
Textbook: pp. 75-101; 107-121
See: MBCA Chap 3
CMM:
pp. 37-39
Union Airlines Problem: Textbook: p. 108
Exclude:
Corporate Political Expenditures (pp. 101-107)
D. THE CHOICE OF ORGANIZATIONAL FORM
(Chapter 5)
Factors in Decision: Corporation vs. Partnership vs. Limited Liability Company
Read:
Textbook: pp. 122-135
CMM:
pp. 41-46
See: Uniform Partnership Act
Uniform Limited Partnership Act
Uniform Limited Liability Company Act
(See Statutes Book pp 557-656)
Precision Tools Problem - Part 1: Textbook: pp. 122-123
E. FORMING THE CORPORATION
(Chapter 6)
Process of and Choice of State::
Read:
Textbook: pp. 136-139
CMM:
pp. 48-52
See: MBCA Chapters 2, 3, 10 and 15
Corporation Forms in Statutes Book
(pp. 519-530)
Lawyers’ Role and Responsibilities:
Read:
Textbook: pp. 139-159
CMM:
pp. 53-55
Problems encountered:
Read:
Textbook: pp. 159-163
CMM:
pp. 56-57
Coopers & Lybrand case (Handout case)
Precision Tools Problem - Part 2:
Textbook: pp. 136-137
F. FINANCIAL ACCOUNTING AND VALUATION
(Chapter 7)
Special Handout: Financial Accounting & Valuation (to be provided)
Financial Statements: meaning and importance
Read:
Textbook: pp. 164, 167-170
CMM:
pp. 58-61
Special Handout
Precision Tools Problem - Part 3:
Precision Tools Problem - Part 4:
See: MBCA 16.20
Textbook: p. 164
Textbook: p. 188
Major Financial Statements:
-- Balance Sheet
Read:
Textbook: pp. 165, 170-180 (but exclude Analysis…., p. 180)
-- Income Statement
Read:
Textbook: pp. 166, 181-185
-- Statement of Cash Flows
Read:
Textbook: pp. 166, 186-188
-- Valuation of a Business
Exclude: pp. 188-196
G. FINANCIAL STRUCTURE OF THE CORPORATION
(Chapter 8)
Corporate Securities:
-- Equity vs. Debt Securities (Common & Preferred Stock; Bonds)
-- Corporation’s vs. Investors’ Interests
Read:
Textbook: pp. 199-218
CMM:
pp. 63-76
Metropolitan Life case (Handout case)
Precision Tools Problem - Part 5: Textbook: pp. 199-200
See:
MBCA Chapter 6, Subchapters A thru D
-Regulation of Legal Capital:
-- In general
Read:
Textbook: pp. 218-224
CMM:
pp. 77-80
Exclude: Precision Tools Problem - Part 6 (p. 219)
-- Issuance of Stock
Read:
Textbook: pp. 220-226
CMM:
pp. 81-83
-- Declaration of Dividends
Read:
Textbook: pp. 226-232
CMM:
pp. 84-88
Exclude:
Klang case (p. 228)
Corporate Dividend Policy:
Read:
Textbook: pp. 232-234
CMM:
pp. 89-90
Exclude:
Kamin case (p. 236)
H. THE REGULATION OF SECURITIES ISSUANCE
(Chapter 9)
Background and Objective
Read:
Textbook: pp. 239-241
See: Securities Act of 1933 and SEC Rules
CMM:
p. 92
(Statutes Book pp. 713 … &
739…)
Precision Tools Problem - Part 7: Textbook: p. 240
Meaning of a “Security”
Read:
CMM:
p. 93
Life Partners case (Handout case)
SEC No-Action Letters
Read:
CMM:
pp. 94-95
Registration Process:
Read:
Textbook: pp. 241-244
CMM:
pp. 96-99
Exemptions:
Read:
Textbook: pp 244-252
CMM:
pp. 100-102
Liability:
Read:
Textbook: p. 253
CMM:
p. 103
Escott case (Handout case)
I. PIERCING THE CORPORATE VEIL
Concept, Justifications and Application:
Read:
Textbook: pp. 255-265
CMM:
pp. 105-107
Tort Creditors:
