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Contents
INTRODUCTION ......................................................................................................................................4
A. Different Business Organization Types ............................................................................................4
1. Corporations ...............................................................................................................................4
2. Partnerships ................................................................................................................................4
3. Limited Liability Company ..........................................................................................................5
B. Risk Assessment ...............................................................................................................................5
C. Agency..............................................................................................................................................5
1. Issues ............................................................................................................................................5
2. Fiduciary Duties ...........................................................................................................................6
3. Equitable Limitations- inequitable action is not permissible simply because it is legally possible
to do so. ................................................................................................................................................6
D. Piercing the Corporate Veil ..............................................................................................................6
- General .........................................................................................................................................6
- Tort Creditors ...............................................................................................................................7
- Contract Creditors.........................................................................................................................7
E. Business and Legal Personality ........................................................................................................8
- Introduction ..................................................................................................................................8
- First Amendment ..........................................................................................................................8
BUSINESS TYPES .....................................................................................................................................8
A. Close Corporations ...........................................................................................................................8
1. Characteristics (Donahue) ............................................................................................................8
2. Shareholder Agreements (SHA) ...................................................................................................9
3. Dissension and Oppression (LLCs and Partnerships) .................................................................11
B. Partnerships ....................................................................................................................................12
1. General Partnerships...................................................................................................................12
2. Limited Liability Partnerships ....................................................................................................13
C. Limited Liability Company ............................................................................................................14
- Introduction ................................................................................................................................14
- Management ...............................................................................................................................14
- Fiduciary Duties .........................................................................................................................14
- Piercing the LLC Liability Veil ..................................................................................................15
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- Dissociation and Dissolution ......................................................................................................15

FINANCE AND BUSINESS STRUCTURE...........................................................................................15
A. Accounting .....................................................................................................................................15
B. Securities ........................................................................................................................................17
C. Forming the Entity..........................................................................................................................20
- Advising the Entity .....................................................................................................................20
CORPORATE GOVERNANCE ISSUES ..............................................................................................22
A. Corporate Governance Basics.........................................................................................................22
B. Shareholder Role In Governance ....................................................................................................23
1. Mechanics of SH Meetings.........................................................................................................23
2. Election and Removal of Directors.............................................................................................23
3. Inspections of Books and Records..............................................................................................24
4. Dynamics of SH Voting in Public Companies............................................................................24
C. Proxies ............................................................................................................................................24
1. Introduction ................................................................................................................................24
2. SH Proposals...............................................................................................................................25
D. Fiduciary Duties to Disclose to SH from company ........................................................................27
1. Implied Federal Private Action for Proxy Fraud.........................................................................27
E. SH Litigation ..................................................................................................................................28
a. Basics..........................................................................................................................................28
b. Difference between Derivative and Direct Suit ..........................................................................29
c. Demand Requirement .................................................................................................................30
d. Right to Inspect...........................................................................................................................31
e. Special Litigation Committees (SLCs).......................................................................................31
FIDUCIARY DUTIES .............................................................................................................................32
A. Duty of Care ...................................................................................................................................32
a. Business Judgement Rule ...........................................................................................................32
b. Duty of Oversight .......................................................................................................................33
c. Duty to become informed ...........................................................................................................34
B. Duty of Loyalty ..............................................................................................................................35
a. Director Self-Dealing and Conflicts of Interest ..........................................................................35
b. Meaning of fairness ....................................................................................................................35
c. Good Faith ..................................................................................................................................37
DUTIES OF CONTROLLING SH .........................................................................................................38

1. Introduction ................................................................................................................................38
2. Transactions within Corp. Groups ..............................................................................................39
3. Cash out Transactions.....................................................................................................................39
MECHANICS OF CORPORATE COMBINATIONS .........................................................................42
A. Introduction ....................................................................................................................................42
a. Basics of corporate combinations ...............................................................................................42
b. Tax aspects of corporate reorganizations (no need did not cover)..............................................45
c. De Facto Merger Doctrine ..........................................................................................................45
d. Sale of all or substantially all the corps assets ............................................................................45
e. Typical Steps of a MnA ..............................................................................................................45
B. Defending Against Tender Offers...................................................................................................45
a. Poison Pills .................................................................................................................................45
b. Proxy Contests............................................................................................................................46
c. Greenmail (Cheff).......................................................................................................................46
d. Counter-takeover offers (Unocal) ...............................................................................................46
e. Lock Ups/White Knights (Van Gorkum, Revlon) ......................................................................46
C. Federal/State Regulation for proxies and tender offers...................................................................46
a. Objectives ...................................................................................................................................46
b. Williams Act Disclosure of security purchases (Federal Statute) ...............................................46
c. State Regulation..........................................................................................................................47
D. Cases regarding defending against tender offers ............................................................................47
INSIDER TRADING................................................................................................................................49
A. The Law..........................................................................................................................................49
B. Cases...............................................................................................................................................49
C. Who is an insider? ..........................................................................................................................49
CORPORATIONS ROTH FALL 2021
INTRODUCTION
A. Different Business Organization Types
1. Corporations
- Laws Governing
o Security laws
o Anti-trust laws
o Environmental laws
o Tax
o Corporate
- Characteristics
o Immortal (can live on in perpetuity unless)
▪ Bankrupt
o Shareholders
o Exists in one particular state (state of incorporation)
▪ Must file creation of corporation in that same state (some guidelines on how
to do so)
o Officers execute orders of the board
- Advantages
o Limited Liability
o Growthy
o People resources
- Disadvantages
o Double taxation (corporation taxed, and shareholder taxed on the dividends/sale of
share)
o Complexity
- Types
o Small/S corps
▪ Single taxation, but limited to 75 shareholders who are US citizens/residents
o Close Corps
▪ Closely held often with no security laws that apply because have less
requirements on a state by state basis
o Public Corps
▪ Defined by security laws
▪ Publicly traded = more comfort to shareholder because of transparency in
place
2. Partnerships
- Laws governing
o Affected by UPA
o Are like spouses (the partners)
- Characteristics
o No formality to require a partnership’s inception
o Management is defined on a partner by partner basis
- Advantages
o Simplicity
o Single taxation
o People resources
- Disadvantages
o Unlimited liability
o Growth potential
o Difficulty attracting capital (investors)
- Types
o Limited Partnerships
▪ Advantage
o General Partnership
▪ Advantage
o Sole Proprietorship
▪ Characteristics
• When someone does business, becomes a sole proprietor
▪ Advantages
• Simple
• Single taxation
▪ Disadvantages
• Unlimited liability
• Limited growth
• Potentially difficult to attract capital
3. Limited Liability Company
- Characteristics
o Owners called members
o Usually created by articles of organization
o Many states allow single owner LLCs (NOT ALL)
- Advantages
o Limited Liability
o Single taxation
o People resources
o Ease of creation (HOW?)
- Disadvantages
B. Risk Assessment
1. What is risk/how to minimize it
- Risk = uncertainty regarding future/unpredictability
- An investments risk is characterized by the expected return
o Expected return = (risk% x return) + (risk% x return).
- Can minimize risk by diversifying portfolio and allocating risk to others
o Ex. Employees, insurance companies etc.
C. Agency
1. Issues
- Problems created by separation of control of company and ownership
o Shareholders want stocks
o Mangers want high pay/benefits

- Creates a fiduciary relationship between agent and ownership
o Fiduciary relationship can be implied from outside and internal actions of the parties.
▪ Gay Jenson Farms v. Cargill
• Fiduciary/agent relationship created as a result of Cargill’s lending,
hands-on management of the lender, the usage of their forms and
letter head.
• You may not have intended for the actions of your agent, but can still
be liable for their consequences
2. Fiduciary Duties
- Duty of Care
o Business Judgement Rule (BJR)
▪ Presumption that directors are acting on good faith and making decisions that
best benefit the company
▪ Yields to rule of Duty of Loyalty (see Bayer v. Beran)
- Duty of Loyalty (DoL)
o The officers must put the interests of the company before their own
▪ Bayer v. Beran
• Found that because the advertising campaign worked, that the project
started before the wife was brought in, that the wife was paid less
than other singers, and that she already had a good career as singer,
there was no breach of fiduciary duty (note: there was strict scrutiny
because of the wife being involved(ie the possibility of a breach of
DoL brings in a stronger scrutiny of the BJR).
o Shareholder wants come first (over the vision of the officers, in some respects)
▪ Dodge v. Ford
• Ford could not stop paying out the special dividend it had been
paying before just because the officers did not want to and planned
on making cars cheaper
• Court could not interfere with the building of the plant, as was
reasonable to expect the officers to be thinking of the company’s
future (BJR)
3. Equitable Limitations- inequitable action is not permissible simply because it is legally possible
to do so.
▪ Schnell v. Chris-Craft Industries
• Despite the actions of the board being legal in both DE and with the
bylaws of the Corp, it was done in a way to benefit themselves at the
expense of the shareholders (prevented shareholders from having
ample time to organize and kick them out)
D. Piercing the Corporate Veil
- General
o Ties directly into Limited Liability
▪ There are some doctrinal confusions, just remember, shell corp., etc., all
mean the same thing
▪ Note: parent companies also have limited liability over their subsidiary
industries (that can be pierced)
o Generally, favors tort creditors over contract creditors
- Tort Creditors
o TEST NY/DE
▪ (Personal agent liability theory) look to see if the shareholder is using the
company either to
• Hide behind its liability
• For own interests
o KEY FACTORS
▪ Status of the corporation
▪ Nature of plaintiff’s claim (tort vs. contract)
▪ Nature of defendant
▪ Generally, only for closely held corps.
▪ EX. Walkovszky v. Carlton
• P hit by a cab that was owned by Carlton
o Carlton ran the Seon corporation taxi, along with 9 other taxi
corps all ran in a similar manner
o P then sues Carlton
o Carlton structure:
▪ Cab company had 10 subs corps. Each with min.
liability insurance of 10k required by law
• Eaach 10 had 1-2 cabs, and undercapitalized
(and underinsured) so that anyone injured
could not recover much
▪ Decision: Could pierce the corporate veil, was a failure of personal agent
liability theory
- Contract Creditors
o Test:
▪ NY (and likely DE)
• Company a mere instrumentality of the owner?
o Are there regularly held meetings?
o Are there minutes of those meetings?
o Is the corporation underfunded?
• Such control used to commit fraud?
• Fraud results in unjust loss/injury to P?
▪ WVA (rest)
o Freeman v. Complex Computing (NY test)
▪ It was a contractual agreement between Freeman and C3 where he would sell
and license their software
▪ Even though it was completely a shell, no piercing the veil because it was
contractual (at least with Thompson and Thompson was a successor of C3
with no previous connection to Freeman) but Glazier was attached to C3 and
on the hook because it was a shell
o Kinney Shoes v. Polan (WVA test)

