1.consider the hypothetical situation of the Fender family who operates a guitar manufacturing concern and has decided to incorporate. They would like to create a corporation and obtain limited liability. However, taxation at the corporate level would be very costly for them. Freddie Fender, the father, would rather be taxed as a partnership, if possible. Felix Fender, the eldest child of the Fender family, is worried about the additional paperwork and meetings that a corporate structure surely would bring. Fannie Fender, the youngest child, does not want a large board of directors to be formed. Fannie fears that the board would somehow detract from the family goals and orientation that the business always has enjoyed. Is there a corporate form that would please the Fenders? How would you advise them? What about a form other than a corporation? What are the pros and cons? about 100 words

2.reviews shareholder rights and the transfer of shares (stocks) in a corporation. Contract law ebbs through each transaction involving stocks, whether relating to the shareholders’ ownership rights in the corporation or the transfer of the stock per se (i.e., a transaction involving a broker and one or more shareholders. about 100 words

Consider the following situation: You call your stockbroker on Monday and tell her to purchase 300 shares (common stock) of Acme, Inc., at $15/share, which is the current market price. Your broker agrees to do so but becomes distracted and fails to place your order. Acme’s shares increase $3/share in price that day. Later that evening, in a telephone conversation you agree to sell the 300 shares in Acme, Inc., to a business acquaintance for $16/share. On Tuesday morning, Acme’s board of directors declares a $4/share dividend. Assuming that you and your broker dispute the validity of the buy/sell contracts, which contracts are enforceable in court? Would you be entitled to the declared dividend?

  1. Let’s take a look at the concept in corporate law known as the “business judgment rule.” How broad should the business judgment rule be in protecting officers and directors from liability for their actions? What is the purpose of the rule? What do you see as the difficulties in its application to corporate management? Would you have a different opinion about the rule if you were an officer of a corporation as opposed to being a shareholder? about 100 words

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UNFORMATTED ATTACHMENT PREVIEW
Corporate Directors, Officers and Shareholders 36 – 1 Rights of Shareholders • A corporation’s shareholders own the corporation. • Shareholders are not agents of the corporation. • They cannot bind the corporation to contracts. • Shareholders have the right to vote on matters such as: – the election of directors, and – the approval of fundamental changes in the corporation. 36 – 2 Annual Shareholders’ Meeting • Meeting of the shareholders that must be held annually by the corporation to elect directors and vote on other matters. – Shareholders do not have to attend the shareholders’ meeting to vote. – Shareholders may vote by proxy. • Special shareholders’ meeting called by board, holders of at least ten percent of stock, others authorized. – Emergency or important issues 36 – 3 Proxies • Shareholders may vote by proxy –

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