Syllabus

BUSINESS ORGANIZATIONS (CORPORATE LAW)

LAW 459 003 Allard School of Law

University of British Columbia

Fall 2016:  Mondays & Wednesdays, 9:00 a.m. to 11:00 a.m. Room 104

4 Credits

Jon Festinger, Q.C.

Centre for Digital Media/Festinger Law & Strategy

Work: 604-568-9192 

Cell: 604-837-6426

E-mail:  jon@fblawstrategy.com;  jfestinger@telus.net

Twitter: @jonfestinger

PSN: cdmjon                                                 

Office: Allard 341

Office Hours: Mondays after class (by appointment).

 

These materials are based on materials largely developed by Leon Getz, Q.C. for “Business Associations” taught by Leon Getz Q.C. and Jon Festinger, Q.C. at the Faculty of Law, Thompson Rivers University during the winter semester of 2014. Jon Festinger, Q.C. as the “Course Author”, modified and elaborated on the materials for Law 508 “Business Organizations,” a distance education course for LLM students at the Faculty of Law, University of British Columbia.

 

COURSE INFORMATION/SYLLABUS                               

 

  1. COURSE DESCRIPTION AND PURPOSE

Greeting all. Welcome to Business Organizations. This is a survey course. You will be introduced to some of the more significant legal policies and provisions that apply to some of the forms through which business activity is carried on, such as proprietorships, partnerships and corporations of various kinds.

There are eight learning Units in the course meant to be progressed through in thirteen weeks. There is also a Review Unit.

As a starting point, would encourage you to navigate the course and  familiarize yourself with the online tools available to you to get a sense of the learning environment and where we are going.

Most of your time will be devoted to the corporate form principally because it has the greatest impact on our lives and brings into sharp relief the opportunities and costs of economic activity.  Moreover, it and the law surrounding it provide a useful counterpoint to partnerships and the law that governs them.

There are several pedagogically motivated devices that recur in the course. These include a focus throughout on the contrasts between the forms of companies, partnerships and proprietorships. This will be coupled with various attempts to highlight “ethical” issues including, but not limited to, the lawyer’s professional responsibilities and fiduciary duties.

There is a caution worth noting. This course might be among the first times a course on this subject has been organized for distance learning. This is both invigorating and challenging. With diligence and mutual support you should be able to achieve what we wish the goals of the course and work through and think through a subject that is very relevant to prevailing structural and economic paradigms of today’s world. Accordingly this course is in some ways an experiment and an adventure  – certainly for all of us involved in its creation. We hope that its iteration proves to be flexible and satisfying for you, perhaps even facilitating, encouraging and enriching your learning in some novel ways.

 

  1. COURSE OBJECTIVES

It is impossible in a course of this kind to cover all of the myriad issues that confront a business lawyer.  The most that can be hoped for is that by the time you have completed the course you will have a good understanding of some of the more important principles, policies and statutory provisions that frame the law governing the organization of business activity; the reasons for them; the extent to which they differ in their application to various forms of association and why.  Legislation is an important part of the governing law and so providing you some understanding of the interpretation of relevant statutes and their relationship to judicial decisions in the field is a clear aim.

While all of these are necessary skills for a good business (or indeed any) lawyer they are not the entire tool-kit.  A good lawyer must be able to communicate directly and in plain English, have a good ethical sense and be sensitive to the limits of her knowledge and experience.  It is hoped that your awareness of these matters will be heightened and that you will begin to apply that knowledge in informed ways.

The goal of the design of this course is to not render the subject to be a lengthy laundry list of unrelated, tedious and technical rules. There are key organizing principles – designed to provide solutions to a limited number of basic problems. The course is also intended to allow you to develop a set of intellectual tools that you can deploy to analyze almost any part of the subject. Paying particular attention to the underlying structural components of the subject should assist your ability to put details into context.

 

  1. LEARNING OUTCOMES

 

By the end of this course, students will:

  • Have developed an understanding of the core characteristics of company law and how they interrelate. Specifically these are the corporate law principles, policies and statutory provisions dealing with: 1. Separate legal personality of companies; 2. Limited liability of shareholders; 3. Centralized management; 4. Principle of shareholder control; 5. Fiduciary responsibilities; 6. Transferability of shares in the market/privately; and 7. Profit seeking as a required corporate motive.
  • Have developed an understanding of how, why and to what extent corporate law principles, policies and statutory provisions differ in how they apply to various corporate business forms (mainly companies, partnerships and sole proprietorship).
  • Have developed an appreciation of the role and interpretation of relevant statutes and their relationship to judicial decisions in the area.
  • Develop an ability to communicate directly and in plain English on corporate law subjects.
  • Develop an ability to reflect on the frequent ethical conundrums that are endemic to many corporate law issues. Specifically, appreciating how the seven subjects noted above (1. Separate legal personality of companies; 2. Limited liability of shareholders; 3. Centralized management; 4. Principle of shareholder control; 5. Fiduciary responsibilities; 6. Transferability of shares in the market/privately; and 7. Profit seeking as a required corporate motive) are as often the underlying cause of ethical conundrums will help the student in framing arguments for legal positions.
  • Analyze critically and through an ethical lens the rights and responsibilities of the legal actors in the corporate drama, including management, directors, shareholders, government, legal advisors and the courts. The reality is that most corporate litigation seems amoral, very often (but not always) pitting a wealthy investors or company against another one.