▪ Contractual agreement between Kinney and Polan for the leasing of a space
▪ Found that because Polan didn’t run any meetings or treat corps like corps,
could pierce the corporate veil.
o OTR Assoc. v. IBC Services
▪ OTR owns the leasing space-- leased to Blimpee Franchisee
• IBC is sub. Of Blimpee that holds the leases and nothing else
• Rent missed, lease terminated
• OTR sues
▪ Decision
• IBC dominated and controlled by Blimpee
• Did blimpee use IBC to commit fraud?
• sole purpose to insulate Blimpee from liability under leases
o Gardemal v. Westin Hotel
▪ Two people die in Mexico, sue the parent company of the hotel
▪ Not a complete domination when it is a normal parent/subsidiary relationship
E. Business and Legal Personality
- Introduction
o All businesses possess legal personality (possess same rights as persons)
▪ Rights include
• 14th Amendment (Santa Clara case 1886)
• Due process (1888)
• 4th Amendment protection from unreasonable search and seizures
- First Amendment
o Citizens United v. FEC (free speech)
▪ BG:
• Made an anti-Hilary video, released it 30 days before
▪ Decision
• 1st amendment applies to corporations
• Political speech = indispensable to decision making in democracy,
no less true because corp. is not real person.
o Burwell v. Hobby Lobby (Religion)
▪ BG:
• Hobby Lobby doesn’t want to give contraceptives/abortions to
employees insurance, goes against health
▪ Decision:
• FRFA dictates that government cannot infringe on religious right of
individual/corporation if there is a less restrictive means of serving
the compelling government interest.
BUSINESS TYPES
A. Close Corporations
1. Characteristics (Donahue)
- Small # of shareholders (no more than 30)
- Illiquid- no ready market
o Hard to value
o No market for them
o Issue with other equityholders

- Req. filing with the state (limiting liability rule)
- DE distinction
o Closely held corp. and a close corp. (DGCL s.342)
2. Shareholder Agreements (SHA)
- EH can be managers- but the increase of their management is the decrease of
- Substantive Decisions
o Control
▪ Who will be the directors/how are they chosen?
▪ How will control rights be divided? (voting)
o Money/labor in
▪ Who contributes capital?
▪ Who will be the officers?
o Money/Labor out
▪ Salaries
▪ Dividends
▪ Termination
o Transferability of shares
▪ What happens if someone dies or gets pissy?
- Procedural Decisions
o Fiduciary Duties
▪ Smith v. Atlantic Properties
• Facts
o Had the 80% req to try and prevent the homies ganging up
on him (minority blocking right)
o Allowed for one shareholder to veto
o IRS comes around, they get penalized for not moving
funds/paying
• Discussion
o Buddy breached fiduciary duty because motivated by tax
purposes
o Court looked over him for 5 years
▪ Justified in finding
• Class discussion
o Corp formed
o Ill will arises
▪ Buddies are getting all grumpy with each other
▪ Then bleeds into the corp.
o IRS comes a knocking
▪ REMEMBER THE RISK THAT TAX PRESENTS
SOMETIMES
• TAKEAWAYS
o Minority shareholders owe fiduciary duties to other
shareholders
▪ Ex minority shareholder vetoing without legit
purpose
o Donahue
o Raises a line in how far one minority SH can go before
hurting the company and breaching the FD
▪ Cannot go as far as he did

o Corporations closely held cannot manufacture home-made
dividends
▪ (not going to be on the exam)
▪ What is it?
o Cannot waive all fiduciary duties (but can waive some)
o They will let them work like a BoD for the BJR
o Voting arrangements
▪ Voting trusts
• Permitted everywhere
• Titles of shares transferred to a trust
• Trustee has power to vote shares according to agreement in trust
• Disadvantages
o SH loses control of share
o Statutes limit duration of voting trust
▪ 10 years in the MBCA
o Voting trust = public
o Solves deadlock, not oppression
▪ Irrevocable proxies
• Proxy is given to someone else to vote (either with discretion or inst.
On how to vote)
• Usually revocable, but irrevocable if attached to an interest
• Disadvantages
o SH loses control over shares
o Reqs. An interest
o Solves deadlock, not oppression
• Contractual enforcement
▪ Voting Pooling agreements
• Just another agreement with parties to combine their votes
• Agreement may provide its own enforcement mechanism
• But enforcement remedies = tough
o Minority Protection Devices
▪ Supermajority voting
• Risk of deadlock
▪ Class voting
• Risk of deadlock
▪ Cumulative voting
• Available in most states if parties opt in.
o Transfers
▪ Death
• Default is free transferability
• Can limit the default in the SHA
▪ Types
• Right of First Refusal
o Offer to Corp. first at same price/terms being offered to
outsider
• First Option
o Offer to Corp./remaining SH on terms fixed in the SHA
• Consent
o Transfers could. Req. consent of Board or other SHs
▪ Contractual Transfer Provisions
• Sale option
o Triggering event
▪ Ex. Death, retirement, or termination of employment
• Buy Sell agreement
o Obligates corp/SHs to buy shares of other SH on specific
triggering event
▪ MBCA on SHA
• Validity
o 7.32 (b)
▪ Must be approved by all SH or must be made known
in writing to all
o 7.32 (d)
▪ SH agreement is dead when company goes public (in
respect to transfers?)
• 3rd parties
o 7.32 (c)
▪ Purchase of shares who don’t know re. SHA can
rescind their purchase
▪ Corporation can give constructive knowledge re
SHA
• Print reference to SHA on share statements
given to buyer
3. Dissension and Oppression (LLCs and Partnerships)
- First consider
o What state court?
▪ Donahue approach states (close corp SH similar to partners, owe GFFD to
one another)
▪ DE: rejects Donahue, says SH in a close corp have ZERO FDs to one
another.
o Which State laws?
▪ Many state laws protect SH and have provisions which authorize courts to
order dissolution or other remedial actions when minority oppressed (or vice
versa)
- Fiduciary Duty of Loyalty
o Wilkes v. Springside Nursing Home Inc.
▪ Making bank, everything good – ill will develops between parties
▪ Decide to boot out the minority SH
▪ Decision
• Standard duty is one of utmost GF and Loyalty
o BJR trumped by ill will in this scenario
o Nixon v. Blackwell
▪ Because closely held corp., and in DE, no FD due.

B. Partnerships
1. General Partnerships
- Definition of Partnership
o 2+ people
▪ Claim to profit (residual claim on revenue after all expenses paid)
- Formation
o No filing req.
o RUPA 202 (formation of partnership)
▪ Assoc. of 2+ people to carry on as co-owners of business for profit =
partnership
▪ To determined if formed
• Sharing of gross returns is not = to partnership (necessarily)
• Person who receives share of profits of business = presumed partner
UNLESS
o Received in payment of debt, services as independent
contractor, or interest charge on loan
o Martin v. Peyton
▪ KNK bank gets a loan from PPF, loan came with multiple guarantees and list
of wants
▪ KNK goes down, creditors go after PPF claiming they are Partners of KNK
▪ Rule
• Have to have control over business entirely, and not just over certain
aspects with intention of buying investment
- Private Ordering and Mandatory Provisions
o Set forth in PA
o RUPA s.103 (a)
▪ Relations governed by the agreement
o RUPA s.103(b)
▪ Above PA cannot
• Unreasonably limit right of access to books and records
• Eliminate the DoL (duty of Loyalty)
o Can make certain carve outs, but not eliminate
• Elimination of GFFD (Good Faith and Fair Dealing)
o Needs standard still to measure obligations, cannot be
unreasonable carve outs
o Cannot eliminate duty of care
▪ Interests are found in the PA
- Partnership Default Rules
o Most state P statutes have default terms that apply if PA fails to address them,
including:
▪ Equal financial rights
▪ Equal management rights
▪ Transfer of equity interest
▪ Disassociation
• Decision by partner to withdraw
• Expulsion under PA or by unanimous vote of the partners

o Cannot do in 50/50 situation
• Expulsion by court order
• Disqualification due to death, incapacity, bankruptcy, or dissolution
o Meinhard v. Salmon
▪ Classic FD of Loyalty
• BG:
o Joint partnership, with Meinhard creating a lucrative deal for
himself out of an opportunity created from the joint venture.
• Takeaway:
o FD of Loyalty is the default rule for partnerships
▪ Can make carve outs in the PA
o Must notify the other partner of the deals pertaining to the
Partnership
o RUPA s.404
▪ Ps owe a DoL and DoC
• DoL can be limited by the PA
o RUPA 103 (b)
▪ Cannot eliminate the DoL
• PA can carve out some DoL so long as not unreasonable
• All partners can authorize specific act/transaction that would not
violate duty of loyalty
2. Limited Liability Partnerships
- Introduction
o All GP RUPA rules apply EXCEPT Liability
o All 50 states have LLPs
o Requires filing with the state
▪ Cause Liability requires filing
o Requires 2 partners minimum (different types)
▪ General Partner (no limited liability)
▪ Limited Partner (passive investor/has limited liability)
- Fiduciary Duties in LLP
o GP has same duties as if normal P
o If LP, then
▪ Does not have same duties (ULPA 305 (a))
▪ Is bound by the PA
▪ Must exercise rights consistently with obligation of GFFD under ULPA 305
(b)
o Same Concept as RUPA- cannot fully carve out DoL, but can carve things out if not
unreasonable
- DE IS DIFFERENT
o DE Revised Uniformed LP Act 17-1101
▪ Gives maximum effect to contact of PA
▪ Can eliminate and restrict much more on the PA than in other states
▪ DE loves contracts- maximum effect given to the PA
o Gerber v. Enterprise Products

