Table Of ContentCORPORATIONS
AND OTHER BUSINESS ENTITIES
SEVENTH EDITION
STEVEN L. EMANUEL
Founder & Editor-in-Chief, Emanuel® Law Outlines and
Emanuel Bar Review
Harvard Law School, J.D. 1976
Member, NY, CT, MD and VA bars
The Emanuel® Law Outlines Series
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eISBN 978-1-4548-3887-6
Library of Congress Cataloging-in-Publication Data
Emanuel, Steven.
Corporations : and other business entities / Steven L. Emanuel,, Founder & Editor-in-Chief, Emanuel Law Outlines and Emanuel Bar Review; Harvard Law School,
J.D. 1976, Member, NY, CT, MD and VA Bars.
— Seventh Edition.
pages cm. — (The Emanuel® law outlines series)
eISBN 978-1-4548-3887-6
1. Corporation law—United States—Outlines, syllabi, etc. I. Title.
KF1414.85.E434 2013
346.73’06—dc23
2013018240
This book is intended as a general review of a legal subject. It is not intended as a source of advice for the solution of legal matters or problems. For advice on legal matters,
the reader should consult an attorney.
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Dedication
For Samuel Herman,
no longer the littlest Emanuel
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Abbreviations Used in Text
CASEBOOKS
A,K&S — Allen, Kraakman & Subramanian, Law of Business Organization (4th Ed. 2012)
B,W&P (6th) — Bauman, Weiss & Palmiter, Corporations — Law and Policy (6th Ed. 2007)
C&E — Cary & Eisenberg, Cases and Materials on Corporations (7th Ed., Unabridged, 1995)
Hamilton (8th) — Hamilton & Macey, Cases and Materials on Corporations, including Partnerships and Limited Liability Companies (8th Ed. 2003)
Hamilton (10th) — Hamilton & Macey, Cases and Materials on Corporations, including Partnerships and Limited Liability Companies (10th Ed. 2007)
Hamilton (11th) — Hamilton, Macey & Moll, Cases and Materials on Corporations, including Partner-ships and Limited Liability Companies (11th Ed. 2010)
K,R&B (8th) — Klein, Ramseyer & Bainbridge, Business Associations (8th Ed. 2012)
O&T (6th) — O’Kelley & Thompson, Corporations and Other Business Associations (6th Ed. 2010)
S,S,B&W — Solomon, Schwartz, Bauman & Weiss, Corporations — Law and Policy (3rd Ed. 1994)
HORNBOOKS
Clark — Robert Clark, Corporate Law (1986)
Gevurtz — Franklin A. Gevurtz, Corporation Law (2000)
H&A — Henn & Alexander, Law of Corporations (3d Ed. 1983, w/1986 supp.)
OTHER MATERIALS
ALI Prin. Corp. Gov. — American Law Institute, Principles of Corporate Governance (1994)
Brode — George Brode, Jr., Tax Planning for Corporate Acquisitions (1988)
Del. GCL — Delaware General Corporations Law
F,B&H — Ferrara, Brown & Hall, Takeovers — Attack and Survival (1987)
K&C — Klein & Coffee, Business Organization and Finance (4th Ed. 1990)
Loss — Louis Loss, Fundamentals of Securities Regulation (2d Ed. 1988)
Nutshell — Robert Hamilton, The Law of Corporations in a Nutshell (3d Ed. 1991)
NY BCL — New York Business Corporation Law
Ratner — David Ratner, Securities Regulation in a Nutshell (3d Ed. 1988)
MBCA — Model Business Corporations Act (1999)
’33 Act — Securities Act of 1933, 15 U.S.C. §§77a et seq.
’34 Act — Securities Exchange Act of 1934, §§78a et seq.