 

  1. COURSE MATERIALS

Required Text

Welling, Smith and Rotman, Canadian Corporate Law: Cases, Notes and Materials, 4th ed., 2010, LexisNexis, Canada. (the “Casebook”).

 

A cautionary note about the text (Welling, Smith and Rotman)

The Casebook (Welling, Smith and Rotman, Canadian Corporate Law: Cases, Notes and Materials, 4th ed., 2010, LexisNexis, Canada) contains an excellent collection of important and useful cases and materials.  For the purposes of this course, however, it suffers from the limitation that most of the statutory references are to either the Canada Business Corporations Act or the Ontario Business Corporations Act.  Accordingly it will be necessary from time to time refer to relevant provisions of the British Columbia Business Corporations Act.

Aside from this limitation, there are differences as to the emphasis given to certain aspects of the subject; and to some extent, as to how the materials are best organized.  The Syllabus reflects this change of emphasis.  This may sometimes mean that you will have to consider together seemingly unrelated materials gathered from different parts of the Casebook.  Attempts will of course be made to try and guide you through this.

 

 

Statutes

Canada Business Corporations Act, R.S.C. 1985, c.C‐44, as amended and Regulations – available on line at http://laws-lois.justice.gc.ca/eng/acts/c-44/fulltext.html (“CBCA”)

B.C. Business Corporations Act, S.B.C. 2002, c.57, as amended (available on line at http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/02057_00 (“BCBCA”). The BCBCA comprises more than 500 sections and 225 pages; an extensive body of common law

B.C. Partnership Act, R.S.B.C. 1996, as amended – available on line at http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_96348_01 (“BCPA”)

B.C. Securities Act, R.S.B.C. 1996 – available on line at http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_96418_01  (“BCSA”)

 

Other

Copies will be made available of:

  1. The Certificate of Incorporation, Articles of Incorporation and Bylaws of Federal Instruction Company, incorporated under the CBCA; and
  2. The form of Incorporation Agreement and Articles under the BCBCA.

From time to time the materials to be found in the Casebook will be supplemented with other materials that are helpful or important.

 

  1. TEACHING METHOD

Lecture, discussion, blogging, exercises & question and answer will all be used.

You will see from the Syllabus that the course is divided into Units. Each Unit is identified as relating to one or two weeks of work. The materials for each week will appear in a narrative format, but will with some frequency refer you to the text, or to a link to news or other materials.

 

     6. METHOD OF EVALUATION

There will be a final 3-hour open-book examination worth 50%. Participation including attendance, class activities, blogging etc. will be worth 30%. There will be a drafting assignment worth 10% where you will be asked to write a short memorandum identifying legal issues on a set of facts as if you were an associate in law firm. There will also be a written assignment asking you to analyze a legal issue through an ethical lens, also worth 10%.

 

7. COURSE Outline/UNITS

 

UNIT 1 (Week 1): Introducing Business Organizations & Their Real World Contexts

Corporate law exists not only within legal and juridical contexts, but also within political and social ones. Prof. Joel Bakan’s seminal film the corporation explores those nexus points. As part of this Unit you should also begin familiarizing yourself with the course materials and syllabus generally.

UNIT 2 (Week 2): The Basic Concepts Of Business Organizations

You will be introduced to some of the themes that recur throughout the course. These themes should constitute helpful reference points as you go through the materials.

UNIT 3 (WEEK 3): Partnerships

In this unit some of the principal legal characteristics of the partnership as a business form will be reviewed. This will lead to highlighting some of the key differences, from a legal and a practical point of view, between partnerships and corporations.

UNIT 4 (WEEK 4 & 5): Corporate Personhood – Some Issues And Problems

This unit will be devoted to exploring some of the limitations and conundrums, both legal and practical, which arise out of the assignment of “personhood” to the corporation and how does the law deal with them.

UNIT 5 (weeks 6 & 7): Corporate Obligations

In this section of the course we consider the parameters by which corporations become obligated or incur liability (criminally or civilly), given that they are not “flesh and blood” but have the rights of “an individual of full capacity”. The first assignment will be due at the end of this Unit.

UNIT 6 (week 8 & 9): The Legal Architecture of Business Governance

In this unit the general structure of the board/ management-shareholder relationship and, in particular, how and to what extent management is subject to the direction of, and accountable to, the shareholders will be considered. These issues involve investigations of the nature of the corporate constitution and the internal architecture contemplated as the norm by corporate law. The extent to which, by contract or otherwise, that architecture may be modified will also be considered.

The student will also go into some detail about corporate directors, their qualifications, disqualifications, election and removal and their compensation; and the “principle” of “majority rule” as well as its limits.

UNIT 7 (WEEKS 10 & 11): The (Fiduciary) Obligations of Corporate Management

In this unit the legal and fiduciary obligations of management and directors; the scope of those obligations and to whom they are owed; and the constraints and limitations on those powers shall be examined. The second assignment will be due at the end of this Unit.

UNIT 8 (WEEKS 12 & 13): Majority Power & Protecting Minority Interests

In this unit the variety of statutory provisions enacted with a view to protecting minority interests will be examined.  There will be reference to some contractual arrangements that might be adopted towards this end. You will also consider the role of government and the securities regulatory authorities.