MCCCD Official Course Competencies:

LAS214  2008 Spring – 2009 Summer II

Law of Business Organizations

1.

Compare and contrast the utility and structure of each business entity. (I)

2.

Apply the governing law to evaluate the advantages and disadvantages in creating, operating, and dissolving a Sole Proprietorship. (II)

3.

Apply the governing law to evaluate the advantages and disadvantages in creating, operating, and dissolving a General Partnership. (III)

4.

Apply the governing law to evaluate the advantages and disadvantages in creating, operating, and dissolving a Limited Partnership. (IV)

5.

Apply the governing law to evaluate the advantages and disadvantages in creating, operating, and dissolving a Registered Limited Liability Partnership. (V)

6.

Apply the governing law to evaluate the advantages and disadvantages in creating, operating, and dissolving a Limited Liability Company. (VI)

7.

Prepare the necessary documents to complete the creation of a Limited Liability Company under Arizona law. (VI)

8.

Distinguish and assess the characteristics of the various types of corporations and their respective advantages and disadvantages. (VII)

9.

Summarize case studies and recommend the most applicable type of corporate entity. (VIII-X)

10.

Prepare the Articles of Incorporation, Bylaws, and requisite corporate filings for an Arizona corporation. (VIII-X)

11.

Formulate, detail, and prepare the appropriate filings to request 501(c)(3) status from the Internal Revenue Service. (VIII-X)

12.

Prepare the meeting minutes from a regular Board of Directors Meeting. (X-XI)

13.

Prepare a registration statement, SEC Form S-1. (XII)

14.

Prepare an Amendment to the Articles of Incorporation. (XIII)

MCCCD Official Course Outline:

LAS214  2008 Spring – 2009 Summer II

Law of Business Organizations

I. Introduction to Business Organizations

A. Types

1. Sole Proprietorships

2. General Partnerships

3. Limited Partnerships

4. Limited Liability Partnerships

5. Limited Liability Companies

6. Other unincorporated organizations

B. Selection Considerations

1. Ease of formation

2. Management

3. Liability and financial risk

4. Continuity of existence

C. Conducting Business and Agency Principles

1. Agency relationship

2. Authority of agents

3. Duty of agents

4. Liability of agent's torts

5. Agency termination

II. Sole Proprietorships

A. Characteristics

B. Governing law

C. Advantages

D. Disadvantages

1. Unlimited personal liability

2. Lack of continuity

3. Capital difficulties

4. Management difficulties

E. Formation

1. Licensing and name considerations

2. Business and sales tax permits

F. Taxation

G. Role of paralegal

III. General Partnerships

A. Characteristics

B. Governing law

C. Definition

D. Property

1. Partner contributions

2. Rights of partners

E. Advantages

F. Disadvantages

1. Unlimited personal liability

2. Lack of continuity formation

3. Difficulty in transferring partnership interest

G. Formation and operation

1. Duties and rights

2. Management

3. Compensation, profits, and accounting

H. Partnership Agreement components

1. Name of partnership

2. Names and addresses of partners

3. Recitals

4. Purpose

5. Address

6. Term

7. Financial provisions

8. Profits and losses

9. Management and control

10. Admission of new partners and withdrawal of partners

11. Dissolution

12. Miscellaneous provisions

13. Signatures and date

I. Transferability of partnership interest

J. Dissolution and winding up under the Uniform Partnership Act (UPA)

K. Taxation

L. Role of paralegal

IV. Limited Partnerships

A. Characteristics

B. Governing law

C. Definition

D. Partners' rights and duties

1. Limited Partner (LP)

2. General Partner (GP)

E. Advantages

1. Limited liability

2. Ease of transferability

3. Continuity of existence

4. Pass-through taxation

F. Disadvantages

1. Lack of control for LP

2. Unlimited liability for GP

3. Formalities and expense of organization

G. Formation

1. Contents of the Limited Partnership Certificate

2. Filing and amending the certificate

3. Limited Partnership agreement

H. Transferability of interest

I. Actions by LP

J. Dissolution and winding up of Limited Partnerships

K. Cancellation of Limited Partnership Certificate

L. Taxation

M. Family Limited Partnerships

N. Role of paralegal

V. Registered Limited Liability Partnerships (LLP)

A. Characteristics

B. Governing law

C. Advantages

D. Disadvantages

E. Formation and operation

F. Transferability of interest and admission of new members

G. Dissolution

H. Taxation

I. Role of paralegal

VI. Limited Liability Companies (LLC)

A. Characteristics

B. Governing law

C. Advantages

1. Pass-through tax status

2. Limited liability and full management

3. One-person LLC

D. Disadvantages

E. Formation

1. Articles of organization

2. Operating agreement

F. Transferability of interest

G. Actions by LLC members

H. Dissociation and dissolution of LLC

I. Taxation

J. Growth and trends of LLC

K. Professional Limited Liability Companies (PLLC)

L. Role of paralegal

VII. Introduction to Corporations

A. Characteristics

B. Governing law

C. Powers and purposes

D. Types

1. Domestic

2. Foreign

3. Federal or state corporations

4. Public corporations

5. Privately held corporations

6. Nonprofit corporations

7. Close corporations

8. Professional corporations

9. S corporations

10. Parent and subsidiary corporations

E. Advantages

F. Disadvantages

G. Role of paralegal

VIII. Formation of Corporations

A. Pre-incorporation activities by promoters

1. Duties of promoters

2. Agreements by promoters

3. Pre-incorporation share subscriptions

B. Selection of jurisdiction in which to incorporate

1. Delaware

2. Factors to consider

C. The corporate name

1. Selection, availability, and reservations

2. Registration

D. Articles of incorporation

1. Elements

2. Optional provisions

3. Filing

E. Post-incorporation activities

1. Bylaws

2. Organizational meetings

3. Annual report

F. Defects in incorporation process

G. Role of paralegal

IX. Corporate Finances

A. Introduction to securities

B. Equity securities

1. Par value and no par value stock

2. Consideration for shares

3. Stock certificates

4. Classes of stock

C. Debt securities

1. Unsecured debt

2. Secured debt trust indentures

3. Common features of debt securities

4. Junk bonds

5. Negative interest securities (e.g., SQUARZ-offered by Berkshire Hathaway Corporation)

D. Taxation of corporations

1. Double taxation

2. Accumulated earnings tax

3. Alternative minimum tax

4. State and other taxes

E. Role of paralegal

X. Corporate Management

A. Shareholders' rights and responsibilities

1. Rights to formation

2. Voting rights

3. Meetings

4. Action without a meeting

5. Modern trends

6. Preemptive rights

7. Dividends

8. Right to transfer shares and shareholder agreements

9. Actions

10. Piercing the corporate veil

B. Directors' rights and responsibilities

1. Number and qualifications

2. Functions

3. Election, term, vacancies, and removal

4. Meetings and actions without meetings

5. Compensation

6. Rights to information

7. Duties and liability

C. Corporate scandals, reform, and governance

1. Suspected causes for scandals

2. The fallout

3. Reform and the Sarbanes-Oxley Act

4. Governance guidelines

5. Governance trends

D. Rights and duties of officers

1. Qualifications, appointment, and tenure

2. Functions

3. Titles

4. Authority

5. Standard of conduct, liability, and indemnification

E. Role of paralegal

XI. Corporate Dividends

A. Restrictions

1. Solvency and excess assets test

2. Legally available funds

3. Distribution test

4. Contractual limitations

5. Preferences

6. Classes of shares

B. Effect of illegal dividends

C. Procedure of declaring and paying dividends

D. Right to dividends

E. Tax considerations

1. Cash dividends

2. Property dividends

3. Share dividends

4. Encouraging dividends

5. Avoiding double taxation

6. Modern trends in dividend payment

F. Stock splits

G. Purchase by a corporation of its own shares

H. Role of paralegal

XII. Securities Regulation and Stock Exchange

A. Introduction to investor protection

B. Going public

C. Securities Act of 1933

1. Registration requirements

2. Registration exemptions

3. Anti-Fraud provisions

4. Penalties for violations

D. Securities and Exchange Act of 1934

1. Registration requirements

2. Periodic reporting requirements

3. Insider trading: Rule 10b-5

4. Remedies and penalties for violation

5. Proxy regulations

E. EDGAR (Electronic Data Gathering Analysis and Retrieval)

F. State securities regulation

G. Securities markets

1. Trading on the NYSE (New York Stock Exchange)

2. Other trading systems

3. Understanding reports of stock trading

H. Stock market indexes

I. Role of paralegal

XIII. Corporate Structure Changes and Corporate Termination

A. Amending the articles of incorporation

1. Reasons for amending

2. Procedures for amending

3. Articles of amendment

B. Amending the Bylaws of a corporation

C. Dissolution

1. Voluntary

2. Involuntary

D. Liquidation

1. Nonjudicial

2. Judicial

3. Claims against corporation

E. Distribution of assets to shareholders

F. Directors' duties to minority shareholders

G. Corporate bankruptcy

H. Role of paralegal