For insider trading, if an individual eavesdropps and hears info and trades on it, is anyone liable? No Liability. For the misappropriation theory, 1. Who are the parties? And 2. Does a family relationship create fiduciary duty? SEC sues. Family relationship is not important for this analysis, itself does not create insider. For Breach of Loyalty – Decision to defend, can the BOD of the acquiring company sue (does the BOD of the target company owe a duty of loyalty to the BOD of acquiring company?) For Breach of Loyalty – Duty to Auction, what triggers this duty? What if there are competing tender offers from two widely dispersed companies? 2 companies coming together widely dispersed and the other with one shareholder. Does BJR attach to any breaches of loyalty. It attaches at the end, at the end of the other 4. Dir and Officer insurance, what does it cover or not cover? Covers Due Care only. For piercing the veil, we have lack of capital, and lack of formalities, what do we need to know about fraud? Nothing. For § 5 COA, do we need to know any exceptions (4.2)? No. When suing to compel dividends in a closely held corp., who are the parties? Does it matter if the corp. is statutory or not? Minority v. BOD When we have an invalid stockholder action (bad meeting or whatever), who are the parties? When shareholders are voting by written consent, I am under the impression to look out that the actions does not cause substantial harm to another class, is this a factor when voting by stockholder meeting as well? Is it a requirement when directors are voting? Factor for any stockholder actions, not for director actions, but that is a general duty of loyalty. Who are the parties for an improper amendment of the articles? Who are the parties in a transfer restriction COA? Does the restriction have to be listed in the AOI? What is the notice requirement? The corp is suing the transferee. Don’t bring up AOI. Who are the parties for invalid Director actions or Invalid Officer actions? Can an officer be sued for Loyalty – Self Dealing?
What do we need to know about creating and filling vacancies? Is there a cause of action? Gearing situation, directors can fill vacancies on the board but still have to follow regular procedures, the only requirement that may be waived is quorum, and all they can do there is fill the vacancy. Can you explain the essential link test? 1 million share, 750 vote to pass something. Who can sue? If any minority vote is needed then that will do it. Can an individual board member be sued for breach of due care? Ex. One board member tells interested party that company not for sale. What is a parent/sub cash out merger? The parent is the majority stockholder of the sub, who is merging with who? For poison, do we need to know what happens at 10%? Tipper – Tippee if psychiatrist. If tippee does not trade then the tippee is not liable, but the tipper is. If not enough to make quorum, majority directors need to show up, and then a majority of those who show up vote will put people on the board. On a self-tender, look for invalid repurchase.