Final Biz

Front 1

intrinsic fairness test

Back 1

When everyone is interested
1. Court looks at the motivation when acting
2. Court looks at the effect on the corporation regarding that transaction

Front 2

Derivative action

Back 2

When suing on behalf of corporation, and remedy goes to corporation
1, Make written demand to board, if disinterested board then can't go to shareholders
2. If interested board and they deny then file a complaint alleging particlurized facts of wrondgoing. 3. Board can appoint disinterested committee of shareholders to investigate.
4. If this commitee decides to bring no action, board is protected by BJR

Front 3

SBO requirements

Back 3

1. CFO and CEO must sign that their are no misrepresentations or ommissions of material facts
2.Audit committee must be in place to oversee companies auditor's
3. increase penalties for SEC violations
4. Acounting oversight board to oversee audit committee independently.

Front 4

Self Dealing

Back 4

When a shareholder or director is personally involved with a transaction and benefits at the expense of the corporation.
Apply intrinsic Fairtness test

Front 5

Corporate opportunity doctrine

Back 5

i. In the capacity as an officer or as a director – you find out a/b it based on your relationship to the company, OR

ii. Same line of business or competing business – it belongs to the corporation and you must disclose, give the corp. the opportunity to reject before you take advantage, OR

iii. Likelihood that the corporation may be interested

Front 6

Self dealing rules of thumb

Back 6

i. If the court believes it is fair, it’ll be upheld

ii. If there is fraud, overreaching, waste, or bad faith, it will be set aside

iii. If it doesn’t involve the elements in (2) but the court is not sure, then it will be upheld only if

Front 7

f. Defenses To corporate opportunity

Back 7

i. If you made disclosure, and the corporation rejects, then no problem: someone that is disinterested must be the one to reject (and protected by B/J rule)

ii. Corporation can’t afford – you’re still not in the clear, you’ll have to turn it over on the same terms that the director would have been able to take advantage of opportunity (show it’s reasonable)

iii. Clearly outside the scope of business, then corporate opportunity will not apply

Front 8

3. Aiders and Abettors

Back 8

10b5 only SEC can go after

Front 9

10b5

Back 9

1. Material misrepresentation or omission of fact

2. Intent to deceive

3. Purchase and Sale

Front 10

proxy solicitation

Back 10

i. 120 day requirement,2. 500 words,3. 1 prop per shareholder

Front 11

damages for 1933

Back 11

liable for 3 times profit