▪ Ct holds that party breaches GFFD if it is clear from the PA that the parties
would have agreed to prohibit that action.
- Default Rules of LP
o Losses and profits are more like Corporations
▪ Based on the value of contributions of each partner
▪ The more you own, the more $ you are entitled to
C. Limited Liability Company
- Introduction
o 50 states- but major variations between states
o Limited liability
▪ Requires filing with the state
o Equity Holder
o Only needs one member to form
o Equivalent Terms
▪ PA = Operating Agreement (OA)
▪ SH= Members
▪ Directors/Officers= Managers
▪ Articles of Incorp. = Articles of Org.
- Management
o 2 options
▪ Member managed
• Each member has right of management
• Issues decided by a majority vote
▪ Manager Managed
• Elected by majority of members
• Managers decide all matters except those in the OA which req.
unanimous vote
• Members have no manager rights except those in the OA/ULLCA
404 (c)
- Fiduciary Duties
o Depends on Management structure, statute allows limitation of FDs by OA
o In Manager Managed LLC
▪ Managers owe FD
▪ Members do not owe FDs to LLC/members unless otherwise defined in OA
o In Member Managed LLC
▪ All members owed FD
o Standards of FD set in ULLCA 409
▪ OA may not eliminate the DoL but can ID carveouts so long as not
unreasonable
o REMEMBER
▪ GFFD (Good Faith and Fair Dealing) is subject to everyone
• Non-waivable and mandatory in all business types
o McConnell v. Hunt Sports
▪ The OA had carves out in it that allowed Members to compete against the
LLC, even in business ventures the LLC was currently engaged in.
- Piercing the LLC Liability Veil

o MBCA s.622 (b)
▪ (corporation) shareholder can be liable for their own actions and conduct
o ULLCA s.303 (a)
▪ Not liable for debt, obligation, or liability of the company solely because you
are manager/member of the same LLC
▪ No exception for opening the door for LLC
• BUT
o Minnesota
▪ LCC pierce the veil is same as Corp.
o ULLCA s. 303 (b)
▪ Failure to follow usual company formalities not
enough to pierce the LLC veil
o All members and managers of LLC get limited liability
▪ RULLCA s.304
• Obligations of the LLC belong to the LLC and not become the
liabilities of members/managers acting in that capacity
▪ Exceptions
• Cortez v. Nacco Material
o Swanson was liable for the actions of subsidiary LLC
because they retained the responsibility of safety
o Moral of the story: if you do not want liability, don’t assume
responsibility
- Dissociation and Dissolution
o Lots of ways to be dissociated from a P
▪ Desire to leave
▪ Per the PA
▪ Expulsion by the partners (for good reason)
▪ Expulsion by court (for good reason)
▪ Death, Dissolution (corporation) or bankruptcy
o Haley v. Talcott
▪ Greg and Matt get into a curfuffle, want to destroy partnership.
▪ Matt says there’s the exit clause- but Greg has personal obligation to the
mortgage of the LLCs property.
▪ Therefore, the court only has option to scrap the LLC
FINANCE AND BUSINESS STRUCTURE

A. Accounting
• Importance of accounting
o Investors value the stream of benefits that an asset can produce for them
• Ex. You do not buy a cow just for the cow (milk, hide, potential offspring etc.)
o When investor buys an asset,
• Want to know what the asset is and who else has claims
o Accounting helps
• Determine value of the sale of the milk
• Determine any expenses related to the purchase of the cow, milking, sale of milk
• Determine any claims on the cow or its milk or the proceeds of the sale of the
milk
• Accounting Material
o Technical
o Necessary evil for finance not that necessary for lawyers
• Rules and regulations
o GAAP- collection of standards over the years
o Financial acounting standards boards (FASB)
o Companies registered with the SEC must compy with their accounting rules that the SEC
dictates
o Companies have to report regularly to the MDA
• Important Financial Statements
o Balance sheet
• Snapshot of the firms assets and liabilities
o Income Statement
• Shows revenues and profits and losses over a specific period
o Statement of cash flows
• Shows the actual condition of the firm- shows in and out of the business
o Statement of changes in stockholders equity
• Where you find certain tech gains and losses that increase or decrease owners'
equity but that are not reported in the income statement
• Fundamental Asset formula
o Asset = liability + equity
• What is an asset?
o Defined
• Probable future economic benefit
• Firm has to have legal title and expected to give
o Historical Cost principle
• After asset is recorded on a company's books, general no adjustments are made
for future changes in market vaue
• Exceptions
• Inventory recorded at the lower of cost or market
• Marketable securities held for sale can be reported at fair market
value
• Depreciation expense can decrease the value of equipment
• Liability
o Defined
• Obligations to provide economic benefits to a third party in the future
o 3 Conditions
• The future obligation must be probable
• The amount of the obligation must be known or can be reasonably estimated
• Transaction or event that caused the obligation must have already occurred
• LIFO vs FIFO inventory Accounting
o Inventory methods of profits adjust based on the different methods you use
o Last in is lower
o First in is higher
• Analyze and Compare
o Ratios are the big helper
o Compare companies in the same industry
o Types
• Profitability ratios
• Financial leverage ratios
• Liquidity ratios
• Activity Ratios
• Market Value Ratios
• Internal Controls of Financial Reporting
o Big Business now
o Lots of regulatory and compliance issues
o Risk Management
o All are Opportunities for lawyers
• Valuation
o 3 main ways to value company
• Discount cash flow
• Estimated cash flows
• Terminal or residual value
• Discount rate (higher the rate, lower the valuation- think about the risk)
• Comparable
• Look at similar corporations
• Market multiples
• Takes a specific term and uses multiples of that
• Different sectors have different kind of multiples they pull from
o Present Value
• Veruca Salt Theory of $$ take the money now, not later
• Take the money now (dollar today is worth more than a dollar tomorrow)
• Basic Discounting to present value
• Flip of compounding in discounting
• Just learn it at home I cannot be bothered here
o Rule of 72
• Doubling time = 72/interest rate
• Why this all matters
o Financial models are needed for lawyers to opine on things
o Have you considered inflation/high risk sector
• Valuations
B. Securities
- Shares
o Equivalent to points in a partnership
o Voting rights to the firm
o Rights to dividends
o Different kinds of shares
▪ Authorized shares
• # of shares specified in the articles of the corporation
▪ Outstanding
• Owned by someone else and not the company (sold and not
repurchased)
▪ Treasury
• Once issued and outstanding but have been bought back
o Different kinds of equity
▪ Preferred shares
• Dividends go to them first
▪ Convertible bond
▪ Warrants
- Bonds
- Rights of a shareholder
o Right to share in dividends, if dividends declared by the company
o Right to the residual assets of the firm after all debts have been paid
o Right to vote on certain issues (ensure accountability of board)
▪ Election of directors
▪ Amendments to articles of incorporation and bylaws
▪ Fundamental transactions
▪ Miscellaneous such as approval of independent auditors
- Common stock is owned fiduciary duties from the board
o Courts usually deferring to the board with the BJR
o Allows boards to make decisions
- Equity
o Common
▪ Residual claims
▪ Can be voting or non-voting
▪ Different classes (maybe)
o Preferred Stock
▪ In private equity finance
▪ Usually issues in one or more series
▪ Economic preference
• Dividend preference
• Liquidation preferences
• Redemption rights
• Conversion rights
▪ Control Preferences
• Might include special voting rights
• Might even include take-over rights
▪ Warrants
• Options that accompany purchase of security equities
▪ Statutes allow for preferred stock
• MBCA and DE allows for authorization of such shares
• Model Act and DE allow a comp. to defer setting the terms of the
preferred by delegating that authority to the board
• No dividend rights by statutes
• No redemption rights by statute
• Their rights are contractual (rights are negotiated)
o Board does not owe them the same FD as common
shareholders
▪ Why Preferred stock?
• Three common areas we see them
o Financial institutions
▪ Bank does not want to dilute the common stock
o Balance sheet management
▪ Company would ideally issue debt, but is already
highly leveraged and doing so would be problematic
for some reason
o Venture Capital and Private equity
▪ Investors are primarily interested In investing in the

