| Corporate Creditors |
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| Generally, directors do not owe a fiduciary duty to a corporate creditor when that creditor has contracted exclusively with the corporation. However, a director may owe a fiduciary duty to a corporate creditor to protect the corporate assets when the corporation becomes insolvent.
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| Regulation of "Penny Stock" Sales |
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| Rules issued by the Securities and Exchange Commission under the Securities Exchange Act of 1934 define and regulate "penny stocks." Penny stocks are defined in Rule 3a51-1 as unregistered stocks priced at less than five dollars issued by a company with net tangible assets of less than $2 million after being in operation for three years or less than $5 million after being in operation less than three years.More... |
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| Business & Corporate Entities> Corporations> Shareholders & Other Constituents> Shareholder Duties & Liabilities |
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| (Controlling Shareholder Duties)More... |
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| Benefits of a Nonprofit Corporation |
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| A "nonprofit" corporation may seem like a misnomer if activities of the corporation generate a profit. However, if the objective of the nonprofit corporation is not to make a profit but to achieve charitable, educational, religious, literary, or scientific goals, then those profits normally would not be subject to federal taxation. This feature of a nonprofit corporation has led to use of the term "501(c)(3) corporation" in recognition of the section of the Internal Revenue Code that provides for the exemption from taxation.More... |
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| Sarbanes-Oxley Act |
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The Sarbanes-Oxley Act of 2002 (Act) covers corporations and other business organizations that are required to register securities and file reports pursuant to federal securities laws. Under Section 307 of the Act, Congress directed the Securities and Exchange Commission (SEC) to issue rules that would establish minimum standards of professional conduct for attorneys who appear and practice before the SEC. Specifically, the SEC was instructed to develop and implement rules that required attorneys "to report evidence of a material violation of securities law or breach of a fiduciary duty or similar violation by the company or any agent thereof, to the chief legal counsel or the chief executive officer of the company (or the equivalent thereof)." Additionally, the SEC was instructed to devise reporting procedures. The SEC issued a proposed rule to govern attorney professional conduct and ultimately adopted this final rule (with certain changes), which went into effect in 2003. The rule is now part of the Code of Federal Regulations and has the force of federal law.
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