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SOCIETY
11th
Edition
McGraw-Hill
2015 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
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Learning Objectives
Learning Objectives
Learning Objectives
Learning Objectives
Traditional corporations
Referred to as C corporations
9-6
Corporations
entities
Required to establish books of account
9-8
Management Structure
9-9
Case
Shlensky v. Wrigley
237 N.E.2d 776 (Ill. App. Ct. 1968)
Issue
Shlensky sued the directors on the grounds
9-10
Limited Liability
Case
Charles E. Wolfe v. United States
612 F.Supp. 605 (D Mont 1985)
affd 798 F.2d 1241 (9th Cir. 1986)
Issue
Corporation and the proprietorship were
9-12
Transferability of Ownership
Interests
9-13
Duration of Existence
not favorable
Involuntarily termination
Caused by the action of a court or of the
9-14
Corporations
Taxes
Subject to taxation in its own right
Double taxation
Capital structure
Equity capital has a long-term horizon
Debt capital can be short- or long-term
Ensure debt covenants are not breached
9-15
Partnerships
Mutual agencies
9-16
partnership
Partnerships
Management structure
Not centralized
Partners owe fiduciary duties to each other
Limited liability
Not offered to owners
Partners are jointly and severally liable for
9-18
Case
Veale v. Rose
657 S.W.2d 834 (Texas Ct. of App. 1983)
Issue
Roses partners claimed that he competed
9-19
Partnerships
Duration of existence
Partnership automatically dissolves upon
9-20
Partnerships
Taxes
Partnership agreement can detach
Capital structure
Partners are the sole source of equity
9-21
9-22
Circumstances Favoring a
Specific Business Form
9-25
Corporate Governance in
Public Corporations
company
9-26
Management Pyramid
Shareholder Rights
Movement
Dodd-Frank Act
9-29
9-30
Exemptions
Exempt securities and transactions do not
Case: Security
Case
SEC v. W. J. Howey Co.
328 U.S. 293 (1946)
Issue
Howey Company offered a land sales
trades
SEC needs companies to disseminate
material information to reach general public
SEC can suspend trading in any security
9-33
guidance
9-34
False or Misleading
Statements in Required
Filings
1933
Act
Section-11
establishes liability with
Case
Escott v. BarChris Construction Corporation
283 F.Supp. 643 (S.D.N.Y. 1968)
Issue
BarChris filed a registration statement for
False or Misleading
Statements in Required
Filings
1934
Act
Section-18
establishes liability with
9-37
Fraud
9-38
Case: Fraud-on-the-Market
Theory
Case
Basic Inc. v. Levinson et al.
485 U.S. 224 (1988)
District Court
Issue
Respondents asserted that defendants
Insider Trading
9-40
Case
SEC v. Texas Gulf Sulphur Co.
401 F.2d 833 (2d Cir. 1968)
Issue
Insiders started buying TGS stock when a
Case: Misappropriation
Theory
Case
United States v. OHagan
521 U.S. 642 (1997)
Supreme Court
Issue
OHagan purchased and sold Pillsbury
Short-Swing Profits
9-43
Private Enforcement
Government Enforcement
ill-gotten gains
Tender Offers
Tender Offers
Greenmail
Takeover defenses
Crown jewel - Involves the target company
Golden parachutes
Targets officers negotiate to protect
9-47
offerings
9-48
International Securities
Regulation