residual claim but need some form of downside
protection
▪ Get the uspude of equity but preference if things go
bad
- Debt
o Bonds/notes/debentures
▪ Bonds
• Bond terms
o Principal
▪ Amount bond states is owed to holder
o Maturity
▪ Date principal has to be repaid
o Coupon
▪ Annual interest that the bond states issuer will pay
o Optional Features
▪ Secured bond
• Certain assets serve as the collateral
▪ Guaranteed bond
• Someone other than issuer guarantees the
payment
▪ Callable bond
• Issuer may redeem the bond before maturity
(call premium)
- Derivatives
o Derived from other securities
o Includes swaps, options, convertibles
o Lawyers have no choice but to understand options
▪ Dang it
▪ Fuh
o Options
▪ Call option
• CB
• Call option is the right to buy a stock at a specific price
• You expect price of the underlying instrument to increase
• If so, I get the right to buy the stock at the strike price, sell it, and
keep the profit
▪ Put Option
• PS
• Put option is the right to sell the stock at a specific price
• Used to hedge against the decline of the price of a stock
• Used for speculation as you can buy a put option instead of shorting
the stock
o Only limit is price you pay for the option
▪ Warrants
• Options typically given to employees
• Option to buy stock, part of overall compensation package
• Help incentivize managers to help the stock price move up
- Capital Structure of the Company
o Depend on tax issues and desire to leverage
o Incentive to finance company using debts given interest expense can be deducted
o Will depend on sector, business cycle, maturity of company, interest, rates, and much
more.
o The structure is fluid, can change over time, and is not fixed
- Limit on Distributions
o Tension between equity holders and debt holders/creditors
▪ Equity holder wants $$$
▪ Mr. Wonderful on Dividends
- Legal Capital
o Fictional Concept
o Ineffective
o Klang v. Smith’s Food and Drug
▪ Do not have to know the terms of the deal
▪ What is important here is that there is an evaluation being made here
▪ Was this a violation of DE Sect 160?
• Company cannot repurchase its shares if it causes an impairment of
capital, unless expressly contained in s.160
▪ Is this transaction impairing the shareholders of the company
▪ Takeaway
• Corporate balance sheets do not necessarily reflect the current asset
values because of unrealized appreciation and depreciation
• Courts may defer to board's judgement and evaluation unless P
proves directors failed to fulfil their duty to eval. The assets on the
basis of acceptable data and by standards which they determined to
believe reasonably reflect present values
o BJR
• Purpose of DE s.160 is to preserve capital for protection of creditors
C. Forming the Entity
- Advising the Entity
o Who are you going to be client for?
• Jesse by Reinecke v. Danforth
o BG:
• Flygt gets hired by Danforth to form MRI Comp.
• Then Jesse Family sues, hires another DeWitt lawyer
• D tries to get them off the case
o Different Theories
• Guidelines for entity theory of rep.
1. If person hires a lawyer for purpose of incorp.
2. The lawyers involvement with that person is related to
the incorporation AND
3. In entity incorp. Then the entity rule applies retroactively
and the lawyer's involvement with the person is deemed
as -
• Alternative aggregate theory
1. Lawyer can rep multiple people as joint clients during
formation of business
2. Once formed, clients then have to decide who the lawyer
reps
• Reasonable expectations theory
1. If lawyer makes a person think they are the client, and it

is a reasonable belief then there is an attorney client
relationship, even without a retainer
2. Difficult with close corps.
o Forming a Corporation
▪ MBCA 2.01
• 1 or more peoples may act as an incorporator by delivering articles
of incorporation to the secretary of a corporation by delivering
articles of incorp. To the state
▪ How to form
• Promotion
• Name search
• Subscribers
• Articles of incorp
o The name of corp.
o Corp. name that satisfies 4.01
o Number of shares the corp. allowed to issue
o Street address of corp. intial address
o Blank
• 2.02
o May set forth (see the slide)
▪ Names of and address of the individuals who serve
as initial directors
▪ Por
• 2.03
o Existence of the company when art. Of incorp. Are filed
o Post Formation
▪ Draft bylaws
▪ Organize meeting
• Name directors
• Adopt bylaws
• Appoint officers
o In CA need to specify each position
• Authorize the sale of founder stock
▪ Planning/structuring entity
• Ownership structure
• Management
• Dissoc.
• Minrity protection
• Fiduciary duties
o Stakeholders in Corporation
▪ Creditors
• Owed a certain amount from the company (with interest)
• Protect their interests by contract
▪ SHs
• Own residual claim on the corp's assets - hard to define entitlement
• Have most interest in corp's prosperity
• Therefore it makes most sense that corp would operate for benefit of
the SH, subject to contractual and legislative protection of the
interests of the other stakeholders
▪ Employers
• Can protect themselves by contract but
o Their entitlements are less easily defined
o Information asymmetries and discrepancies in bargaining
power between corporation and many of its employees
o Limited interest in corp prosperity
o Some foreign countries req a portion of the board to be
appointed by employees
CORPORATE GOVERNANCE ISSUES

A. Corporate Governance Basics
• Just means how the company is being run
o In corporations
• There must be a board of directors
o Limited Partnerships
• Two tier system (GP and LP) structure but other entities do not have this req.
for a B of D
o Outside directors
• More important- also independent known as
• More focus on what America looks like
• Nice goal
o Specific tasks not defined in statutes
• Monitor corp performance
• Developing succession plans
• Choosing a CEO
• Understanding risk profile
• Understanding corp finance
• Steering the management of the company
• Not
▪ Day to day
o Types of board committees
• executive
• Audit- now mandated by the NYSE and the NASDAQ
• Finance
• Compensation
• Nomination
▪ Develop candidates for member of the board
• Many more (including special committees that deal with litigation and one off issues)
o How are boards changing
• Gender diversity
▪ Notice that boards with women are more successful
• Diversity
▪ CA- gender diversity rule thingy
• Balancing boards
▪ Is CA constitutional?
• Comply or explain NASDAQ
• SEC Rule
▪ Listed on NASDAQ, gotta have 1 woman and 1 underrepresented minority
▪ Gotta disclose the diversity info on their board of directors
o Shareholder Powers
• Elect the B or D (do not nominate them)
▪ The actual board does the nomination
▪ How they know who to sit in etc.
• Initial board pretty small- has financial
• Typically vote on big transactions
▪ Merger
▪ Sale
▪ Voluntary dissolution
▪ Any other amendments to the AI as well as amending by laws
• Can vote when the board seeks their vote for items like appointment of auditors,
management , compensation plans, etc.
• CANNOT vote to have board take certain actions, except maybe non-binding reqs.
B. Shareholder Role In Governance
1. Mechanics of SH Meetings
a. Calling the meeting
▪ Bylaws usually fix the date of the annual SH meeting
▪ Most corp statutes provide that BoD, someone with 10% of shares, or anyone
authorized by the AoI can call a special meeting of SH
• DGCL s.211(d) does not include stock ownership as qualification for
calling that meeting
b. Notice
▪ Must give written notice of all meetings to SH entitled to vote in meeting
▪ Board must set record date to satisfy notice
▪ DGCL s.213(a) allowed one fixed notice date and another recording date for
those entitled to vote at the meeting
c. Quorum
▪ Quorum must be repped at the meeting either in person or by proxy in order
for action taken to be effective
▪ MBCA sets no minimum or maximum
d. Action by Written Consent
▪ Unless AoI says otherwise, one share = one vote
▪ For vote to be effective must be quorum either in person or other by proxy
2. Election and Removal of Directors
a. Election of Directors
▪ Elected at annual meeting unless otherwise stated in the AoI for staggered
terms
▪ SH power to elect is exclusive unless board seat is suddenly empty
▪ If annual meeting not held in 15 months, any SH can req. it be held
▪ Default rule = plurality voting
o Removal and Replacement of Directors
▪ Authorize SH to remove board members with or without cause

