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S S 

   

   


"  (1) O p (th Ppal) t that
ath (th " t) hall at  P¶ bhalf & 
 bjt t P¶ tl, & (2) " t t th
at

" t¶ F
a " t ha FD t Ppal (
t f lalt) •• Œ Empl a t f
D t CCS a¶t lt   b 

 mplmt. (" ha FD f
lalt t P).


Œ Empl¶
aa mt f fa la
pa f  b   OK-
l tal.

Œ D¶ l


t
SH¶ (" bah
FD t P).

Emplmt at 


•Œ F
Wll ha
at- ll k, hh a am


th h tm tp f lathp


(b , pmt)[ bah f
mpl
--fat k¶l bl at t

ha  f 
a  l.

Maftat f "t al " thtΠh P maft t


Ct
tl t " ( p  mpl
)

"ppat " thtΠWh "  th t at al


a tht, b t P maft t
tl t [
  (Fam¶
th
pat h 
al th " ( p, f)Œ Fam¶ f at

mpl
). 
a a Wtt bka 
E. ., Stab k h  (P) pla
L (") 
pt t
fa
th
 tm. B ha

 b 
Iht " thtΠJ
all at
ap- th W bf.
fll
 that t
 t a h  t
fa p h  ff l fm a t¶
a th
at. 
!"

NtΠU all, m t h bft t th P. If C t

t   a .
t, lk at m atal thΠh Stt ha
la ha
, a
h l
ha k  btt t at-h l
ha k 
btt. Lak f la  P
ba  S  l
¶t talk ab t
hk 
mt th P
ptat.

c 1
 S  

 S SS  


gall üc Pathp = aat f >2 t a  a -
  f a b  f pft (§101(6)), fm


 §202.
üc Dfa lt  l =  al maa mt & tl
(§401(f)  al pft ha (§401(b)),  al
l (§401(b)).
üc Ca k a 

fa lt  l th Pathp
" mt (§202)
üc Pat  a t f pathp (§301)
üc
Fmat üc P-hp fm
h P¶ a  b  a - 
"ΠF  
  (§202(a)) hth pat t

&
üc Itt t fm pathp t 

(§202(a)) at all ³a  b  f
üc Sa that  a pat  t  h, 
pft´ & t  tt t fm p-
tt t ha pft l  all. hp.


"$ΠC t lk at
at aft pathp
a mt a  
& a
that
pat

t at a jt  
f b  f pft. ³J t
ba   all  a
k-t
 t a
k´.

F
a üc FD = l al bl at t at f bft f ath. 
 
 Œ P¶  
D t ×c Obl at f 
fath & fa  ft
t f lalt t ah

al th  ath, &
t t at th. (³p tl f a h
 f tha f p-hp mt t´) (Tat JV am
üc Bah f FD = fal  f f
a t b a a P). S ha

t f
l  (S
ta
a
f a  
b pfal f a maa -M  l
ha t
mla 
at &  p. (Rt. Of "  k  f ff).
§379).
üc Eah pat  a a t f th pathp Slf-Dal Œ
(§301(1)) $
 %"&
üc Pat   pathp DUTY OF LOY"LTY Sh l
t  a 
tl
(§404(a) & (b)) t lathp th p-hp.
×c (1) T a t t pathp, (2) t V t ala f k that h

,
fa fm
al p-hp  
t aptal tb t-b t pft h
 
 p a   bhalf f pat ma
 m t b pa
bak t p-
ha a
 t p-hp (3) fa fm hp. Vlat f FD f lalt
mpt th p-hp  
t f p- 
l  ma t  a  
hp b  bf
l t. lf-
al .
(NtΠBa
& a k a 
pat f t 

§103(b)(3)).
üc Pat   DUTY OF C"RE (§404())
×c Rfa fm l  l t  D t f Ca N l Œ
kl 
t, ttal m
t,  "ΠN l  
 k  lat f la . maa mt f affa f gP 
×c N l  al  t  h. JV
 t at  ht f at
(NtΠC t
¶t    bah f
t a at pat b p-hp.
f a ba   h a h h ta
a
).

c 2
Opat üc Eah Pat ha  al  ht t maa  & tl •
 Π"ll pat ha
Maa  b  (§401(f)).  al  ht  maa mt &
P-Shp üc Da mt  ³
a   f b ´ [ 
t f b  f p-hp. If
a b


b majt f pat (§401(j)) t  a -labl  , p-hp
üc E ta
a matt   am  t h l

l.H h al  h
(§401(j)). FD t CSI m tha h FD t
üc R ht t a t bk & 
 (§403) Ral Etat Vt  b f 
t a t. Ct a
th k
ab t t bf&h l
ha k¶

f t aha
f tm 

§103(b)(3).
Ctat [c Ca¶t k f a-abl t
t  Pathp Slf Dal Ctat f
f "bl t " mt. DtŒ
Dt [c LmtatΠ
 
