Business Law Newsletters
Application of the De Facto Merger Doctrine to Acquisition of Corporate Assets
Companies which otherwise are attractive acquisition targets may have contingent liabilities that are difficult to assess. For example, a paint manufacturer may have used ingredients that later prove to be toxic. Present and future liability of the manufacturer for damages from sales of products with those ingredients may be anticipated, but the scope and cost of that liability may be too difficult to determine to support an acquisition value for the manufacturer.
Corporate Loans to Directors and Officers
At common law, a corporation's surplus funds could lawfully be loaned to directors and officers of the corporation unless the loan was fundamentally unfair to the shareholders, concealed from the shareholders, or fraudulent. The circumstances under which a corporation may permissibly make loans to directors and officers are now largely governed by statute. The permissibility of such loans varies from state to state. Most jurisdictions have adopted some version of the Revised Model Business Corporation Act (Act). Under the Act, a corporation generally cannot make a personal loan to an officer or a director unless the loan has been approved (or subsequently ratified) by a majority of the shareholders. If an approved loan is challenged, judicial review is often focused on whether the loan was fair overall to the corporation and its shareholders.
Corporation Governance: Meetings and Voting
Control of a corporation is exercised through its board of directors. Shareholders in turn elect the directors. In addition to straight voting of one vote per share, there are several methods provided by statute or corporate charter for calculating shareholder votes, including cumulative, class, weighted, and supermajority voting.
Employment Law
Protection for Workplace Safety Whistleblowers
SIPC Protection for Investors
Investors who engage in securities transactions through a brokerage firm that is a member of the Securities Investor Protection Corporation (or SIPC) receive protection for cash and securities held by the brokerage firm for the accounts of the investors. The SIPC covers up to $500,000 in losses of such cash and securities per investor with a $100,000 limit on the amount of cash in an account that is covered.