• In MBCA it is mandatory and cannot be restricted
▪ But what constitutes ‘cause’ justifying removal
• Campbell v. Loew’s Inc.
o The charges of exceeding their duty to the detriment of the
company were sufficient to determine that there was cause
3. Inspections of Books and Records
a. Introductions
▪ SH can look at books, but only with reasonable cause and a t a reasonable
time
▪ SH seeking info needs a writ of mandamus
• If reasonable request but corp refuses to accept, then they owe the
SH attorney fees, etc.
b. Proper Purpose
▪ Proper purposes include
• Info relating to shares, dividends, mismanagement, and litigation
• Mailing list of other SH
▪ Improper
• Using info for competitor
• Ex. Pilsbury v. Honeywell
o Wanted Honeywell to stop making frags for ‘nam
o Bought 100 shares and wanted to solicit SH to change BoD
and force a stop to weapons manufacturing
o Determined to be too much and for improper purposes
o Must have a Bonafede investment interest
▪ DE is different
• So long as not a “fishing expedition” they’re good to get the info
4. Dynamics of SH Voting in Public Companies
▪ SH elect, but do not select who the candidates are for election
a. Collective Action Problem
▪ Why don’t SH oppose the actions of the BoD
C. Proxies
1. Introduction
a. What are they
▪ The ability of a SH to give their voting ability to another
• They tell you how to vote
• OR can let the proxy decide
▪ Listed (NYSE and NASDAQ) companies must comply with SEC regulations
(1934 act)
• Means there must be certain disclosures
▪ State laws do not req. proxies but
• State law req. a quorum so you need a proxy solicitation to get
enough SH
• NYSE reqs. Them
▪ Generals
• Companies pay for the proxy votes
•Issues surrounding how many outstanding shares there are and who
owns them
o Resolved some- has to be proxies online now and SH can
use internet to vote- thereby decreasing operation costs
b. Regulating Proxy Solicitations
▪ Long Island Lighting v. Barbash
• Takeaway:
o Newspaper critiquing the company can be interpreted as a
proxy solicitation (so long as it can be interpreted to
influence SH votes)
▪ SEC reg. 14-a
• 14-a 1Defines PROXY as
o A request for proxy whether o not accompanied by or
included in a form of proxy
o Any request to execute or not to revoke a proxy OR
o The furnishing of a form of proxy or other communication to
security holders under circumstances reasonably calculate to
result in the procurement
• 14-a 2
2. SH Proposals
a. SH proposal Rule Basics
▪ SH can attend annual meeting and theoretically have right to introduce
proposals
• Is semi-meaningless- most SH do not attend, SH only have specific
rights and cannot force management to act in a certain way
▪ SEC rule 14-a 8 (who can make a proxy vote)
• Eligibility
o Must be continuous for over a year holding 1% interest or
$2000 in market value (OLD Rule)
• Procedure Reqs.
o 14a-8 (b)-(e)
▪ Proposing SH must be at the SH meeting
• Grounds for company exclusion of the proposal include (rule 14a-
8(i))
o Not proper subject action by SH under state law
o If implemented will cause company to violate state
laws/proxy regulations
o Relates to redress of personal claim or benefit
o Relates to operations accounting for less than 5%
earnings/gross sales
o Lacks power/authority to make that change
o Deals with a matter relating to company ordinary business
operations
o Relates to BoD election or conflicts with the company
proposal
▪ SEC is the referee in these issues
• BoD believes proposal can be excluded from the proxy statement it

files notice with the SEC
• IF SEC agrees then it issues a no action letter (SEC will not take
action for the exclusion of the proposal) (NOTE: SEC is not bound
to the no action letter- can still take action)
o If disagrees then it may take enforcement if proposal
excluded
• Decision can be appealed by either party
▪ Examples of Recent SH proposals
• Corporate
o Remove poison pills, prohibit greenmail, requiring
expensing of stock options etc.
• Voting
o Require annual election of directors, require secret balloting,
adopt cumulative voting etc.
• Directors
o Change directors, limit their payouts.
b. Exclusions
▪ Day to Day Business
• Trinity Wall St. v. Wal-Mart Stores
o SH want the Company to change corporate governance
regarding the sale of firearms
o Determined in TWO PART TEST
▪ What is the subject matter of the proposal?
▪ Does the proposal relate to the ordinary business of
the corp?
o Determined that this was not corporate governance – was to
do with the sale of products at Walmart –
o NOTE: Social policy exception
▪ If related to social policy, but has to do with day-to-
day business, can outweigh the rule
c. Types of SH proposals
▪ 3 main categories
• Corporate governance
o Most likely to succeed
o Typically involve independent board chairs, eliminating
supermajority voting, making it easier for the SH to call
special SH meetings
• Executive compensations
• Social and Environmental policies
o Typically involves the hot topic of the day
▪ SH proposal of Nominees
• Background
o Core issue here SH elect but do not nominate
o SH would have to nominate their own director through proxy

battle that they pay for
• Case law
o American Federation v. AIG Inc.
▪ BG:
• Union wants SH to vote for directors
o Has shares in AIG
• If proposal relates to an election, FEDS will
think this is to a specific election and not
corporate bylaws regarding elections overall
o MUST be specific to election by law
o CA inc. v. AFSCME
▪ BG:
• SH proposes that CA would be req. to
reimburse its SH for the costs of nominating
a board member
▪ Issue:
• is this a proper subject for action of SH
under DE law?
▪ Result
• DGCL 112 allows corporations to have a
bylaw that allows to SH to have their
nominees in the company proxy
o Can adopt a bylaw to allow that to
potentially occur (procedural)
D. Fiduciary Duties to Disclose to SH from company
1. Implied Federal Private Action for Proxy Fraud
a. Quantitative Issues
▪ TSC Industries v. Northway Inc.
• For P to succeed under SEC 14(a)
o Material misrepresentation
o Caused the injury AND
o Is an essential link in accomplishing the corporate action
• Here
o SH suing for omission of details in the proxy statement
▪ National acquired 34% of TSC
▪ National board (5) nominated to TSC board
▪ BUT SH because the proxy did not speicifically state
the control National had over TSC
o Was there a material omission?
▪ Specifically in terms of SH
▪ Materially misleading if there was a substantial
likelihood that reasonable SH would find the control
National had in their decision to vote OR
▪ The omitted fact would have significantly altered the
total mix of info available to the reasonable investor
▪ Basic v. Levinson
• SEC 10 (b) + (b) (5)
o Must prove fraud was material AND
o SH substantially relied on that same fraud
• Because Corp had lied that they were not in discussions regarding a
possible profitable merger, it was a substantial misrepresentation
b. Non-Quantitative Issues
▪ Rule SEC 14a-9 – does no only have to be quantitative information
• Gives power to SEC as they get to prescribe the rules necessary for
the public interest
▪ Gantler v. Stephens (DE CASE)
• BG:
o no discussion or deliberation behind the decision made by
the board, then state in the proxy statement that they had
deliberated carefully
• Decision:
o Misleading statement, plain and simple
▪ Mills v. Electric Auto-Lite Co.
• BG:
o Mergenthaler buys majority of shares
o Wanted to merge with Aut-lite
o Needs 13% of votes – sends out proxy statement for those 13
• Decision
o Failed to demonstrate the power that Mergenthaler had on
the board
▪ Virginia Bankshares v. Sandberg
• BG:
o VBI owned by FABI
o Wanted merger between the two
▪ VBI owned 85% of FABI
• Solicited proxy votes even though not
required to
• $42 a share
• Merger approved
• Issue:
o Can false/misleading opinion be considered a
false/misleading statement
• Conclusion
o Was not sufficient under 14a-9
E. SH Litigation
a. Basics
▪ What
• SH claims breach of FD by 3rd party (directors officers or controlling
SH)
• SH brings claim on behalf of the CORP which they took stock
o Awards go to the company then, and not the SH
• MBCA s.7.41 limits standing to SH (creditors cannot bring

derivative suit)
▪ Logistics
• Any $$$ goes to the corp
• SH benefits from the corp share price going up from the recovery
payment
• Not zero-sum game, both P and D can recover attorney fees from the
corp.
• There are lawyers who specifically seek this sort of work
▪ State Indemnification Statutes
• Most states, including DE, have statutes covering indemnification
o Most = permissive: allow DE and other states to indemnify
the board
o Some = Mandatory; require the corp to indemnify the
officers and board in certain situations
• Indemnification and Insurance
o Scope
▪ Generally covers damages that officers and directors
might incur in connection with their corporate
activities
• Typical situation
o Claim by a third person
• Also covers litigation expenses
▪ Insurance
• Corp can purchase BoD insurance to cover
damages and litigation expenses
▪ Test for Derivative Suits
• SH MUST post bond to cover corp’s legal costs in case of frivolous
suit
• Must also notify board before they can sue derivatively
b. Difference between Derivative and Direct Suit
▪ Tooley v. AXA
• BG:
o
•
• Rule:
o Derivative suit = on behalf of the corporation for damages
sustained to the corp by the board
o direct suit = on behalf of the SH
▪ Re Fuqua
• Rule:
o P does not need to know how much for the P to sue for, so
long as the attorney knows what is going on (SH can be
pretty clueless)
c. Demand Requirement
▪ Rule
• Regulated DA must be balance between holding directors
accountable and deterring friv. Suits with min. encroachments on
board’s decision making authority
▪ Demand approaches
• Traditional Approach (DE)
o Rule
▪ Need to know if SH/P is req. to the BoD to remedy
that alleged wrong or whether demand is not
possible and therefore excused
o Demand Futility
▪ Aronson v. Lewis
• Burden is on P to overcome the BJR
presumption
• Ct says given that there was no proof 47%
SH had control over directors, and no
enough even if Fink nominated them
• Universal Demand (newer) as expressed in the MBCA
o MBCA 7.42
▪ - No SH may commence a derivative proceeding
until a written demand has been made, 90 days have
expired from the date of the demand was made
UNLESS irreparable injury to the corp would result
from waiting
o SH must refrain from bringing suit for 90 days UNLESS
▪ Irreparable injury OR
▪ BOD rejects the demand
o Demand Futility
▪ Einhorn v. Culea
• Special litigation committees (SLCs) help
figure out if derivative action is in the best
interests in the corp.
o Formed by the corp.
o 2 or more independent directors
o Appointed by majority of
independent directors
o When Challenged, typically the
focus is on if it is Independent
• HOW TO TELL IF INDEPENDENT
o Is director defendant?
o Did director apprve alleged action?
o Did director financially benefit from