Read:
Textbook: pp. 265-277
CMM:
pp. 108-109
Contract Creditors:
Read:
Exclude:
Textbook: pp. 277-287
CMM:
p. 110
Freeman case (p. 277)
Parent-Subsidiary Corporations
Read:
Textbook: pp. 287-293
CMM:
pp. 111-115
Alternatives
Read:
Textbook: pp. 294-296
CMM:
p. 116
Precision Tools Problem - Part 9:
Read:
Textbook: pp. 264-265
CMM:
p. 117
(Chapter 10)
J. CORPORATE MANAGEMENT-ACTIONS BINDING CORPORATION (Chapter 11)
In General:
Read:
CMM:
pp. 119-120
Officers:
Read:
Textbook: pp. 297-313
See: MBCA Chapter 8, Subchapters D
CMM:
pp. 122-128
Ripani case (Handout case)
Agency Relations Problem: Textbook: p. 297
Exclude: Menard case (p. 307)
Board of Directors:
Read:
Textbook: pp. 314-318
See: MBCA Chapter 8, Subchapters A, B
CMM:
pp. 129-136
Gearing case (Handout case)
Article : The Lawyer-Director (pp 345-348)
Widget Corporation Problem : Textbook : p. 314
Exclude: Legal Opinions (pp. 319-331)
K. THE GOVERNANCE ROLE OF SHAREHOLDERS - IN GENERAL
(Chapter 14)
Shareholders (Process):
Read:
Textbook : pp. 420-429
See : MBCA Chapter 7, Subchapters A & B
CMM :
pp. 138-147
Fabulous Foods Problem : Textbook : p. 421
Mergers & Acquisitions :
Read :
See : MBCA Chapters 11, 12 and 13
Textbook : pp. 430-446
CMM :
pp. 149-168
LaFrance Cosmetics Problem - Part 1 : Textbook : pp. 431-432
LaFrance Cosmetics Problem - Part 2 : Textbook : pp. 441-443
Shareholders (Inspection Rights)
Read :
Textbook : pp. 446-469
CMM :
pp. 169-171
See : MBCA Chapter 16
Exclude :
Marathon Partners case (p. 459)
Polygon Global Opportunities case (p. 465)
Board of Directors Responses to Shareholder Initiatives
Read :
Textbook : pp. 541-547 (last part of Chapter 15)
CMM :
pp. 172-173
LaFrance Cosmetics Problem – Part 4 : Textbook : p. 541
L. THE CLOSELY HELD CORPORATION: SPECIAL PROBLEMS (Chapters 12 & 13)
Planning (for Special Issues) (Chapter 12)
-- In general:
Read:
Textbook: pp. 332-335
CMM:
pp. 175-176
See: MBCA §§ 6.27 and 7.28,
MBCA Chapter 7, Subchapter C
Maryland Close Corp. Statute
-- Shareholder Voting (for directors and other matters)
Read:
Exclude :
Textbook: pp. 336-344
CMM:
pp. 177-182
Precision Tools Revisited Problem-Part 1: Textbook: pp. 336-337
Article : The Lawyer-Director (pp. 345-348)
-- Restrictions on Board Discretion
Read :
Textbook : pp. 348-362
CMM :
pp. 183-189
Galler case (CMM: p 169)
Precision Tools Revisited Problem-Part 2: Textbook: pp. 348-350
Exclude :
Atlantic Properties case (p. 363)
-- Restrictions on Transfer of Shares :
Read :
Textbook : pp. 366-377
CMM :
pp. 190-196
Precision Tools Revisited Problem-Part 3: Textbook: pp. 366-367
Oppression: (Chapter 13)
-- Meaning : Dissension, Deadlock, Oppression
Read:
Textbook : pp. 378-381
CMM :
p. 197
-- Judicial Protection
Read :
Textbook : pp. 381-394
CMM :
p. 198
Precision Tools Revisited Problem-Part 4: Textbook: p. 378
-- Statutory Protection
Read :
Textbook : pp. 394-416
See: MBCA Chapter 14, Subchapter B
CMM:
pp. 199-200
Precision Tools Revisited Problem-Part 5: Textbook: pp. 394-395
Exclude :
Dissolution of LLCs (pp. 417-419)