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SUMMARY OF CONTENTS
Preface
Casebook Correlation Chart
Capsule Summary
1. INTRODUCTION
2. THE CORPORATE FORM
3. THE CORPORATE STRUCTURE
4. SHAREHOLDERS’ INFORMATIONAL RIGHTS AND THE PROXY SYSTEM
5. CLOSE CORPORATIONS
6. THE DUTY OF CARE AND THE BUSINESS JUDGMENT RULE
7. THE DUTY OF LOYALTY
8. INSIDER TRADING (AND RELATED TOPICS)
9. SHAREHOLDERS’ SUITS, ESPECIALLY DERIVATIVE SUITS
10. STRUCTURAL CHANGES, INCLUDING MERGERS AND ACQUISITIONS
11. DIVIDENDS ANDSHARE REPURCHASES
12. ISSUANCE OF SECURITIES
Essay Exam Questions and Answers
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Table of Cases
Tables of Statutory References
Subject-Matter Index
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TABLE OF CONTENTS
Preface
Casebook Correlation Chart
Capsule Summary
Chapter 1
INTRODUCTION
I. WHAT IS A CORPORATION
II. SOURCES OF CORPORATION LAW
III. CHOOSING BETWEEN CORPORATE AND PARTNERSHIP FORM
A. Choice between partnership and corporation
1. Non-corporate non-partnership forms
B. Nature of partnership
1. General partnership
2. Limited partnership
C. List of factors
D. Limited liability
E. Management
F. Continuity of existence
G. Transferability of interest
H. Complexity of formation and operation
I. Federal income tax
1. Corporation
2. Partnership
3. Subchapter S
4. LLC
5. Summary
J. Overall summary of corporations vs. partnerships
1. Corporations superior
2. Partnerships superior
IV. THE LIMITED LIABILITY COMPANY (LLC)
A. Limited Liability Companies generally
B. Operating agreement
C. Piercing the veil of an LLC
Quiz Yourself on
INTRODUCTION (CHOOSING A FORM OF ORGANIZATION)
Chapter 2
THE CORPORATE FORM
I. WHERE AND HOW TO INCORPORATE
A. Where to incorporate
1. “Internal affairs” rule
2. “Permissive” states
3. Closely-held corporation
4. Publicly-held corporation
B. Mechanics of incorporating
1. Articles of incorporation
2. Review by state official
3. Incorporators
4. Contents of articles of incorporation
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5. Registered office and agent
6. Initial board of directors
7. Bylaws
8. Organizational meeting
C. Amending the articles
II. ULTRA VIRES AND CORPORATE POWERS
A. Ultra vires doctrine
B. Classical ultra vires doctrine
1. Use to invalidate contracts
C. Modern abolition
1. Broad powers clauses
2. Formal abolition of doctrine
D. Corporate powers today
1. Charitable donations
2. Pensions, bonuses and other fringe benefits
Quiz Yourself on
THE CORPORATE FORM (ULTRA VIRES AND CORPORATE POWERS)
III. PRE-INCORPORATION TRANSACTIONS BY PROMOTERS
A. Who is a “promoter”
1. Transactions by
B. Liability of promoter
C. Liability of corporation for promoter contract
1. No adoption, no liability
2. Adoption by corporation
D. Promoter’s fiduciary obligation to corporation and shareholders
Quiz Yourself on
THE CORPORATE FORM (PRE-INCORPORATION TRANSACTIONS BY PROMOTERS)
IV. DEFECTIVE INCORPORATION AND ITS CONSEQUENCES
A. The problem generally
1. How defects can occur
B. Common law’s “de facto” doctrine
C. Modern view
1. MBCA abolishes de facto doctrine
2. Passive investors
D. Corporations by estoppel
Quiz Yourself on
THE CORPORATE FORM (DEFECTIVE INCORPORATION AND ITS CONSEQUENCES)
V. PIERCING THE CORPORATE VEIL
A. Problem generally
B. Individual shareholders
1. Factors considered
2. Tort claims vs. contract claims (and the “voluntary creditor” doctrine)
3. Fraud or wrongdoing
4. Inadequate capital
5. Failure to follow corporate formalities
6. Summary
C. Parent/subsidiary structure
D. Distinction between active and passive investors
Quiz Yourself on
THE CORPORATE FORM (PIERCING THE CORPORATE VEIL)
VI. INSIDER CLAIMS IN BANKRUPTCY (INCLUDING EQUITABLE SUBORDINATION)
Quiz Yourself on
THE CORPORATE FORM (INSIDER CLAIMS IN BANKRUPCTY & EQUITABLE SUBORDINATION)
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