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Business Associations/Corporations
Temple University School of Law
Porrata-Doria, Rafael A.

Coporations Outline

I. Introduction and First Amendment
a. Four basic attributes of a corp.
1) Separate entity with perpetual existence
2) Limited Liability
3) Centralized Management
4) transferability of ownership interests
b. First Amendment
1) Contributions to candidates – restricted
2) First National Bank of Boston v. Bellotti
a) Corporations challenged constitutionality of a statute that forbid certain expenditures for
the purpose of influencing the vote on referendum proposals other than those materially
affecting the property, business, or assets of the corp. – can’t influence votes on statutes
covering individuals
b) Indispensable free speech – same for corp. as for individual
c) Prohibits speech in a manner unjustified by a compelling state interest, so invalid
d) Issue – shareholders money funds corporation; by allowing corporate money to be spent
on politics spending shareholders money on something outside of business
e) Shareholders can, through the mechanisms of corporate democracy, can get rid of
management
3) Austin v. MI Chamber of Commerce
a) MI law prohibited corps from using corporate funds for contributions or independent
expenditures in support of or in opposition to any candidate in elections for state office –
Non-profit group complained
b) Corps have political advantages that need to be regulated – Sufficiently compelling
rationale for restriction of independent expenditure
c. Three views of corporation political activity
1) Marshall says corporation is an economic development
2) Corporation is a creature of the state – State can regulate it anyway it chooses
3) Corporation is contract template

II. LAW OF CORPORATIONS
I. Basic Principles
A. Corporate Statutes
1. MBCA – Model Business Corporation Act
2. DCGL – Delaware General Corporation Law
B. Choice of Law
1. Relationships between owners and managers are governed by the corporate statutes and case law of the state
where the corporation is incorporated
C. Documents
1. Articles of incorporation
2. Bylaws
D. Corporate Actors
1. Stockholders – own the corp.; elect board
2. Board of directors – act for corp.
3. Officers
E. Corporate Securities
1. stock – residual financi

the board? No, one share-one vote
e. Need to acquire two more tugboats
1) Lambert wanted to raise additional equity capital
2) If you can’t get a loan?
a) Debt securities – some secured, some aren’t
b) Issue more stock
c) Could sell assets
3) Lambert suggested that they issue more shares of stock – would have to amend by-laws
f. §10.03 of MBCA – approval of amendment requires a majority vote – Apple opponents have a
majority
1) something that specifically changes business must be voted on by shareholders
2) Amending bylaws is one situations [10.01 says articles of incorp. can be changed, 10.03
tells you how to do it] 3) Proposed amendment must be adopted by board, then must be submitted to shareholders
for approval by majority – 10.03
4) §7.27 –AOI may provide for a greater quorum or voting requirement for shareholders
than is provided for in act
2. Bayer v. Beran