Business Organizations

Professor Whitehead
Fall 2013

Syllabus – First Set of Readings

(subject to revision)

Course Description and Materials

This course is intended to introduce students to the legal rules and principles, as well as some
of the economic factors, that affect the conduct of productive enterprise in the United States.
A principal focus will be on large, publicly traded corporations that dominate much of the
U.S. business environment – in particular, its control and the potentially conflicting interests
that the corporate form must mediate. Topics to be covered include basic fiduciary
obligations, shareholder voting rights, the proxy process, corporate control transactions, and
insider trading. Time permitting, we will also devote attention to other business forms.

All assignment references are to the unabridged edition of Melvin Aron Eisenberg & James D.
Cox, Corporations and Other Business Organizations, Cases and Materials (10 th ed. 2011)
(“Casebook” or “CB”) and the related Statutory Supplement. Unless otherwise indicated, all
Statutory Supplement (“Stat. Supp.”) references in the Casebook should be read with the
assigned readings. In many cases, I will suggest that you skip or skim portions of those
readings – otherwise, you should review them in their entirety. I may also assign additional
Statutory Supplement or other readings, as well as hypothetical problems (to be posted on the
course website). Students are not expected to prepare written responses to the hypothetical
problems.

Grading and Participation

Examination. There will be one in-class final examination for this course. The examination
will be limited open book, meaning that you may use your Casebook, the Statutory Supple-
ment, any materials distributed during the semester, your notes, a non-legal dictionary, and
any written outlines that substantially reflect your own work and analysis. Commercial
outlines, treatises, and hornbooks will not be allowed.

Class Participation. Class participation can be a factor in the final grade. Among the points I
will consider are responses to questions in class, as well as other comments or insights that
may be made during an in-class discussion. The class participation component may result in
no more than a one increment increase or decrease in the final grade (e.g., from an A- to an A;
or from a B+ to a B).

You will be expected to be prepared to participate in each class session; except that I will
permit up to 5 “free” passes solely to accommodate conflicts that arise due to employment
interviews, religious holidays, and emergencies. To exercise your pass, please email me no
later than 30 minutes before class begins. If there are other reasons you cannot attend a class
session, please let me know in advance.

This course is subject to the Law School’s grading curve.

Business Organizations Professor Whitehead

Classroom proceedings for this course are being recorded by the School’s audiovisual depart-
ment for purposes, including, but not limited to, student illness, religious holidays, disability
accommodations, and student course review. Recording devices (including iPads) are prohi-
bited in the classroom except with my prior permission.

E-mail Communications. E-mail communications can provide an important means of

enhancing the learning process, but they should not become a substitute for analyzing a
problem on your own. A student who e-mails a question to me is expected to have carefully
considered the analysis on his or her own (or with a group of colleagues). If the question still
remains unanswered, you are encouraged to raise it with me by e-mail or in person.

Office Hours

My office hours are Tuesday and Thursday, 3:00 p.m. – 5:00 p.m. Students should also feel
free to schedule meetings outside of office hours.

Contact Details

I can be reached as follows:

238 Myron Taylor Hall

(607) 255-9498
[email protected] 

My assistant, Gina Jackson, can be reached as follows:

315 Myron Taylor Hall

(607) 255-6027
[email protected]

2
Business Organizations Professor Whitehead

Assigned Readings No. 1

The list below sets out the first set of readings we will cover, organized by group in the order
we will review them. They are not an indication of the number of pages we will cover in each
class. Specific reading assignments will be made available for each class.

We may adjust these readings over the course of the semester. I expect to distribute later sets
of Assigned Readings as the course progresses.

Hypothetical problems will be posted periodically on the course website, to be reviewed in

class. Students are not expected to prepare written responses.

Pages

1. Note on the Agency Relationship 6-20

Review the Mrs. Fields hypothetical problem (course website)

2. The Foundations of a Corporation 191-193

207-219

Read Del. Gen. Corp. Law (“DGCL”) §§ 105, 152, 157, 165
Skim Model Bus. Corp. Act (“MBCA”) sections and various corporate forms (in
particular, the Minutes of Organization Meeting) referenced in the Casebook
In addition, skim the Simple Form of Certificate of Incorporation in the Stat. Supp.
and Cal. Corp. Code § 2115

3. Review Problem 1 (course website), including the statutory references in

the Review Problem

4. Preincorporation Transactions by Promoters; Consequences of Defective

Incorporation 408-415
Review Problem 2 (course website)

