1. CHAPTER 31: FINANCIAL AND OPERATIONAL FEATURES OF CORPORATIONS

2. Learning Objectives: Financial Features Operational Features:  Shareholders  Directors  Liability of Officers and Directors Chapter 312 CHAPTER 31: FINANCIAL AND OPERATIONAL FEATURES OF CORPORATIONS

3. 1.Introduction a.Role of Bonds: Debtor/Creditor Relationship b.Role of Stocks: Equity Relationship c.Types of Stock: i.Common ii.Preferred d.Par vs. No-Par Stock e.Treasury Stock Chapter 313 FINANCIAL FEATURES

4. 2.Stock Subscriptions: pre- incorporation agreement to purchase shares. 3.Right to Transfer Stock: a.Generally: free transferability b.Close Corporation: restrictions are proper. 4.Mechanics of Transfer Chapter 314 FINANCIAL FEATURES

5. 1.Rights of Shareholders a.To Inspect Records b.To Participate in Meetings c.To Vote d.Preemptive Rights 2.Derivative Suits a.Nature b.Proper Use Chapter 315 SHAREHOLDERS

6. 3.Right to Dividends a.General Rule: Unfettered right of directors to declare a dividend b.Exceptions 4.Fiduciary Aspects: Within a Closely-Held Corporation a.Duty of Majority to Minority b.Rationale Chapter 316 SHAREHOLDERS

7. 1.Powers 2.Meetings 3.Compensation Chapter 317 DIRECTORS

8. 1.Generally a.Liability to Third Persons b.Directors and Officers are Fiduciaries of the Corporation 2.Business Judgment Rule a.Nature of the Rule b.Application c.Situations Where the Rule Does Not Apply Chapter 318 LIABILITY OF OFFICERS AND DIRECTORS

9. 3.Duty of Loyalty a.Generally b.The Corporate Opportunity Doctrine 4.Duty of Care a.Obligation of Directors b.Immunity of Directors 5.Indemnification and Insurance Chapter 319 LIABILITY OF OFFICERS AND DIRECTORS

10. CHAPTER 31: FINANCIAL AND OPERATIONAL FEATURES OF CORPORATIONS