the transaction?
o Did director have any dealings with
any defendants?
o Family of director have relationship
with Defendants?
o Director have business relationship
with corp?
o How many directors on the SLC
o Is SLC represented by independent
lawyer?
d. Right to Inspect
▪ Saito v. McKesson HBOC, Inc.
• Takeaway:
o Date of purchase of stock is not absolute cutoff date for the
right to inspect docs, but the documents must be essential to
a proper purpose for the search
▪ Seinfield v. Verizon Communications Inc.
• Takeaway:
o Fishing expedition is NOT a proper purpose, must have
some evidence of a possibility of improper behavior
e. Special Litigation Committees (SLCs)
▪ Determining if dismissal appropriate under SLC
• Zapata
o Step 1: (are they independent?)
▪ Inquiry into the independence and good faith of the
committee
▪ Inquiry into supporting the SLC claims
o Step 2:
▪ Court goes on to apply its own busisnees judgement
to determine if the case should be dropped
o NOTE:
▪ Corp has burden of proving the SLC independence,
good faith, and reasonable investigation
• Make sure the SLC is really independent
and not related to the lawsuit
• Conduct a thorough investigation
• Hire an ex judge from the same court that
you are in
▪ Determining the interest and independence of an SLC
• Orman v. Cullman
o Interest (2 definitions)
▪ DE: defines a disabling interest as (cannot be part
of the decision making)
• Director personally receiving a benefit or
detriment from the challenged transactions
which is not shared by other members of the

board?SH of the corp AND
• Material enough to question whether the
director could objectively vote on the
transaction
▪ When a director is on both sides of the transaction
• Involves same bullets as above, but because
is on both sides materiality is not an issue
o Independence
▪ Can be dominated by another party
• Personal relationships (school, family, work,
friends).
• Force of Will
▪ Beholden to another party
• If controlling party has power to decide if
director receives material benefit that the
loss of the benefit questions whether they
can vote independently
• In Re Ebay (Board found to NOT be independent)
o BG:
▪ Ebay hires board to do a stock offering, end up
selling to directors on the cheap
o Takeaway
▪ Were not independent (3 of 7 SLC were defendants)
• A lot of money on the line for the spinners
FIDUCIARY DUTIES
A. Duty of Care
a. Business Judgement Rule
i. BJR Basics
▪ S.8.30 of the MBCA
• Each member of board of directors shall act in good faith and in a
manner that director reasonably believes to be in the best interest of
the corp.
• Members of board when becoming informed in connection with their
decision making function or devoting attention to oversight function,
shall discharge their duties with the care that a person in a like
position would reasonably believe appropriate under the
circumstances
▪ Duty of care = reputation issue/shaming mechanism
• Is breached when board does not conduct a sufficient
investigation/deliberation to make business judgement
▪ Shlensky v. Wrigley
• BG:
o The Chicago Cubs lights on the field case
• Decision:
o BJR appropriate here
▪ No evidence of fraud
▪ Cost of lighting is for the board to decide
ii. BJR and Directorial Negligence
▪ Duty of care imposes liability for breach of duty, BJR requires that the court
refer in good faith to the judgement made by board
▪ Aronson v. Lewis
• Presumption is that board in making business decision acted on
informed basis AND in honest belief action was taken in best interest
of the company
• Neglectful inaction is not protected, only action
• Will refer to the BJR UNLESS
o Breach of duty of loyalty
o Fraud in decision making
o Illegaility OR
o Conflict of interest
• NOTE:
o Controlling SH does NOT have BJR
iii. BJR and Waste
▪ In Re Disney Investigation
• BG:
o The major termination clause payout for the failure CEO
• Decision:
o A waste claim must be so unblanaced that the other side is
getting zero benefit
▪ Sometimes to pay an investor to go away is waste
o Here: was not waste. Had to pay for a high level executive to
leave his position and assume new role, needed some
cajoling in case it did not work
b. Duty of Oversight
o In Re Citigroup Derivative Litigation (DE 2009)
▪ BG:
• Citibank engaged in subprime lending, lost $55 Billion
▪ Decision:
• Caremark established director oversight liability
o Either there was no control/reporting systems OR
o There were such systems, and the directors did not monitor
or oversee them
▪ This would be a conscious disregard of duties and a
breach of duty of loyalty
o Must demonstrate bad faith dereliction of duties by board
• Board here was found to not have acted in bad faith, did have proper
measures and reporting in place BJR applied
o Francis v. United Jersey (Drunk Housewife case)
▪ BG:
• Absent board member let sons defraud the company and did nothing
▪ Decision:
• Board members must be present, understand the business at some
level, be informed of its activites and be familiar with the financial
condition of the company. Here Francis did none of that.
o Caremark Int’l Derivative Litigation
▪ BG:
• Settlement agreement after board breaches oversight in connection
with employees violation state and federal laws
▪ Decision
• Focus on the process and not the result: DID THE BOARD
o Have an adequate information and reporting system?
c. Duty to become informed
o Smith v. Von Gorkom
▪ BG:
• Sold company by signing contract without reading it (during a
merger)
o Came up with number from CFO chats in private
o Other better offers down the pipe
• SH approves the merger
▪ Decision:
• SH approval of the merger can cure issues of duty of care SO LONG
AS ARE PROPERLY INFORMED by board
• Test:
o Did they reach an ifnromed decision? If no,
o Did actions taken after alleviate the issues caused by
informed decision?
• Here:
o Not an informed decision
▪ No documentation
▪ Inside counsel was clueless
▪ Senior management had not idea
o Remedied by Actions
▪ SH approval insufficient – was not informed.
o Therefore was a failure of the duty to be informed
• What Board can do to avoid Gorkoming?
o Obtain expert opinions on all transactions
o Other issues relating to the duty to be informed
▪ Reliance
• Important for outside directors
• Can rely on reports, opinions, advice BUT should read or be present
at the meetings
▪ Lack of Objectivity
• Discusses familial/financial and or business relationships as well as
control/domination effecting independence
▪ Causation
• Nonfeasance
• Misfeasance
B. Duty of Loyalty
a. Director Self-Dealing and Conflicts of Interest
o Remillard Brick Co. v. Remilliard Dandini Co.
▪ BG:
• S and S owned controlling majority shares in parent company
• Execs are officers of both companies
• Arrangement made for selling bricks to mother company
▪ Takeaways
• Director owes FD to all SH, not just the controlling SH
• If we have an interested Director, Transaction is not auto voided
o Will depend on if the rest of an uninterested board OR
informed SH approval of the transaction + the deal is fair to
the corp.
o Benihana of Tokyo v. Benihana
▪ BG:
• Control issue between different SH, Abdo (board member) on both
sides of the voting (but was outside the room when the voting
occurred)
▪ Takeaway
• DE s.144 – parties must know of the double-sided person and be
informed of the deal to sign off on it.
• Because Parties knew Abdo on both sides, Benihana got a good
deal, negotiation occurred, board was informed and Abdo left room,
entire fairness standard was not used.
o MBCA approach to DE s.144
▪ Defines Directors conflicting interest transactions
• Provides a safe harbor for self-dealing transactions IF authorized by
qualified directors and Disinterested SH
b. Meaning of fairness
o Entire Fairness Standard
▪ Defines to mean both fair practice and fair dealing
• Fair price = economic and financial considerations
• Fair dealing = all about the transaction process
o Structure, negotiated, disclosed, and approved, but still goes
to fair dealing to protect the SH
o Procedural Fairness
▪ Easier for courts to process
• Disclosure = full
• Approval for disinterested directors
o Financial interest easier to determine that non-financial
relationship
o DE law states that if approached, transaction is not auto
voidable but can be challenged
o Lewis v. Vogelstein (The Mattel Case)
▪ BG:
• Compensation package for exec, approved by SHs
▪ Decision:
• If SH approve of self-dealing action
o Complete defense to any breach of loyalty
o Shift of judicial review is from fairness to waste
▪ Entails an examination to see if unjust enrichment
occurred or not
▪ Shift of burden of proof to the P
▪ No effect from the SH approval
o Harbor Finance Partners v. Huizenga
▪ BG:
• Merger with another company was challenged as a self-interested
transaction effected for the benefit of D of one company who had
shares in the other
▪ Decision and takeaway:
• Demand was futile, as 4 of the 7 board members were held to be in
doubt of considering a demand impartially
• Demand requirement not necessary when there is a question of doubt
regarding the board’s ability to consider a demand impartially
o Gantler v. Stephens
▪ BG:
• The no deliberations case
▪ Decision and Takeaway:
• No deliberation, self dealing therefore was a breach of the duty of
lyalty
• Doctrine of SH ratification
o Scope of doctrine limited to circumstances where fully
informed SH vote approved director actions that did not
legally require SH approval to become legally effective
o Cleansing effect of a ratification was to subject a challenged
action to BJR
o Exculpation Clauses
▪ Board is statutory relieved (in DE) of any personally liability (must be
adopted in Corps. By laws)
• EXCEPT IF
o Duty of loyalty breach
o Bad Faith
o Intentional Misconduct
o Knowing violations of the law
▪ Exculpation and Indemnification
• 3 tools to provide protection to Directors
o Exculpatory Clauses
▪ Prevents liability attaching to BoD in the first place
(except for duty of loyalty, acts or omissions not in
good faith or which involve intentional misconduct

or a knowing violation of the law)
o Indemnification clauses
• Compendate and hold BoD harmless when they have incurred
liability or are faced with defending liability claims
▪ D&O Insurance
• Like any other insurance product
o Also Issues of Pierce the Corporate Viel (PCV) versus Fiduciary Duty (FD)
▪ Remember driving force to structure entity is the issue of liability
c. Good Faith
o Assumes Directors act in Good Faith
▪ DGCL s.102 b 7 does not exculpate BoD that acted in bad faith
▪ Indemnification requires BoD to act in good faith
o Did Director Act in good faith?
▪ Nonfeasance
• Francis and Caremark cases – if directors had done job there would
not have been a loss
▪ Misfeasance
• Deficient decisions like Van Gorkum, if directors had been fully
informed, would not have approved the decision in good faith
▪ Disney Derivative Litigation
• BG:
o Was there an intentional dereliction in duty in giving away
the large firing bonus?
• Decision:
o Subjective bad faith = classic conduct of intending to do
harm
o Lack of due care = Gross negligence with no intent
▪ Does NOT mean bad faith – gross negligence and
bad faith are meant to be kept separate
o Bad Faith
▪ Intentional dereliction of duty,
▪ Conscious disregard for one’s responsibilities
▪ Is without intent
o All three were not present
▪ Stone v. Ritter
• BG:
• Decision:
o Good Faith is a necessary condition for the duty of loyalty
• Determining Demand futility in the absence of a business decision
o DE has three prongs for demand futility
▪ Majority of the board has a material financial or
familial interest
▪ Majority of board is incapable of acting
independently for domination or control, etc. OR
▪ The underlying judgement is not the product of a

