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CORPORATE LAW

LAW 5210 D

Western University Faculty of Law


2017-2018

Winter Term Course

Tuesdays: 8:30 a.m.-10:50 a.m.

Thursdays: 8:30 a.m.- 10:20 a.m.

Attendance and Participation:

Students should note the following extract from the University of Western Ontario Academic
Calendar 2017 (Faculty of Law, Attendance)1:

“…Failure to attend classes, seminars, appointments or examinations without good cause


constitutes a ground for exclusion from the Faculty.

The right to sit for examinations or to submit work for evaluation is conditional upon regular
class attendance and participation in required exercises. An instructor, with the approval of
the Associate Dean (Academic), may refuse to evaluate all or part of a student's work where
attendance has not been regular.”

Course Description:

This introductory, survey course principally explores the law of the business corporation primarily
from a doctrinal perspective, but with some elementary discussion of theoretical scholarship as well.
The topics to be canvassed in the course will include a brief history of the business corporation,
theories of the firm, competitive federalism in U.S. corporate law and the “Delaware phenomenon”,
the foundational characteristics of the modern Canadian business corporation, promoters and pre-
incorporation contracts, corporate contracting authority, disregard of the corporate entity, criminal
and tortious liability of corporations, corporate governance—shareholder “voice” and directors’ and
officers’ duties—corporate finance, private corporations, and shareholders’ (and others’) remedies.
The course may also consider use of the not-for-profit corporation.

During the introductory portion of the course, students will briefly examine alternatives to the
corporate form of business organization, including sole proprietorship, (general) partnership, and
limited partnership, as well as limited liability partnerships (LLP), the unlimited (liability) company
(ULC), and the U.S. organizational form, the limited liability company (LLC).

Objective of the Course:

This is an introductory or survey course intended to introduce students to a broad range of legal
issues relating to Canadian business organizations. The goal of the course is to help students develop
a basic framework within which to understand and analyze corporate law issues as they are
encountered by lawyers, regulators, and policy makers. The course also provides necessary
groundwork for specialized study in courses such as corporate finance, securities regulation, etc.

1 Available online at http://www.westerncalendar.uwo.ca/2017/pg494.html.


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Learning Outcomes:

After successfully completing this course, a student will:

• Understand the basic principles of Canadian corporate law

• Have a basic understanding of theories of the firm

• Have a basic knowledge and understanding of partnership law, including an understanding


of the distinction between forms of partnership including general partnerships, limited
partnerships, and limited liability partnerships, and the key distinctions, from the perspective
of people wishing to carry on business in Canada, between partnership, sole proprietorship,
the corporation and certain other hybrid forms of business organization

• Be familiar with many elements of the Canada Business Corporations Act and Ontario’s Business
Corporations Act and judicial interpretations of key provisions of those statutes

• Be familiar with issues relating to fiduciary obligations in the corporate context, including
various issues relating to corporate governance

• Have a basic understanding of remedies available under corporate law for shareholders and
other corporate “stakeholders”

Plagiarism:

Students should note carefully the following warnings concerning plagiarism, which are included here
in accordance with University Senate Regulations:

“Scholastic offences are taken seriously and students are directed to read the appropriate policy,
specifically, the definition of what constitutes a Scholastic Offence, at the following Web site:
http://www.uwo.ca/univsec/handbook/appeals/scholastic_discipline_undergrad.pdf.”

“All required papers may be subject to submission for textual similarity review to the commercial
plagiarism detection software under license to the University for the detection of plagiarism. All
papers submitted for such checking will be included as source documents in the reference database
for the purpose of detecting plagiarism of papers subsequently submitted to the system. Use of the
service is subject to the licensing agreement, currently between The University of Western Ontario
and Turnitin.com ( http://www.turnitin.com).”2

Mental Health Services:

“Students who are in emotional/mental distress should refer to Mental Health@Western


http://www.uwo.ca/uwocom/mentalhealth/for a complete list of options about how to obtain help.
Mysty Clapton, Assistant Dean (Student Services) is available to help students identify resources that
may be of assistance to them.”

2 Western University Academic Handbook, Examinations, Course Outlines, s. 6.


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Evaluation Options:
A student’s final grade in the course will be determined in accordance with one of the following three
evaluation options:

Option 1: Exam only. Students selecting this option will be evaluated through a final examination
worth 100% of your grade. All assigned readings (noted in the Class and Reading Assignment
Schedule below) and all material (including all relevant provisions of statutes and regulations)
discussed or mentioned in the lectures will be considered examinable unless the instructor indicates
otherwise. The instructor may add material to the required reading list orally or in writing (any such
additions will be noted in class). Any material designated as “optional” will not be examinable, but
may be useful in rounding out your understanding of examinable material.