M. GOVERANCE ROLE OF PUBLIC SHAREHOLDERS
(Chaps 14 & 15)
Background & Theories of the Firm:
Read:
Textbook: pp. 484-494
Individual and Institutional Investors:
Read:
Textbook: pp. 494-502
CMM:
pp. 202-204
Federal Proxy Regulation:
-- Background and Process:
Read :
Textbook : pp. 470-483 (last part of Chap 14) See :
§14 of SEC 1934 Act
SEC Rule 14a
CMM :
pp. 206-212
TSC Industries case (p. 557)
Universal Netware Problem - Part 1 : Textbook : pp. 476-478
Universal Netware Problem - Part 2 : Textbook : pp. 494-495
Overview of Chapter 16 : Read :
Textbook : pp. 554-560
Exclude : Long Island Lighting case (p.480)
-- Shareholder Proposals
Read :
Textbook : pp. 502-519
CMM :
pp. 213-218
Universal Netware Problem - Part 3 : Textbook : pp. 502-504
-- Shareholder Nomination of Directors and ByLaw Amendments
Read :
Textbook : pp. 519-541
N. CORPORATE GOVERNANCE IN THE PUBLIC CORPORATION
(Chap 17)
Meaning and Background (including the Enron Scandal)
Read:
Textbook: pp. 607-611
CMM:
pp. 219-220
Sources of:
Read:
Textbook: pp. 614-618
CMM:
p. 221
The Board of Directors (Classification,Composition, Committees & Structure)
Read :
Textbook : pp. 618-633
CMM :
pp. 222-229
Fashion Industries Problem - Part 1 : Textbook : pp. 611-613
Sarbanes-Oxley Act :
Read :
Special Handout
CMM :
pp. 231-237
See : Statutes Book pp. 877…….
O. THE DUTY OF CARE OF CORPORATE DIRECTORS/OFFICERS
(Chap 18)
In general:
Read:
Textbook: pp. 634-637
See: MBCA Chapter 8 Subchapters C
and E
CMM:
pp. 239-244
Decision Making (Business Judgment Rule):
Read:
CMM:
Textbook: pp. 637-644
p. 245-248
Oversight:
Read:
Textbook: pp. 644-674
CMM:
p. 252
Fashion Industries Problem – Part 2 : Textbook : p. 634
Exclude:
Citigroup case (p. 662)
Directors’ Criminal Liability:
Read:
Textbook: pp. 674-676
Duty to Become Informed:
Read:
Textbook: pp. 676-696
CMM:
pp. 239, 249-250
Fashion Industries Problem – Part 3 : Textbook : pp. 676-677
Recurring Issues :
Read :
Textbook : pp. 696-703
CMM : p. 251
\
Rebutting the Business Judgment Rule
Read:
Textbook: pp. 703-704
Avoidance of Liability:
Read:
8, Subchapter E
Textbook: pp. 705-7-718
See:
CMM:
pp. 253-255
MBCA §2.02(b)(4) and (5)
MBCA Chapter
Exclude:
Fashion Industries Problem - Part 4 (p. 705)
P. THE DUTY OF LOYALTY TO THE CORPORATION
(Chap 19)
In General:
Read:
Textbook: p. 719
CMM:
pp. 243-244, 257
Director Self-Dealing
Read:
Textbook: pp. 722-753
F and G
CMM:
pp. 258-274
See: MBCA Chapter 8, Subchapter
-- Substantive Fairness
Read:
Textbook: pp. 736-738
-- Procedural Fairness
Read:
Textbook: pp. 739-752
Exclude:
Harbor Finance case (p. 746)
Gantler case (p. 750)
-- The Independent Director
Read:
Textbook: pp. 752-781
Exclude: The Oracle Story (pp. 769-777)
-- Read: Starcrest Problem - Part 1: Textbook: pp. 702-721
The Evolution of Good Faith
Read:
Textbook: pp. 781-800
Exclude: ATR-Kim ENG Financial case (p. 792)
The Corporate Opportunity Doctrine
Read:
Textbook: pp. 800-819
CMM:
pp. 275-276
Starcrest Problem - Part 2: Textbook: pp. 801-802
Exclude: Burg case (p. 811)
Q.
