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- A corporation issues shares in return for capital, property or other consideration. Classes and/or series of shares can be created with different rights, particularly with respect to dividends and voting. Preemptive rights can also exist, by which the percentage of shares owned by current shareholders cannot be diluted by the issuance of new shares. In such cases, the current shareholders are given a right of first refusal with respect to purchasing the new shares. This requirement however can b [...]
- The Issuance of Shares
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- A corporation has a perpetual life. Dissolution, the end of the legal existence of the corporation, can occur in several ways. A corporation can merge into another corporation, thereby ceasing to exist. With a consolidation or fusion, two corporations come together to form a new corporation, thereby both cease to exist. The shareholders in a corporation can elect for a voluntary dissolution of the corporation. A shareholder, a creditor or the state attorney general under certain circumstances de [...]
- Corporate Dissolution
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- In certain situations, a corporate creditor can sue to hold a shareholder personally liable for the debts of the corporation, requesting that the court invoke the equitable remedy of piercing the corporate veil. Accepted reasons for piercing the corporate veil are: inadequate capitalization, failure to observe the corporate formalities, the non-payment of dividends, insolvency of the corporation, the siphoning of corporate funds by a majority shareholder, defendant’s wrongful dealings with the [...]
- Piercing the Corporate Veil
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- Directors and officers have a fiduciary relationship with the corporation, resulting in a duty of care to avoid harm to the corporation, a duty of loyalty by placing the corporation’s interests ahead of their own as well as a duty of good faith and in some states a duty of candor. In accordance to the duty of care, corporate officers have a duty to inform themselves, prior to making a business decision, of all material information reasonably available to them. They then are to act with requisi [...]
- Fiduciary Duties
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- The Sarbanes-Oxley Act of 2002 was enacted as a direct response to the Enron scandal. It contains a number of reforms to enhance corporate responsibility and financial disclosures and to combat corporate and accounting fraud. The “Public Company Accounting Oversight Board” was created to oversee the audit of public companies subject to the securities laws, establish audit report rules and standards, and investigate, inspect and enforce compliance relating to registered public accounting firm [...]
- Sarbanes-Oxley
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- In the federal system, the losing party has the right to appeal to the appropriate circuit court of appeals. The state systems typically grant a right to appeal to the appellate court. For both the federal and state systems, the granting of leave to appeal to the supreme court is discretionary. The scope of review by the appellate court as to the judgment of the trial court depends upon the issue appealed. If a question of law, the appellate court can review the judgment de novo, free to reverse [...]
- The Appeal
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- If the jury has arrived at a verdict, the foreperson of the jury hands the verdict to the judge. The judge checks to see that it is in its proper form and then hands it back to the foreperson. The foreperson then reads the verdict. Judgment is entered on the verdict. In a bench trial, the judge can either issue the judgment from the bench directly after the closing of oral arguments, or take the case under advisement and issue a written judgment at a later date. It is common for the judge in a [...]
- The Judgment
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- International mergers can be subject to regulation by American regulatory agencies as well as the agencies of other countries or regional authorities, such as the European Union. In the proposed acquisition of the McDonnell Douglas Corporation by Boeing Corporation in 1997, the FTC [Federal Trade Commission] did not challenge the acquisition because it concluded that McDonnell Douglas would not survive as an independent company without the acquisition. American merger law allows weight to be g [...]
- Mergers – International Issues
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- A merger is when two separate firms come under common ownership or control. A merger in itself is not illegal. For antitrust purposes, a merger can occur with the purchase by one firm of all or most of the other firm’s assets or shares, or with a consolidation.
A horizontal merger occurs when one firm acquires another firm that manufactures the same product or a close substitute, and both firms operate in the same geographic market. If it is the same product but different markets, or diffe [...]
- Mergers
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- Partnerships
Partnerships, originally governed by common law, are today governed by state law, either the Uniform Partnership Act of 1914 (1) or the Revised Uniform Partnership Act.(2) A partnership is simply an association of two or more persons as co-owners conducting a business for profit. Partners have a relationship of mutual agency of a fiduciary nature, with each partner having the authority to bind the partnership. Partners can be either individuals or legal persons.
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General [...]
- Partnerships
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- The common law originally derived its name from the centralization of the English government, including the administration of justice, beginning with the Norman Conquest of England in 1066. A body of law eventually developed, the common law, the law common and applicable to all Englishmen. The classic definition of the common law is the unwritten customary law as found by the courts.(1) A suit at law, a lawsuit, was commenced in the medieval English courts of law. The plaintiff petitioned for a [...]
- The Origins of the Common Law System
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- Two legal institutions developed in England during the Middle Ages to which plaintiffs could turn to assert their rights: The courts of law as mentioned above and the Court of the Chancery. This court originally stemmed from the residual judicial power retained by the King. The courts of law became limited by the formalism arising out of the use of writs and forms of action. Despite the perception that judges in the common law system act freely, the historical reality was that it took decades fo [...]
- Law and Equity
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- The trial can be held before a judge, a bench trial, or before a jury with a judge presiding, a jury trial. If a jury trial, the next stage is for the parties to pick the jury, the voir dire. Jury trials are one of the most prominent, and perhaps notorious, features of the American legal system.(1) However, recent legal scholarship has shown that the quantitative results in jury and judge trials do not reflect the popular myth that juries are out of control. In two rather controversial areas of [...]
- The Trial
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- The plaintiff initially decides the forum of the lawsuit by filing the complaint with the clerk of the court in which the plaintiff wishes to litigate. The rules regarding the content of the complaint and the specificity of the claims in the complaint are generous. The complaint needs only to contain a statement of the grounds upon which the subject matter jurisdiction of the court is based, a short and plain statement of the claim(s) upon which the plaintiff is seeking relief, and a request for [...]
- The Selection of the Forum
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- The emphasis on equity in the American legal systems is in direct contrast to the civil law principle of legal certainty. In certain civil law systems, judges are often prohibited from making law in the interest of legal certainty. The decisions of judges are perceived as introducing elements of subjectivity or inconsistency into the law, disturbing any systematization of legal principles crafted by the legislator. The legislation should be clear, complete, and coherent, basically judge-proof, c [...]
- Equity versus Legal Certainty