Option 2: Exam plus three reflection papers. Students selecting this option will be evaluated
through a final exam (worth 70% of their final grade) and three “reflection papers” (each worth 10%
of their final grade). The final exam will be the same exam described in Option 1, above, but will be
worth only 70% of the final grade for students selecting Option 2. Each reflection paper should be 7
– 10 pages in length (double spaced, 12 point font) and each must relate to a different lecture in the
course. Reflection papers may focus on the cases or articles referred to in the lectures, or theoretical
or policy issues relating to corporate law. All three reflection papers are due in hardcopy in the Law
School Administration Office on April 13th, and will be graded during the exam period. **Note that
any student submitting fewer than three reflection papers will be deemed not to have
selected Option 2.** Grades for reflection papers will be based on persuasiveness, quality of
writing, and (most importantly) demonstrated understanding of the material covered in the relevant
lectures & readings.

Option 3: Exam plus major essay. Students selecting this option will be evaluated through a final
exam (worth 70% of their final grade) and one major essay (worth 30% of their final grade). The final
exam will be the same exam described in Option 1, above, but will be worth only 70% of the final
grade for students selecting Option 3. The major essay will be a traditional academic paper on a topic
agreed upon by the student and the instructor. While there is no set length requirement for this
paper, the paper must demonstrate mastery of the chosen topic and constitute a useful and original
contribution to the relevant field. Papers will typically be 25 – 30 double-spaced (12 point font) pages
in length, and will deal with appropriate primary and secondary sources. Grades for major papers will
be based on persuasiveness, quality of writing, and (most importantly) demonstrated understanding
of the chosen topic. The major essay is due in hardcopy in the Law School Administration Office on
April 13th and will be graded during the exam period.

Notes on evaluation options:

• Students must select one of the three options described above – students may not cobble
together a hybrid option based on any combination of the foregoing (for example, students
may not write three reflection papers plus a major essay). In the event that a student does
submit a major essay and one or more reflection papers, that student will be deemed to have
selected option 3 and the reflection papers will not be marked. In the event that a student
submits fewer than three reflection papers (and does not submit a major essay), that student
will be deemed to have selected option 1 and no reflection papers submitted will be marked.

• Subject to the paragraph above, students “select” an evaluation option by submitting the
relevant work: there is no need to announce your chosen option in advance.

• Neither option 2 nor option 3 constitutes a “no downside risk” option. If you select (or are
CORPORATE LAW-NICHOLLS-WINTER 2018 Page |4

deemed to have selected) option 2 or 3, work submitted in pursuit of that option will count
toward your final grade, even if your grade on the final exam is higher than your grade on
the other work you submit.

• All work must be submitted anonymously, using the Winter Term marking numbers
provided by student services.

Academic Policies and Procedures:

Course grades in this, as in all Western Law courses, are subject to the Faculty of Law’s Academic
Policies and Procedures3, which includes “Grading Rules” that provide, among other things:

The class average in an upper-year course of more than 25 students and in all first-year courses must be
between 74.0 – 76.0. Grades in the “F” range will be excluded from the calculation of class averages. These
grading rules do not apply to independent research projects, supplemental writing credits or to the courses
in which students participate in external advocacy competitions.

Course Materials:

Required:

1. Poonam Puri, et al., Cases, Materials and Notes on Partnerships and Canadian Business
Corporations, 6th ed. (Carswell, 2016) (“Casebook”).

2. Consolidated Canada Business Corporations Act, 37th ed. (Toronto: Carswell, 2017) ("CBCA”).

3. Consolidated Ontario Business Corporations Act, 40th ed. (Toronto: Carswell, 2017) (“OBCA”).

Suggested:

1. Christopher C. Nicholls, Corporate Law (Toronto: Emond Montgomery Publications


Limited, 2005) (“Text”).

Tentative Class and Reading Assignment Schedule

[The following page provides a tentative class and assignment schedule only. IT MAY BE NECESSARY TO
AMEND, SUPPLEMENT OR OTHERWISE REVISE THIS TENTATIVE SCHEDULE
IN WHOLE OR IN PART, as the term progresses. If this occurs, I will inform you orally, in class of any
such amendments or revisions. If a student must be absent from class, it is that student's responsibility to determine if
any changes to the schedule have been announced.]

