Professional Documents
Culture Documents
Theories of Ethics
Ethical Fundamentalism look outside for right/rule indications
Utilitarian choice to do greatest good
Kantian moral duties based on universal rules
Rawls Theory of Social Justice contract binds all of us to live in peace and harmony
Ethical Relativism each situation is differ; moral
Choice will differ
Sometimes called situational ethics
- Lot of ethical problems in law
- There needs to be trust
Worldwide Widget (our created business)
Forms of Businesses
1. Sole proprietorship simple, least cost, most convenient business form
One owner + no legal entity
People commonly start businesses as this
They are entitled to all the profits of the business and all the risk/liability
(there is no difference between business and personal assets)
Taxed once on personal form
No additional govt reporting or registration (because it is not a legal
entity
Easily transferred
Protected with insurance
**most convenient and least cost to establish
2. General partnership 1. one or more partners join to share all liability and all profit
2. Agreements which specify how profits and losses will be shared /
allocated
Partners are entitled to no salary
3. To carry out a business
4. To make profit
Own Names or D/B/A (doing business as)
Worldwide widgets give notice in order to operate in that name because people need to know who to
go after if something goes wrong
Rights:
1) Indemnification reimbursement of expenses connected with business (reasonable
incurred, in proper course of business)
2) Loan repayment
3) Information
4) Accounting go to court to ask judge to review book and records to divide profits and
liabilities
5) Return of Capital
Duties (3 principle duties):
*Process
1. Choose a state (diff. states have different law for corporation)
2. Name
3. Incorporators (the parents)
4. Articles of Incorporation (document that says name, incorporators, place), it can be amended if
needed
5. Registered Agent receive all legal documents given to the corporation, so the company has
someone to accept the complaint
6. Establish bylaws governing document of corporation (ex. Establish board of directors, how
many times they need to meet, how many shares would be issued)
7. Corporate Seal some signature or mark that the corporation designate to show it actions
-
All corporations go through this process of birth and further processes if necessary
Example: non-profits also have to register with someone else after the birthing process
*Ultra vires Action when a corporation acts outside of the boundaries it has established for itself
Owners or Atty general can sue for injunction, they can also sue Board of D
Atty general can seek to dissolve
How do corporations finance their operations?
Financing
Equity
1. Stock issuance
Common stock: residual value of corporation after liabilities
Preferred: - participation in management
- dividend right
- liquidation preferences
- conversion to common stock
2. Issued: sold
Authorized: capable of being sold by by-laws
Outstanding: traded in market
Treasury: repurchased by corporation
Corporation Dissolution
1. Voluntary by filing articles of dissolution
2. Administratively: state will dissolve corporation for failures to meet obligations to it
3. Judicially: action of attny general seeking end to corporations for fraud of ultra vires act
-
something they dont have laws for already and the B o D gets together and votes on it based on other
laws)
2. Implied authority takes acts to execute express authority ex, take check and make investment
Agent person who acts on behalf of corporation
Agency fiduciary (trust) relationship which results from
1. Manifestation on evidence of authority +consent
2. One person will act for another
3. On his/her/ its behalf
4. Under that persons (corporation) consent + control
*Agency relationship requires 2 parts
1. Principle one who directs and controls
2. Agent agrees to represent and act for principle
Board of directors elected by shareholders to manage, control, supervise, make policy for corporation
Inside directors employee of company
Outside directors (independent) not employed, but can receive compensation
-
Officers people specify bylaws, can or cannot sit on the board, responsible for day-to-day operations
- They can be director of board, an employee or not
- Or it can be outside lawyer
You have independent directors because inside directors might make decisions to benefit their salary
Director Duties
1. Obedience: act within authority
2. Care: a) good faith b) ordinary prudent person c) reasonably they are acting in Corps. best interest
3. Loyalty: directors have to act honestly and put corporations interest above their own
No self-dealing, no usurpation of corps opportunities, no secret profits, compete with corporation
What happened when things go wrong? Jail time
Some laws that were tightened due to tyco, enod, etc
New Law
*Sarbanes Oxley (2002)
CEO/CFO have to certify that financial statement contain no untrue statements of material facts
CEO/ CFO required to reimbursement of company ad bonuses
Prohibits personal loans by corporations
Penalties for evidence tampering
Could be barred as director or officer for time or always
Companies are required to have code of conduct or tell why they dont have one
Audit committee of directors
Piercing the corporate veil: shareholder dominating corporation can be subject to liability if acting outside of the
lines of using corporation to further personal interests
Workers Compensation creates administrative procedure injured workers on the job to be compensated for
injury exclusive remedy for injury
OSHA promotes workplace safety, specific + general regulations
FLSA 1. Forbids child and oppressive labor
2. Establishes minimum wage
3. Established overtime wages, for non-exempt workers
Nonexempt: hourly worker
Exempt worker: 50 or more employees work more than 1 year, the have control over how the work is
delivered (2+3 does not apply because it is at a professional level)
FMLA guarantees time off (unpaid) for family and medical emergencies (birth, adoption, foster placements,
self-health, immediate family health)
COBRA right for employees to continue their health insurance benefits at the employers cost if terminated
or quit (18 months)
Unemployment compensation terminated from job, you are entitled to pay
*employment at will* - you can be fired at any time or any reason/ no reason at all