Business Newsletters

Sarbanes-Oxley Act

Most states recognize that corporate directors and upper-level officers owe the corporation the duties of care, loyalty, and obedience. The duty to act in good faith has emerged in some jurisdictions as an equally important fiduciary duty imposed upon directors and officers. Historically, directors and officers were frequently exonerated of personal liability for business decisions because of courts' long-standing deference to the business decision under the business judgment rule or because the transaction was deemed fair to the corporation and its shareholders overall. In the wake of recent corporate scandals, however, officers and directors are under ever-increasing scrutiny by shareholders, the courts, state governments, and the federal government. Many corporate commentators bemoan the fact that conduct once protected under the business judgment rule may not be viewed with such deference in the future.

Formation and Operation of a Nonprofit Corporation

Nonprofit corporations are a useful tool for organizing for charitable, educational, religious, literary, or scientific purposes while reducing the risk of individual liability in accomplishing those goals. A nonprofit corporation is often referred to as a 501(c)(3) corporation due to the tax code provision under which most nonprofit corporations are considered exempt from federal taxation.

Initial Public Offerings and Lockup Agreements

A lockup agreement is a contract between an underwriter and a company going public in which the insiders of the company, including directors, officers, employees, and friends and family agree that they will not sell shares of the company they own until a set period of time after the company's shares are sold to the public. The objective of the lockup agreement is to provide a stable market for the securities for a reasonable time after the initial public offering.

Investment Manager Reports To Be Filed With the Securities and Exchange Commission

Institutional investment managers must report to the Securities and Exchange Commission on Form 13F those securities registered under Section 13(f) of the Securities Act of 1933 over which the investment managers exercise discretion.

DIRECTOR'S DUTY OF LOYALTY

AN OVERVIEW