EXECUTIVE COMPENSATION
(Chap 20)
Forms and Process:
Read:
Textbook: pp. 820-829 (+ p. 210 for Stock Options)
CMM:
pp. 278-281
Federal Law:
Read:
Textbook: pp. 829-832
CMM:
pp. 282-283
State Law:
Read:
Textbook: pp. 832-848
CMM:
pp. 284-285
Stock Options and Backdating
Read:
Textbook: pp. 848-857
CMM:
pp. 286
Exclude: Tyson Foods case (p. 857)
R.
REGULATION OF SECURITIES TRADING
(Chap 23)
Background:
Read:
Textbook: pp. 1004-1016
CMM:
pp. 288-289
Insider Trading - State Law
Read:
Textbook: pp. 1016-1027
Exclude: Diamond case (p. 1021)
Insider Trading - Federal Law
Read:
Textbook: pp. 1030-1076
CMM:
pp. 289-297
See: Securities Exchange Act of 1934
& SEC Rules (Statutes Book pp.
783…. & pp. 887……….)
Texas Gulf Sulfur case (Handout)
Standard Electronics Corp. Problem: Textbook: pp.
1012-1016
S.
SHAREHOLDER LITIGATION (DERIVATIVE SUITS)
(Chap 22)
Nature of: Direct vs. Derivative:
Read:
Textbook: pp. 942-950
Subchapter D
See: MBCA Chap 7,
Procedural Requirements and related matters:
Read:
Textbook: pp. 950-985
Class Actions:
Read:
Textbook: pp. 985-1003
Exclude: Cavanaugh case (p. 986)
T. PROTECTING AND SELLING CONTROL OF A CORPORATION
(Chap 24)
Proxy Contests - Tender Offers - Defensive Tactics - Management's Role/Duty
Read:
Textbook: pp. 552-606
See: SEC 1934 Act
SEC Rule 14D
OTHER PERTINENT COURSE INFO
I.
RELATION OF CORPORATIONS, AGENCY LAW & UBO COURSES
II. TWEN WEBSITE: Students need to register on the TWEN website asap, since I
frequently use this site to provide weekly assignments and other messages, together with posting
other pertinent course information (e.g., a special handout, citations to cases or articles).
III. ASSIGNMENTS, CLASS PARTICIPATION: Students are expected to read all textual
materials assigned, including cases, notes and other discussions. There will be frequent
reference to the corporate statutes and other materials in the above-required Statutes Book.
Students should read over the applicable portions of the Statutes Book with respect to each
reading assignment.
Special emphasis will be placed on the Problem Situations that appear in each chapter, focusing
on giving advice to clients. Outside cases, articles and other materials will be distributed
throughout the semester. Class attendance and participation is strongly recommended and may
be used for grading purposes. Persistent absences may lead to exclusion from the course. Of
course there may be legitimate reasons for not attending a particular class (e.g., family, sick,
work, job interview), in which case you need to email me.
III. LAPTOP USAGE: Students may use their laptops in class, provided they are using the
laptops for course purposes and the laptops are not distracting them from our class discussions.
IV. RECORDING CLASSES: Students may request that a particular class be audio recorded,
provided there is a legitimate reason for doing so (e.g., a religious holiday, or a required official
school function or activity). The recording will be posted on TWEN asap. An individual
student’s recording a class is not authorized unless special permission is granted.
V. SPECIAL ACCOMMODATIONS: Please contact the Disability Support Services office.
(202) 319-5211.
VI. SPECIAL NOTES ON CLASSES:
First Class:
Last Class:
Review Session:
Final Exam:
Monday, May 21
Tuesday, July 10
TBA
Tuesday, July 17
No Class. There will be no classes on the following dates:
Monday, May 28
Wednesday, July 4
VII. GRADING/ EXAM:
(Memorial Day)
(Independence Day)
There will be one final exam (3 hours), Closed Book but Course Outline attached to the
exam. Discretionary points may be awarded based on class attendance, preparation and
participation. Further details will be provided.