valid exercise of Business Judgement
• BJR is inapplicable when there is no
business judgement exercised
• Stone Standard
o Held Caremark articulated necessary conditions to predicate
director oversight liability
▪ Director utterly failed to implement any reporting or
information system or controls OR
▪ Having implemented such system but consciously
failed to monitor its operations thus disabling
themselves from being informed or risk or problems
req. their attention
• HERE
o Board had properly exercised oversight on a reasonable scale
o Established a good reporting system
▪ ATR Kim Eng. Financial Corp v. Araneta
• BG:
o ATR owns 10% of PMHI
o Araneta owns 90%
▪ Takes everything out of PMHI and leaves it bare
o Other 2 board members are Araneta family
▪ Controlled by Araneta
• Decision:
o Duty of good faith applied
▪ Board were stooges
▪ Corp did not profit from scheme
▪ Did not monitor at all
▪ McPadden v. Sidhu
• Takeaway:
o Gross negligence alone is NOT bad faith (meaning
exculpation can still apply)
o Here: Because Actor on both sides of deal, interest was
widely known and did not contact many buyers, and board
failed to act
o BUT because there was an intentional dereliction of duty
and/or a conscious disregard for them, exculpation does not
apply
• NOTE:
o S.102 b 7 applies only to directors, and not to officers
DUTIES OF CONTROLLING SH
1. Introduction
o Similar to director or board member but in subtle and important ways
o Control =
▪ De jure (more than 50% of the stock held by 1 SH)
▪ De Facto (less than 50% but still can elect a board majority)
▪ Incumbency
• Usually possesses de facto control because their power to nominate
management candidates for election as directors and to use corp
resources for their election
o Corporate statutes
▪ Do not protect the SH the same way it does BoD
2. Transactions within Corp. Groups
o Sinclair v. Levien
▪ BG:
• Corp had 95% of shares in sub.
• Fixed huge dividends with the sub, prevented them from expanding
out of Venezuela, and breached agreements with the sub.
▪ Test:
• When parent controlling transaction and fixing the terms, test is
intrinsic fairness
• Intrinsic FAIRNESS TEST:
o Burden of proof on D to demonstrate subject to close
scrutiny, that the transactions are objectively fair
• Only used when accompanied by self-dealing (parent and sub
working together)
▪ Here:
• Passed and applied BJR on two of the three issues- the breached
contracts were an issue and needed intrinsic fairness applied
3. Cash out Transactions
o Introduction
▪ When the controlling SH wants complete control of the company, buying out
minority SH shares
▪ Dangerous because
• Huge potential for conflict of interest
o Controlling SH wants to pay as cheaply as possible
o Minority SH has little choice but to accept
▪ How to kick out the minority
•
• Also known as a freeze-out merger
▪ Process
• Proxy + tender offer requires Ind. SH consent – but a merger only
requires majority vote from SH, so controlling SH can bind all SH to
the merger
o Stock for stock merger can force the minority to become an
SH in the merged company
o Stoc for case can force minority to lose interest in the

company in treturn for cash
o To protect minority, they may demand appraisal, which will
result in corp buying out shares at judicially determined
value
o Weinberger v. UOP
• BG:
o 50.5% of the UOP stock owned by signal, who then decides to buy
remaining stock available in cash-out merger
o In meeting of UOP and Signal directors, decide that any price point
above $24 is good – Fairness opinion from Lehman in 4 days
▪ UOP directors know of the memo but do not disclose it to
other Signal directors – who decide on $21
o UOP directors on Signal board approve merger, 51% of minority SH
vote in favor
• Decision
o Remedies in freeze out merger
▪ Relief ordinarily limited to appraisal remedy BUT when
fraud, misrepresentation and corporate waste present, other
forms available
o Burden Proof
▪ Overall burden which applies if minority SH DID NOT
approve of the merger
• P must show some evidence of fraud, misrep. Or
misconduct relating to the merger
• If P can deomstrate that, then BoP is on D to
demonstrate merger was fair
▪ BoP if minority SH approved Merger
• D must show all material facts to transaction
disclosed to SH
o If D demonstrates, then P has BoP to prove
transaction unfair to minority
o Here:
▪ There was minority SH approval, but vote was not informed
(failure to disclose the $24 memo)
▪ So BoP is on D to show transaction was fair through the
entire fairness test (highest level of scrutiny in DE – no
BJR protection)
• Transaction terms should be like those reached in
arm’s length transaction
• Entire fairness in a freeze out merger consists of fair
dealing and fair price
o Fair dealing
▪ Transaction should be like 2
opposing parties negotiating
o Fair price
▪ In appraisal proceeding – court is
just determining the price for that
specific stock
▪ Use of modern methods of
valuation, whatever is available
▪ In the case of Fair dealing and fair price, there was a
reversible error
▪ Lynch I
• BG:
o Alcatel owned 30% of lynch stock, wants Lynch to buy
Celwave
o Lynch refuses, Alcatel then moves to buy Lynch remaining
stock for $14
• Decision:
o Did Alcatel exercise control over Lynch Affairs despite
minority ownership?
▪ Yes: We own x% of stock, we own you
o Burden of proof to demonstrate entire fairness rests on party
that is on both sides of the transaction (but approval from
Ind. Board will shift burden to P)
▪ 2 factors required to do so:
• Majority SH cannot dictate terms of merger
• Special committee must have real
bargaining power that it can exercise with
the majority SH on an arm’s length basis
▪ Lynch II
• Decision
o Khan did not demonstrate evidence that the price was flawed
▪ Khan v. M&F Worldwide Corp.

• BG:
o M&F wants to take MFW private (owns 43%)
o M&F owned by Ron Perlman
o Offer contingent on
▪ Special committee formed with ind. Directors
▪ Majority of minority
• Takeaway:
o BJR applied in a buyout with controlling SH if and ONLY if
▪ Transaction conditioned on special committee and
majority minority vote
▪ Special committee is independent
▪ Special committee is empowered and can say no
▪ Special committee meets duty of care in negotiating
fair price
▪ Minority SH can have informed vote

▪ No coercion of minority
o Entire fairness applied otherwise
▪ In re emerging communications
• Takeaway:
o Director with special expertise cannot be exculpated because
should have known or knew it was a bad price
MECHANICS OF CORPORATE COMBINATIONS

A. Introduction
a. Basics of corporate combinations
o Merger Types
▪ Statutory merger/consolidation
•
• MBCA Rules
o P SH only vote if there is a dilutive share insurance, only
needs a simple majority
o T SH must always vote on a statutory merger
▪ Have appraisal rights UNLESS (market exception)
• Their stock was publicly traded before the
merger AND
• They receive cash or publicly traded stock in
the merger
• NOTE: Market exception does not apply if
there are SH with 20% or an insider group
controlling 25% of corps directors
(management buyout)
• DGCL
o Majority of outstanding shares must approve merger on P
and T side
o 2 Exceptions
▪ P nor T approval required for short form merger
where P owns 90% of T’s stock prior to the merger
▪ Approval of P SH not required for merger that does
not increase P outstanding stock by more than 20%
o P SH has appraisal Rights IF
▪ Entitled to vote on merger AND
▪ Market out exception does not apply

o T SH has appraisal rights, regardless of above exceptions
▪ Triangular merger
•
• MBCA
o P is not a party to the merger – P SH only vote if shares
issued by P constitute dilutive share insurance
o P SH do not have appraisal rights UNLESS entitled to vote
on merger
o T SH have same rights as in a statutory merger
• DGCL
o P SH does not vote on merger because P is not a party to it
▪ Only SH of S can (and T obviously)
o Note:
▪ P SH entitled to vote IF P is on the NYSE or
NASDAQ ifthe issuance of P shares repping 20% or
more shares outstanding
▪ Purchase by one corp of the assets of another