ΠWh pat
×c §103(b)Œ P" ma t (1) a  ht & ha  a 
 lf-
al , BP

t 
 §105  pt t lmat
t t  pat t p fa.
p
 p t all P (2) aabl Pat bah FD h th
tt  ht f a t bk & 
 mak fa pft
tb t

 §403  (3) lmat
t f lalt (a

tm th  ) t

 404(b)  603(b)(3) b t (I) a 

pat pat. Ca¶t k a 

pf tp at  that


¶t lat ba  mt f 


t f lalt(4) aabl 
 fath fa
al .

t f a (5) lmat
t f 
fath
& fa
al (6) a p  t
at
a pat & (7)-(10).
Pft Pft Sha Œ §401(b)
Sha
Pat [c Pathp = a t f pathp (§301) " ""Œ
Lablt [c P-hp labl f l  j  a 
t p a a C t  
ht
 lt f  f l at  atabl 
t f a tht h a gP JV, h 
pat at  
a   f b  t am
 a a mt b a
(§305(a)). -t  & a th
pat,
[c Pat a jtl & all labl f all bft
fm tha mt.
bl at f p-hp l th  a 
p (W l
ha b at al
(§306). a tht f t f JV a mt
[c P-hp ma   a
b  
 am f p-hp p.)
(§307).
[c Lablt f p pt
pat (f p l 
    Π"bt
pt t t t  th at al  p pt
p- 
 f ta, pla
hp) (§308). la a  f P" ll b l


tm hth pat
lat
a mt.
Dat [c Dat  Œ §601-t that a  
 
""Πb
×c Pat la (at- ll) (601(1))  a   pmpt tat
×c Sm t  t  P"   (601(2) lk  t th att
×c E p l p  at t P" (601(3)) tl a

 lt t
×c E p l b am  t f th ltt that
¶t pt all
pat (p  at t 601(4)) pt, pat lat
FD.
×c J
al
tmat (601(5)) M t
at BEFORE
×c Pat bm
bt  bak pt, t mpt a at pathp.
(601(6)) Ú  
 
 
×c Pat¶
ath (601(7)) 


 

c 3
×c (8)-(10)  
 
      
[c Efft f
at (§603)1  
  
×c Rma pat b   t ttŒ §701   

 
(fa makt al  f a t a
a
 
     
 
tt)
!
×c Dl t & 
 p p f
b Œ §801 
 !Πa
[c Dat pat  l  ha  ht t la fm
¶t   pat a
patpat  b   pt  
- p §603(b)(1) FD t t  pl h f pt
[c Dat
pat¶ FD a  [ ha FD l thal 
t (f P" all 
 t matt bf
at §603 ( l f  p l).
pat patpat  
 p f pathp
b )
[c Wth
a  pat bah FD f h at fal
t a
 p-hp, a  p-hp ham. Labl f

ama  (Mha).
[c Pat
¶t lat FD f  pll pat  at
ll p-hp (Bhath) 
 601(3).

Dl t [c Et a 


l t & 
 p f 

Π" p-hp ma b
pathp (lt
 801).2
l
b  p ll f a
(b  ×c Daat f at- ll [ p-hp t pat h 
ft tm 
f 
 fm P f  p ll t th
a (801(1)) pat la 
tak 
p p) (th tha 601(2)-(10)).3 pf
.
×c Dft tm 
 §801(2)
×c Et t   P" §801(3) '
ΠK at R t ha 
×c Ula f l 801(4) half f l aft
×c J
al
tmat that mpatabl t
l t ttl aptal
t  b  §801(5) a t. C tŒ al  R¶
 aptal.
[c Pathp t 

l t §802.
[c P-hp tmat
h b    
p 
ΠI ttl aptal
§802(a). a t  al  f h ma
[c Sttlmt f a t §807 aptal (§401).
×c L 
at, pa 
t (a)-lk
mpl a
bak,th lablt pa
- • Œ J
all
l

lk pat t bak aptal a t. a


 l  patal t
"th that  lft  pft a
plt t 
 b  

am pat (
fa lt  l = 50 50). 801(5). U
 807, m t b
p f l 
at a
f ll
NtΠU
 §401, h ma aptal
 t  t a a t . M t pa ff
al . 
t, b
f tl.
W f l [c Pat¶
at   f l fΠ
" "ΠP-hp f
Dat ×c Bah f  p p f P" 602(b)(1) a tm. If pat
at
×c Bf  pat f tm f f
ft tm  l
b  f l a
ma t
(O tt, 602(b)(2) (f pat th
 b  p t a m at all tak tm