Skip Restatements at CB p. 410

In addition, read/review DGCL§§ 103, 105, 165

5. The Classical Ultra Vires Doctrine 248-251

Interests Other than Maximization of the Shareholders’ Economic
Wealth 253-266

Skip Indiana and Pennsylvania statutes at CB p. 262

In addition, skim/review DGCL §§ 109, 141(a), 143, 242(b)

6. Shareholder Voting 294-302

The Election and Removal of Directors 233-243
Shareholdership in Publicly Held Corporations 302-313
Eisenberg excerpt; The Legal Distribution of Power between
the Board and the Shareholders 268-271

3
Business Organizations Professor Whitehead

Skim Cal. Corp. Code §§ 303, 304, NYBCL § 706, NYSE Listed Company Manual
§313.00, and read/review DGCL §§ 109, 141(b), 151(a), 211, 212, 216, 219, 220(b),
221, 223, 242(b), 350, 351(3), 354, and MBCA § 10.20(b)(2)

7. Equitable Limits on the Board’s Legal Powers 271-283

The Role of Bylaws in the Allocation of Power Between the Board
and the Shareholders 283-294

Skip SEC Proxy Rule 14a-8

Read/review DGCL §§ 109, 141(a), 141(b), 141(d), 141(k), 157, 211(b), 211(d),
223(a), 228, and MBCA § 7.02; and skim Securities Exchange Act of 1934
(“Exchange Act”) §13(d)(1)(C) and Item 4 of Schedule 13D

8. Requisites for Valid Action by the Board 228-231

Requisites for Valid Action by Corporate Officers (skip the Note on
Authority) 244-248
The Normal Requisites for Valid Shareholder Action 231-233

Skip the RMBCA readings listed at CB p. 232, except §§ 7.02 and 7.04
In addition, read/review DGCL §§ 242(b)(1), 251(c) and MBCA § 10.03(e)

9. Note on the Management of Publicly Held Corporations 335-340

Skip the ALI readings listed at CB p. 340

Skim Exchange Act § 10A, Sarbanes-Oxley Act §§ 302, 304, 404, 407, 906, and
NYSE Listed Company Manual §§ 303A.00-303A.07 (excluding all commentary
and explanatory notes)
In addition, read/review DGCL §§ 141(c), 141(e), 220(d), and MBCA § 8.01(b)

10. Shareholder Information Rights Under State and Federal Law 343-366

Skim the section at CB pp. 363-367 (we will go over this in more detail in class), as
well as the Exchange Act statutes/rules referenced on CB p. 365
Skim RMBCA §§ 7.20, 16.01-16.04, 16.20, Cal. Corp. Code § 1501, and NYBCL
§ 624(e)
In addition, read/review DGCL §§ 212(b), 327, Exchange Act Rule 14a-7, and
Sarbanes-Oxley Act § 302(a)(2)

11. The Proxy Rules: An Introduction 367-374

The Dissident’s Access Provision: Rule 14a-7; Shareholder Proposals
Under Rule 14a-8 (skip Standard Pacific Corp.) 374-375
Note on Risk-related Proposals 381-382
Shareholder Access to the Nominating Process 384-385
Funding Proxy Contests 327-335
Review Problem 4 (course website)

Skim the Form of Proxy Statement and Form of Proxy referenced at CB p. 369

4
Business Organizations Professor Whitehead

12. Borak, Wyandotte, Cort 386-387

Note on Materiality 393-394
Mills 387-393
Virginia Bankshares, Wilson 394-404
Notes 404-407

Reskim the Form of Proxy

In addition, review ABA Model Rule 1.13, and skim Exchange Act §§ 27, 32(a),
and 17 C.F.R. Part 205, §§ 2.05.2-205.6

13. Limited Liability and Its Exceptions 415-416

Walkovszky, Berle Article 422-429
Radaszewski 437-438
Note on Direct Liability 446-450

In addition, skim DGCL §§ 154, 170(a), 242(a)(3), 244(a)(4), NYBCL § 102(a)(8),

510, Cal. Corp. Code § 500, and Restatement (2nd) Agency § 140

14. Fletcher 416-422

Note on Limited Liability Against Tort Claimants 429-434
Minton, Arnold, Slottow, Truckweld 434-437
Sea-Land Services, Kinney, Eisenberg Note, Berkey, Carte Blanche,
Piercing Notes 438-446
Equitable Subordination of Shareholder Claims 225-228
The Corporate Entity and the Interpretation of Statutes and Contracts 450-451
Review Problem 3 (course website)

In addition, skim DGCL §§ 172, 174 and NYBCL §§ 510, 630, 719