•
• MBCA
o P SH only vote if there is dilutive share insurance
▪ No appraisal rights
o T must approve terms of sale and if there is no market
exception, dissenting voters have appraisal rights
• DGCL
o T SH must approve the transaction, but unlike in other forms
of corporate combos, they do not have appraisal rights
▪ Statutory share exchange
• Only under MBCA NOT DE
• Achieves same result as a triangular merger
• T SH receives P shares in exchange for their T stock
• P SH will only vote if ther eis dilutive vote insurance AND do not
have appraisal rights because they retain their shares
o Hostile Takeovers
▪ Tender Offers
•
• P can attempt to take over T by buying shares from T SHs
o This means can acquire T without their board’s approval
• Two different
b. Tax aspects of corporate reorganizations (no need did not cover)

c. De Facto Merger Doctrine
o Basics
▪ Courts will recognize a combination of assets between corporations as a
merger, thereby allowing SH to exercise their rights
o How to Identify a De Facto Merger
▪ Hariton v. Arco Electronics Inc.
• Decision: there is no De Facto Merger doctrine in DE
d. Sale of all or substantially all the corps assets
o Gimbel v. Signal Companies
▪ BG:
▪ Decision:
• Test: When there is a sale of all or substantially all assets of a DE
Corp, then a majority vote is required. (Business essentially must
cease to operate)
• Here: Because this was only a sale of a division of the company, and
not all or nearly all assets of that corporation, this was not a
substantial sale of all assets
e. Typical Steps of a MnA
o In DE
▪ BoD approves of Merger agreement
• BoD merging entities adopts an agreement of merger/consolidation
• Agreement can modify surviving corporation AoI
• Consideration for merger does not have to be shares
▪ SH approval of merger agreement
• SH vote in each of the merging entities
• Approval by majority of shares entitled to vote
• Compare to sale of assets
▪ Filing
• Merger becomes effective when merger agreement is filed
▪ Appraisal Rights
• What it is
o Certain transactions allow SH who lost vote to cash out –
have corp buy their assets (but remember the market
exception rule)
• How to access appraisal right:
o Hold shares continuously through to the day the merger has
gone active
o SH must perfect his appraisal right by sending written notice
to the Corp prior to SH vote informing that he intends to
exercise rights
▪ Must give the corp time to get the funds
• Court Decides what the appropriate amount of appraisal right is
• NOTE: no appraisal right in sale of assets
B. Defending Against Tender Offers
a. Poison Pills
o What are they?

▪ SH right plans that kick in if a certain % of stock is obtained by a hostile
Acquirer
• Ex. Hostile acq. Puts a tender offer out for $30 a share (has 15% of
stock). Poison pill gives SH the right to a $60 a share if hostile
obtains 60% of stock. Creates a prisoner’s dilemma
b. Proxy Contests
o Alternative to tender offer
o Advantage to the company (incumbent)
▪ SH tend to support incumbent management, though less true today.
▪ Target Management get to use corporate $$$ to pay their proxy costs
• Bidder must finance proxy and only gets paid back if they win
• Expensive since several rounds + potential litigation
c. Greenmail (Cheff)
o When a BoD/T will pay off an aggressive P in order to retain control over the
company
o Is it successful?
▪ No really, because then more people come around to hold you hostage for
free money (could suggest the company is undervalued)
o Benefits
▪ Wake up call to management to get company performance back up
▪ May trigger an auction, which could benefit the SH
o How to utilize Greenmail
▪ Buy the shares (must be for proper company purpose, not entrenchment
(cheff)).
• Appropriate uses include
o Protecting employee jobs
o Long term value
o Holding out for a higher offer
d. Counter-takeover offers (Unocal)
o Avoids poison pill entirely, just offers to purchase stock back from the SH, excluding
the potential take overeror
e. Lock Ups/White Knights (Van Gorkum, Revlon)
o Lock Ups
o Cancellation fee
C. Federal/State Regulation for proxies and tender offers
a. Objectives
o Ensure SH have all relevant and material info to make a decision
o Protect SH from Deceptive acts
o Prevent coercive tactics that could be used on SH
b. Williams Act Disclosure of security purchases (Federal Statute)
o S.13 d
▪ A beneficial owner of 5% of a registered security
▪ Focuses on
• Identity of acquirer
o Aggregate purchases by several people as part of a single

plan
• Plans and intentions
o Included an intention to seek control of the issuer
• Any contracts, arrangements, understanding etc.
o S. 14 d (tender offers)
▪ Triggered when a tender offer is made for 5%
c. State Regulation
o Help target companies thwart hostile takeover bids
o Usually, 4 different kinds
▪ Control share laws
▪ Business combo laws
▪ Poison pill laws
▪ Constituency law
D. Cases regarding defending against tender offers
o Cheff (Greenmail)
▪ BG:
• P wants to buy T to liquidate it, T says no – worried about the
employees and community
• BoD decide to buy out shares in order to protect T
▪ Decision:
• Standard of review for evaluating BoD decision
o Directors can purchase corp shares if there is a proper
business purpose (does NOT include entrenching)
o Inside versus outside directors
▪ Inside
• Must demonstrate that there were reasonable
grounds that a danger to corporate policy
and effectiveness existed
• Show Good faith and reasonable
investigation
▪ Outside
• Not held to the same standard
o Unocal (counter takeover)

▪ BG:
• Mesa attempting to purchase Unocal, already have 13% of shares
• Unocal tenders offers for share to counter the junk bond offers being
made to Unocal SHs if they don’t accept the initial tender offer
• Mesa excluded from tender offer
▪ Issues:
• Could board exclude Mesa for the purposes of thwarting their
takeover?
• Is the decision governed by BJR?
▪ Decision:
• Test = Enhanced Scrutiny Test (middle point between BJR and
Entire Fairness)
o Did directors respond to a legitimate threat that was a danger
to corporation policy and effectiveness AND
▪ Signs that threat exists
• Inadequacy of price
• Nature and timing of offer
• Illegality
• Risk of nonconsummation
• Quality of securities offered
o The actions the board takes is reasonable/proportionate in
relation to the threat posed?
o Revlon
▪ BG:
▪ Decision:
• Once white knight becomes involved and bidding begins, duty of the
directors shifts from defense to maximizing the value of the SH
shares
• If seeing a lockup on the exam, is not illegal on its face, but if the
duty has shifted, is inappropriate
o Paramount v. Time
▪ BG:
• Paramount makes Time an offer for merger, but Time wants to keep
negotiating with Warner
▪ Discussion:
• Revlon duties are triggered when a company announces itself for sal
with an active bidding process – but just getting an offer or enacting
defensive measures do not trigger Revlon duties – NOTE: UNOCAL
applies
o Here: Under unocal
▪ There was a threat
▪ The response was a reasonable way to protect a new
variant on a preexisting business deal
o Paramount v. QVC
▪ BG: Venue is DE
▪ Holding:
• When a breakup of company is inevitable, Revlon applies, but that
does not mean that breakup being inevitable for Revlon to apply
• A change of control can also trigger Revlon duties
▪ Distinguishing from Time-Warner
• Viacom is going to own combined company, while in Time warner
there was no dominant SH
▪ Enhanced scrutiny can be applied, but only on a case by case basis
o Omnicare v. NCS Healthcare
▪ Directors have Revlon obligation under these 3 scenarios
• When there is an active bidding process
• When in response to offer abandons long term strategy
• When approval
INSIDER TRADING
A. The Law
- SEC 10b-5
o In connection with the sale of any security, cannot do bad things including (see
addendum)
- 4 things to consider
o Is there an established business or personal relationship?
o Is there deception when there is no breach of FD?
o Does the state of mind matter (SEC says that person is aware of non-material public
info)?
o SO:
▪ Must deal in deception
B. Cases
- Basic v. Levinson
o Materiality of the information is determined by whether a reasonable shareholder
would have changed their decision based on that info.
- Goodwin v. Agassiz
o P’s knowledge did not require the board to disclose that information
- Diamond v. Oreamuno
o If an Insider knows information solely because they are privileged to that
information, then they must disclose it or must abstain from trading.
C. Who is an insider?
- Chiarella v. US
o A duty to disclose under 10b does not arise from the mere possession of nonpublic
information
- Dirk v. SEC
o Company committing fraud, D found out and told his clients
o Is not liable for investigating the fraud and telling his clients
- US v. O’Hagan
o BG:
▪ D was a partner helping in an MNA
▪ Bought shares in T company

o Decision:
▪ Someone under this fact pattern can be found liable for securities fraud under
10b
- Salman v. US
o BG:
▪ D tells all his relatives about his secrets. They all make bank.
o Decision:
▪ If Tipper provides a tip to a close familial relationship and knows tippee will
trade on the info, then it is a breach of FD
▪ Is it necessary for tipper to get a financial benefit?
• No – you are giving them a gift (want them to be rich).
D. What are the remedies?
- Disgorgement
- Civil Penalties
- SEC also can have cease and desist authority
- Can be expensive and can land you in jail do don’t do it
INDEX

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- Dissociation and Dissolution ......................................................................................................15

DUTIES OF CONTROLLING SH .........................................................................................................38

CORPORATIONS ROTH FALL 2021

o Mangers want high pay/benefits

o Kinney Shoes v. Polan (WVA test)

o Issue with other equityholders

▪ Cannot go as far as he did

▪ Because closely held corp., and in DE, no FD due.

• Expulsion under PA or by unanimous vote of the partners

o Gerber v. Enterprise Products

- Piercing the LLC Liability Veil

FINANCE AND BUSINESS STRUCTURE

▪ Investors are primarily interested In investing in the

1. If lawyer makes a person think they are the client, and it

CORPORATE GOVERNANCE ISSUES

▪ Authorize SH to remove board members with or without cause

• BoD believes proposal can be excluded from the proxy statement it

o SH would have to nominate their own director through proxy

• MBCA s.7.41 limits standing to SH (creditors cannot bring

o Did director financially benefit from

which is not shared by other members of the

good faith or which involve intentional misconduct

▪ The underlying judgement is not the product of a

o Stoc for case can force minority to lose interest in the

▪ Khan v. M&F Worldwide Corp.

▪ Minority SH can have informed vote

MECHANICS OF CORPORATE COMBINATIONS

▪ Market out exception does not apply

▪ Purchase by one corp of the assets of another

b. Tax aspects of corporate reorganizations (no need did not cover)

o What are they?

o Aggregate purchases by several people as part of a single

o Unocal (counter takeover)

▪ Bought shares in T company

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