¶t f t ll,  pt  90


a aft ath (701(h)). C t hl
S  f ll
t tat th pat¶
at b
ath.
at

 601(5) & t
ba  l [c Pat h  f ll
aat  labl t p- patal t t 

601(1)- hp a
th pat f
ama  a 
b b .
cccccccccccccccccccccccccccccccccccccccccccccccccccccccc
1
§603 [ "tl 7 (t 
p) OR "tl 8 (
l t (p-hp t 
 th tm), 
- p (p-hp tmat
at th
tm 
 802(a)), a
th 807 (ttlmt f a t). Ca¶t  th fm Tak 7 t Tak 8.
2
I p-hp at ll, f 601(1)
aat happ [ 801 Dl t
3
E l  f
l t a 601(2)-(1) a tat
 801(1) Dath
 t la
t
l t (601(7)()).
c

c 4
pat
at, 602().

at
[c W f l
at [  701() (
ama ) • Œ NtŒ St  l

fm p-hp [c Pat h  f ll


at a t ttl
ha  th j
al  p l
p t t pamt f a pt f th b  t p tl 
 601(5), b t f t t a
f  p  pat f tm, l pat h  
 p  ht. E p l [ bth
ll t la. ha
hp t b  f p-hp (701(h)).  f ll
at a
h
Th,  t  l
t ha t pa hm  ht
 f l) a a (  th h p f

l t l 
at, t).

Bft f pathpŒ

c E al maa mt p 


c "blt t ha pft l
c "blt t f a
l t
c FDΠD t f lalt (

l t p)
 c Ca  l
 ta att 
 103(a).
 c N
t f a
6.c Pa th h ta (Pat a ta 
), t pat tt. (What LLC t  t ta 
2 ).


Wh
  at t
l

1.c b
f tl
2.c
tmat f at al al  f tt
3.c t bak tal aptal a t

c 5
‰  S SS S   S S S  

 S SS  


JV gall L pmat a
l mplt m  E. ., If S a
J t p jt
f a a
tt tha gP. t  f 2010 S pb l
t , t b  lathp
Cpat fm t f  l p p. f lmt
p
f tm,  f J
Lmt
p p a
lmt
tm. at t ll b f 2010 Wl

S- FD t Sha.
JV F
a D t Jt Vt ΠF lmt
tm, lmt

p p (a tat a gP  t


p

 f t la
 t fa  lt) tll   ft

t f lalt t ah th (Mha
).
LP [c M t fl fm th th tat.
[c Spaat f  hp a
maa mt
f t (Lmt
pat at
maa . gal pat m t maa .)
[c Lmt
lablt f lmt
pat.
(gal pat ha jt a
al
lablt).
[c Fm¶ t t a
aptablt t ha 

 mta fa


. I ht, lmt

at la at ll. gal a la at


ll. Dl t  t a tmat h
al pat la.
LLP [c RUP" 306©Œ Pat¶ lablt D . JŒ La fm. gal
[c D 
f pfal pathp.  l f gP appl t LLP, b t
[c M t  t th Sta f tat t pat
¶t ha lmt

bm LLP. lablt. H, D a t

[c 1001Œ Statmt f Q alfat. ©- a


 
J f malpat.
tatmt ma taΠam, a

, Pat a  fm


l
2
tatmt that pat lt t b LLP mth bf tal (b t

[c 1002ΠNam (m t 
th RLLP  
- p tll LLP). gt 
f
LLP. LLP tfat 1 mth bf
[c 1003Π" al Rpt tal (N a gP). Stll ha
t
[c O at
, 
b gP la  all aft
at. (306).
pt  pt f pal lablt a


tb t p
f
b tat t.
×c 2 at Œ
×c R l  t
 lmt
lablt
t LLP¶ gP
[c R l lmt
th pathp¶ ablt t

tb t at t al pat.

c 6
   S 


 

 S SS  


Ba [c Spaat  hp maa 
t 3ΠOff, Dt,
a
Shahl
.
[c Cpat 
b tat la (l
 mt FD)
[c B t F
al la 
l , p  t , fa
, t
(SEC "t f 1934 a
SEC R l).
Fmat [c FmatΠh pat fm
, fl th Dpt f Stat • •%Œ 109(a)
Ipat (§101) all  SH t pa ta
 [c Ctfat f Ipat (am, a

