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Chapter 26&27.docx

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York University
Administrative Studies
ADMS 1010
Eytan Lasry

Chapter 26 & 27 Lecture  Fduciary duty - Shareholders take priority to bondholders.  Conflict of interest – even in perceived conflict of interest – should resign.  Proxy Battle is good news for CP shareholders. o BOD seeks proxies, authorization to represent shareholders. o Proxy battle – shareholder does not agree with BOD. o Acme soliciting proxies on its own behalf.  Proxy battle – Telus o Posing to have non-voting shares exchanged for voting shares. o Reconsitute shareholders. Corporate Law  Rights and Duties Directors and Officers have  How those people are put in place  Rights that Shareholders have  Types of Recourse  Insider Trading  Securities law in public markets The Structure of the Modern Busines Corporation  BOD- oversee management of the corporation. o Ontario Business Corporations Act = CBCA o USA is used to take powers away from directors to shareholders.  Shareholders are liable to directors would if that capacity. o Affairs = internal corporation matters. o Business = external matters.  Shareholders – own the corporation. o May compete with the corporate.  Offering corporation = public corporation o 2/3 – independent directors – the securities law requires that the audit/compensation committee should be independent. o Shareholders are sometimes directors. o Sub-groups may be set up in large corporations (e.g. audit committee).  BOD’s Roles o Issue shares of the corporation at reasonable price, for proper business practice. Cannot issue shares to shareholders to change voting power. o BOD disclares dividends o Adopts by-laws; eg creating new officer positions. o Call shareholder’s meetings – more frequently if shareholders need to approve something.  Casual vacancy o Quorum o In case the BOD die, Directors must call special shareholders meeting to elect new BOD.  Fiduciary duty o Majority, minority and future shareholders. o Community (eg environmental, emplyoees, ㄷㅅㅊ.)  BOD’s Personal Liability (strict liability) o Shares are bought back. o Dividend makes corporation insolvent – BOD owed to 6 months of employee’s back wages. o You may seek indemmification secure by an asset or parent company before going insolvent. o Failure to remit income tax when the corporation goes insolvent.  Fiduciary Duties o Obligation to act in the best interest of the corporation. o Fundamentally avoiding conflict of interest.  Court – not complying with conflict of interest. o Disinterested directors can recind the contract. o Affirming the contract. o Damages can be payable. o Injunction can be ordered. Insider Trading  Laws that prevnet insider from obtaining information and disclosing it to others.  Designed to create a level field.  Insider is responsible for losses when the announcement have been made to other shareholders.  Shareholders accountable – acting consultant for the company, finds out something has happened, increased share value – he/she should be paid in shares in cash. Share value skyrockets – engaged in insider trading.  The first tipee is liable.  Public corporation – upto 10 years of imprisonment and/or $5 million fine or 3x profit made, whichever is greater. o Must file
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