Note: IN ADDITION TO THE READINGS SPECIFIED IN THE FOLLOWING


SCHEDULE, students are ALSO responsible for (a) any additional supplementary updates
that may be distributed; and (b) learning the relevant provisions of the CBCA and the OBCA
(i) referred to in any of the assigned readings; or (ii) referred to in class—whether or not
mentioned in any of the reading assignments. ***Please note: All material discussed in class
and ALL ASSIGNED READINGS—including all statutory material—WHETHER
SPECIFICALLY DISCUSSED IN CLASS OR NOT are examinable.***

3 Online at https://law.uwo.ca/current_students/student_services/academic_policies_and_procedures.html#evaluation.
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Date Title of Lecture Assigned Reading (***in addition to all


relevant provisions of the CBCA and OBCA***)
January 30 -Introduction to Course Casebook: pp 1-4; Material on OWL: Teaching Note #1
-The Decision Tree: Choosing a form of Business Enterprise
February 1 “Will You be My Partner?” Reflections on the Law of Casebook: pp. 4-43; Material on OWL: Spire Freezers v. Canada
Partnership Ontario Partnerships Act
February 6 -Hybrids and High Flyers: Joint Ventures, LPs, LLPs, LLCs, Casebook: pp. 43-56
ULCs Ontario Limited Partnerships Act
-A Brief History of Corporate Law Text: pp. 1-37
February 8 Birth of a Corporation; Non-Profit corporations Casebook: pp. 167-185; Materials on OWL: Canada Not-for-Profit
Corporations Act [for reference purposes]
Text: pp. 39-57
February 13 The Wisdom of Salomon: The Corporate Entity and Limited Casebook: pp. 68-69; 73-80; 81-90
Liability Text: pp. 62-82
February 15
Class Cancelled
February 19-23
Study Week: Classes Cancelled
February 27 The Veil Threat: Disregarding the Corporate Entity; Casebook: pp. 102-118; 123-131;147-151; 699-716; 722-741;
“Private Corporations” and the Unanimous Shareholder Material on OWL: Shoppers Drug Mart v. 6470360 Canada Inc.;
Agreement Yaiguaje v. Chevron Corporation
Text: pp. 91-121; 185-214
March 1 “No Soul to Damn”: Corporate Criminal and Tort Liability; Casebook: pp.152-161;
Tort Liability of Directors Text: pp. 215-229
March 6 Corporate Contracting: Casebook: pp. 186-204; 246-253
- The Vexing Case of Pre-incorporation Contracts Text: pp. 130-184
- Indoor Management and What’s Left of Ultra Vires?
March 8 Introduction to Corporate Finance (I): Casebook: pp. 676-679; Material on OWL: Financial Statements
-Basic Financial Statements Text: pp. 343-349
-Capitalization of the Corporation
March 13 Introduction to Corporate Finance (II) Casebook: pp.579-602; 674-676
-Nature of a Share Text: pp. 349-80; 382-385
-“Common” and “Preferred” Shares
-Debt
March 15 Corporate Governance (I): Governance Structure and Casebook: pp. 205-221
Principles; Role and Requirements of Directors Text: pp. 235-43; 248-56; 311-12
March 20 Corporate Governance (II): “Voice, Exit and Monitors” : Casebook: pp. 585-592; 607-625; 629-634; 637-655
Shareholder Voting, Shareholder Meetings; Shareholder Text: pp. 259-270
Proposals
March 22 Directors’ and Officers’ Duties (I): Duty of Care, Diligence Casebook: pp. 291-307; 322-325
and Skill Text: pp. 286-307
March 27 Directors’ and Officers’ Duties (II): Duty of Care, Diligence Casebook: pp. 325-354
and Skill; the “Business Judgment Rule”
March 29 Directors’ and Officers’ Duties (III): Fiduciary Duty--Duty
Casebook: pp. 253-257; 259-266; 274-278; 285-289; 421-429
to act honestly and in good faith with a view to the Material on OWL: UK Government Response to Corporate
“best interests of the corporation” Governance Green Paper (Aug. 2017); Canadian Ombudsman for
Responsible Enterprise Announcement (Jan. 2018); Bill C-25
April 3 Special Class: Annual Business and Law Lecture: Prof Oliver Hart, Co-Recipient, 2016 Nobel Prize in
Economics (Time to be Announced)
April 5 Directors’ and Officers’ Duties (IV): Corporate Casebook: pp. 385-408; 412-415
Opportunities Text: pp. 328-37
April 10 Shareholders’ (and Others’) Remedies (I): Overview; Text: pp. 745-751; 763-772
Derivative Action Material Available on OWL: Shareholder Remedies Chart
April 12 Shareholders’ (and Others’) Remedies (II): Oppression Casebook: pp. 798-830; 833-848
Remedy Text: pp. 389-419
Material Available on OWL: Wilson v. Alharayeri