, at  f k


 f bla , ttl
t
b , la f tk) (§102) t  t bla  a

×c T "m
Œ §242   that ba
a
pt pp am
mt t
l t ft, th SH majt t bla , b t (b) a that
[c Bla  ma ta a p lat t b  f bla  a¶t b
pat, 
t f t affa, a
 ht  p  f tt th la 
SH¶ (§109(b)). th tfat. Ppal t
×c T "m
, f pat ha¶t 
$ f mb  SH f p 
tk,
t a am
bla , f ha 
tt f p t p  
$, SH t (§109(a). Ca p t  atl that
t [ f a
pt
,

t a am
( th bth a).  l
a 
t t
[c Ba
[ maa mt p  
 §141(a) lat FD. Ppal
[c Off [ Dt
l at p  t ff h    l
b tt th
pat (§142) (b t SH ma b abl t p t t bla  141(a) that a D¶ ha
a ff pt b f 142(a)). FD t pat a
SH.
[c SHΠp
 aptal b b  ha lt
t, t
 f 
amtal ha . "l, Bla  a¶t
[c Cla f StkŒ §151 (pf
tk §151© ma
at h ba
h l

[c I a f tk §151, C


at f Stk §153 (pa

  btat b 
al )
, b t ma
f
[c R ht Opt pt StkŒ §157 p p
 b
hh th
 a
ma
.
SH Vt [c Dfa ltΠ1 ha = 1 t (212(a)  "[ a
a
[c Dfa lt    m [ majt ha 

f   m t t tll SH D
216(1), b tfat f pat a ha  a l  
b SH ha
 ht t
a t l tha 1 3 (216). t a
D ha FD t SH
[c Elt f D (h a tll 
×c Sta ht t = Dfa lt- pl alt f t f "  appl
). "t
ha ’   p  pt
b p  at mt  ba

a
ttl
t t (§216(3)) fath bah f FD.
×c NtŒ IN C",
fa lt =  m lat
×c C m lat Vt [ SH at t = tk
 mb f pt aalabl (§214)  
 (I
aa)Πb t 
üc w(ttal ha t at  at t DE, l hahl
 a
lt) (
t t b lt
+ 1) +1] m
t 

×c Cla [ Eah la f tk lt pf
# f 141(k).
D¶ (§141(
))
üc Majt f  tta
 ha f la  Pblm 3-8 a t t
  
f   m (216(4)). a 
th
fa lt  lΠIf
üc Claf
th ta 
tm [   atl f pat
D¶  ff ba  ta SH fm th  p
, th
pla . ba
 hahl
 a
[c Rmal f Dt am
atl t m

c 7
×c SH a m D  a  b majt t f
t  a  
 tta
 ha that a t (141(k))  ptŒ
laf th ba
.
üc Wh ba
 laf
ta 

(141(
)) SH ma fft mal f
C"USE ONLY (141(k)(1).
üc If  m lat t ,  D ma b m

 a  f th a  h t t


a at h mal that  l
ha lt

hm. (  th h fm la).


[c "ppal f F 
amtal Cha  (M  -251©,

l t,  btatal al f at, am
mt t
atl f pat -242(b)- (Majt f  tta

ha that a t)
[c Vt t t & t a mtŒ
×c SH ma b a mt  t ,
pt aptal
tk t a p a th
t at a t t f
t  p th  ht t t f a p

f tm
tm
b a mt. M t  t
a mt tat ff, fat m t b  tk
l
 f pat. Stk ma b t

p  p . T t hall    lablt
 pt f   

al malfaa. (218(a).
"m
mt m t b fl
th tat (218(b)).
Mt  [c Mt  f SH (§211) "(  )#
Œ
×c " al mt  (§211(b)) Elt f D b tt
×c Ma at b tt t m mm at t

¶t atf
(§211(a)(2)) bl at t hl
a al
×c §228 all  tkhl
 t tak at b tt mt . S 
t  a mt (a) l th    

p

 tfat f pat.
SH R ht t [c Lt f SH ttl
t t palt f t p
 •"
•
 "
Ifmat (§219) •Œ SH¶ at
[c M t b ma
 aalabl t SH 10
a bf  tkhl
 lt 

mt , alphabtal. 220(b)()-f p p
[c Ipt f bk a

 [ §220Œ SH m t tablhŒ aabl lat
t b
×c (1)  SH a SH. BP that SH¶
×c (2) mpl
th fm a
ma  
t p p  mpp (h h
mak
ma
b 
) (220()). C t
×c (3) Pp p pŒ aabl lat
t SH¶ hl
that a f
tt (220(b)). m k f f 
pat  a pp
p p f th lt.

