Table of Contents

I.) INTRODUCTORY PRINCIPLES 2
A.) Efficiency and Other Concepts 2
B.) Agency and Partnership Law 2

II.) INTRODUCTION TO THE CORPORATE FORM 16
A.) Formation and Structure 16
B.) Debt, Equity, and Valuation 22

III.) CONTROL OF CORPORATE DECISIONS 32
A.) The Role of the Shareholder 32
B.) Management Obligations 50
1.) Duty of Care 51
2.) Duty of Loyalty 56
3.) Duty of Fairness: Parent-Subsidiary Relationships 63
4.) Duty of Good Faith 64
5.) Management Obligations Under Federal Securities Laws 67
C.) Shareholder Litigation 76

IV.) Structural Changes 85
A.) Transactions in Control 85
B.) Mergers and Acquisitions 86
1.) Mergers 87
2.) Sale of Assets 93
3.) Asset Purchase or Tender Offer 94
C.) Public Control Contests 96
1.) The Poison Pill 100
2.) Enhanced Review When Business is Up for Sale 103
3.) Proxy Contests for Corporate Control 106
4.) Protecting the Deal: Shareholder Lockup Agreements 109

I.) INTRODUCTORY PRINCIPLES

• Definitions

o Corporate Law: The allocation of rights and power within a corporation; the internal body of law

▪ Addresses the creation of economic wealth through the facilitation of voluntary, ongoing collective action

▪ Flexible- expectation that market discipline will weed out what is not working

▪ Principle aim- reduce agency costs of all sorts

o Securities Law: Regulates capital markets that corporations use to obtain funding

o Firm: A form of business relation that has a temporal dimension, a social identity, and a separate pool of dedicated assets

Efficiency and Other Concepts

• Efficiency is the primary objective of business law (fairness objectives, like protecting the environment, are dealt with through other bodies of law)

o Economic Efficiency: The extent to which the law enables