Corporation (Fisch) Outline Penn Law Essay

62808 Words Nov 20th, 2014 252 Pages
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.)
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o Voluntary exchange is a prerequisite

o Weakness: there is a societal imbalance in the distribution of resources, and it is virtually impossible for courts/legislatures to make important decisions that do not make someone worse off

▪ Kaldor-Hicks Efficiency: (Business law model) *Increases aggregate well-being* Fairness model

• An act/rule is efficient (leads to overall improvement in social welfare) if at least one party would gain from it after all those who suffered a loss as a result of the transaction or policy were fully compensated (but those who suffer do not actually have to be compensated).

o Wealth-maximization model that takes externalities into account. Potential improvement (not actual payment) is required.

o Weakness: doesn’t speak to legitimacy of initial distribution of wealth; ignores the actual distributional consequences of policies and difficulty of accurately measuring external effects.

• Theories of the Firm

o Coase Theorem: A firm exists because, in a world of positive transaction costs, it is sometimes more efficient to organize

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