CORPORATIONS

TABLE OF CONTENTS
I. AGENCY ...................................................................................................................................................3
A. A. PRINCIPLES OF AGENCY AUTHORITY........................................................................................................... 3
B. B. AGENCY AND TORT LIABILITY......................................................................................................................... 5
i.

Agency Authority ....................................................................................................................... 5

ii.

Ratification................................................................................................................................. 7

C. SCOPE OF EMPLOYMENT ........................................................................................................................................ 11

i.

Scope of Employment Test ...................................................................................................... 12

D. FIDUCIARY DUTIES IN AGENCY RELATIONSHIP (8.01-8.10) .............................................................. 13

E. FRANCHISE AGREEMENTS ..................................................................................................................................... 16

II. THE CORPORATE FORM ............................................................................................................... 17

A. FORMATION ISSUES AND LIMITED LIABILITY/ ATTRUBUTES OF CORP. LAW ............................ 17
B. CORPORATE CONSTITUTIONALISM (DGCL 101-109) ...................................................................... 19
i.

Limiting Liability ....................................................................................................................... 20

C. STOCKS .............................................................................................................................................. 22
D. LIABILITIES IN CORPORATE FORMING ............................................................................................... 22
i.

De Facto Corporate Doctrine ................................................................................................... 23

E. ENTERPRISE LIABILITY DOCTRINE ...................................................................................................... 23

i.

Sea-Land Test for Piercing the Corporate Veil......................................................................... 24

F. SHAREHOLDER LITIGATION ............................................................................................................... 26

i.

Heightened Scrutiny Demand-Excused Doctrine (Zapata Standard) ...................................... 28

G. ROLE OF THE CORPORATION .............................................................................................................................. 30

i.

DGCL 141(a) .......................................................................................................................... 30

III. DUTIES OF OFFICERS AND DIRECTORS ................................................................................. 31

A. PRINCIPLE DUTIES OF OFFICER AND DIRECTORS ........................................................................................ 3
iii.

DGCL 141(a)-(k) + 216 Elections ......................................................................................... 30

B. DUTY OF CARE ............................................................................................................................................................ 32

i.

Business Judgment Rule (Smith v. Vangorkom p.34) ............................................................. 33

C. DUTY OF LOYALTY ............................................................................................................................. 35

i.

Entire Fairness Analysis (Bayer v. Beran-Celanese) ................................................................. 35

ii.

Self-Dealing (Weinberger) & Safe Harbors .............................................................................. 35

iii.

Corporate Opportunity Doctrine ............................................................................................ 37

iv.

Controlling Shareholder (Sinclair v. Levien) ............................................................................ 37

D. DUTY OF GOOD FAITH ............................................................................................................................................ 39

i.

Corporate Waste (Walt Disney Co.) ........................................................................................ 39

ii.

Caremark Standard ................................................................................................................. 40

E. DIRECTORS DUTY OF DISCLOSURE AND CANDOR.................................................................................... 41

i.

DE Duty of Honesty & Federal Disclosure Rules .............................................................................. 41,42

F. SECURITIES FRAUD / INSIDER TRADING ............................................................................................ 42

i.

Classic / Tipee / Misappropriation Theories (Chiarella, Dirks, OHagan) ................................ 44

ii.

Damages From Insider Trading .................................................................................................................... 46

G. PROXY CONTESTS/SHAREHOLDER VOTING/SHAREHOLDER PROPOSALS.................................... 49

i.

Stockholder Lists and Book Records / 219-220 Proper Purpose (Crane) .............................. 51

H. MERGERS AND ACQUISITIONS .......................................................................................................... 52

i.

Appraisal Rights ....................................................................................................................... 53

ii.

Unical 2 Prong Test .................................................................................................................. 55

iii.

Poison Pill / Shareholder Rights Plan....................................................................................... 55

iv.

Revlon Standard ...................................................................................................................... 56