biz orgeey

1. Reasonable investigation, reliance, honest error

1. applies to all corps 2, duty to disclose, timing is key, 3,

S5 registration statement, 2. no misleading statements, applies to underwriter and issuer, 3. no misrep of material facts.

a person is liable for the use of intrastate commerce or mail to 1. defraud,2, make untrue material stemements or omit material , 3 engage in a fraud or deciat upon any person

offerings less than 1 million in any 1 year period

offering up to 35 persons and total offering doesnt exceed up to 5 million in any 1 year period. does not include investors.

up to 35 sophisticated investors offerings with no dollar limitation

1. Accredited investors excluded under 504, 505, 506

with knowledge to evaluate risks of such an investment

applies to specific transaction all investors are purely local, business must reside 80 percent of reve used in state, office in state, all resale must rest in the state

direct is brought by shareholder remedy goes to shareholder, derivative is by director or shoareholder on behalf of corporation again a direcortor or board for breach of duty.

Defense against breach of duty

Does not apply to interested or self dealing transactions unless the decision is made by directors whor are disintereested after full and complete disclosure, if all directors are interested, the board can appoint a committee to go to shareholders.

First shareholder must make a demand to board to investigate or to refuse. If directors are interested suit can be filed or they can appoint a disinterested committee to investigate.

only SEC can go after

1. 120 days filed to any meeting
2. no misreprensations of material fact.
TWO CAUSES of Action

intent to deceive
material information
purchase or sell

If its private offering dont have to file s1 form

1 reasonable investigation
2. waste
3. recklessness
4. Insider Trading

1. Non Compete
2. Full and complete disclosure
3. Self dealing
4. Unsurping Corporate opportunithy
5. Insider trading

1. Bad Faith
2. Fraud
3. Reasonable care
4. Prudence
5. insider trading

1. Insulates directors from biz decisions
2. Does not apply to interested or self dealing unless ratified by disinterested board and full and complete disclosure, or independent committee or shareholder ratification.

defense to breach of duty of care, loyalty, and good faith.
2. APprove or ratify action after fact
3. Way to dismiss derivative action.

1. Someone who has personal stake in transaction

1. must make written demand wait 90 days for board to answer and investigate
2. Decision to bring or not bring action wil lbe protected by biz judgement rule.

1. If court believes transaction is fair it will be set aside.
2. If involves fraud or waste will be set aside.
3. If court not sure tranasaction must be approved by a disinterested board after full and complete disclosure

1. First establish 10b5
2. Tipper liable only if breach of fid to company. Must receive personal benefit.

1. If tipper has breached fid duty by disclosing information to tippee and 2 tippee knows or show know of breach

Reliance or nonhabitual absence from meeting.
2. age, experience, industry are cconsidered establlish reasonable standard.
3. Unanimous shareholder ratification

1. Opportunity discoverd while working for corporation
2. Opportunity is in same or competing business
3. Corporation has an interest in opportunity.

1. Disclosure to corp
2. Corp cant affot to take advantage of opportunity
3. Opportunity is beyond scope of coprorate powers.

10b5 relies on breach ofa fidcuary duty of an insider tipper. Duty to diclose, correct, and refrain.

10b5 that deals with a breach of duty towards the source (think news reporter)

any trade related to a tender offer where confidential information was used. No need to prove breach of duty for personal benefit.

officers must certify the report no omissions or material misrperesentations
2. Create audit comitte independent from co management to oversee audit process. Will be delisted if refuse to comply.

1. Nonwaivable right of shareholder to inspect records
2. Can limit definition of corp records
3. Requires written requestn and reasonable
4. During business horus

liable to defraud 2. make untrue statements or omit material facts or 3. engage in any practice whic operates as a fraud or deceit on any person.
4. Materiality is based on the reasonable person standard.

1. recisission contract
2. recission damages
3. Out of pocket damages
4. Cover or conversion

1 delist, 2. require ammended S13. impose fines

1fair dealing and
2fair price.