Bft f CpatŒ

 c Ppt tŒ a¶t f tt t


l
 c Ma at m a a
ha lmt
lablt.
 c Ea ba  ha ta al  h t  b .

c 8
   S 



1933 = S tΠD  ha a tal  a f  t M t mt  tat  mt.
1934 "tΠRpt  p  ltat mp  SEC th  lat. "  a p bll hl
pat M t
mt th  mt.
 S SS  
Bak  
f S t "t f 1933ΠR lat ff a
al f  
1933 "t  t.

R  that all  t f al m t b  t


th
th SEC  mt a  mpt.

P pΠF      

What  a S t "t §2(a)(1)Œ a t, tk, b


,
bt , SEC . E
a

 t tmt k,   al, a tt  t mt ba

ft f
mml k  a a ³ t´.  t, pa  193.
B  a
la bak
ph[ f 
t 
 l
b a  t.

E. ., La  t
tmhaΠ 
pt f t  l

b a  t. (Hlp


th taat).
R tat StatmtΠppt  a
th ppa

 mt
 
b th SEC p t a Ital P bl Off
(IPO).

Il
Œ
[c Dpt f b 
[c Dpt f S t t b ff
f al
[c Ifmat ab t th mpa¶ Dt a
Off
[c C t faal tatmt

P pΠT b  t t t mak  

tmt

E mpt fm [c " lt  that mall mpa
¶t ha t   t f
R tat  tat f
[c R lat D p
 3Œ
×c R l 504Œ Fm h ll p t $1M f  t 
12-mth p
. R tt
 t.
×c R l 505Œ Off p t $5M  a 12 mth
p
. Ol t a
t
t a
35 th
(h l
b phtat
 h t k ). R
tt
 t.
×c R l 506Œ Saf Hab 
 §4(2) f 1933 "t.
Ra lmt
am t f aptal t a
t

t a
35 th (phtat
). Ut 
-a
t
t
l 
 mt.
Faal tatmt am a R l 505. R
tt
 t.

c 9
Bak  
f 1934 "t at
SECΠ
p
t a , f
1934 "t  t la , pm l at  l a
 lat t
mplmt th la  m fftl.

TO REgUL"TE PUBLICLY HELD CORPOR"TIONS


Rl f F
al Dl 
La f P bl [c I   t (¶33 "t, R tat Statmt)
Cmpa [c P
 pt Π
b ¶34 "t, R 
b SE"
f ¶34 "t. E. ., 10-K, 10-Q, 8-K
[c P  ltat (. ., at a al  pal mt )-
 
b ¶34 "t
[c T
 ff (P tt (b )  ta ht t
ta t SH f p bl tt a
ak t b  ha.
[c I
 Ta
 (If that maa  ff ha t
p
 t t.)
SEC P  SE" §14(a)Œ It hall b la f l f a pa th E. ., B"

¶t
Cmm ma pb a a 
l t SH bf
apppatf ptt f t´ m  t.

P pΠTO   t pt maa mt fm


tk H fm t f th  h

¶t   h
fmat.
Tpal " al [c Nmat mmtt f  mbt ( t) ba

Mt mat lat f


t t b lt
at  t a al
mt . I
¶ th th  t t .
[c "t mpa  pΠMaa mt ppa p 
tatmt a
a
 Maa mt lt SH t
(  all th p  lt¶ hlp).
[c P  f t 3 th ΠRlathp, D mt,
P.
[c " al pt (10-K) t t t SH, p  tatmt
a
a
t t SH, f t  tatmt t thm,
th th t hl  mbt a tll  th ba
.
Th p  lt t t ath a
 t fa 
a
a.
P  t [c SH appt p  (p  a t) t t ha at
mt .
[c "pptmt fft
b ma f p  (p  a
).
[c Rabl (bf t happ, SH a tak t bak)
[c La  
t mak   a

 tl.
[c If SH hl
 ha at bka  bk fll  t a
a

 t p  a t.

SEC P  R l [c R l 14a-3ΠI mbt


t m t p
 a al
( lat SH¶ pt bf lt p  f a al mt .
a) [c R l 14a-4ΠFm f p  a
 mt.

P  tatmtŒ
[c 14a-5Πfm f p  tatmt
[c 14a-6Πfl bl at.
[c 14a-7Πmal
[c 14a-9Πfa

V  p-m t h la  ± hh  h at t


l
  ¶ tatmt t a f 
.

c 10
P 
l  [c Ifmat ab t th mt
( hat m t [c Bak  
f
tl lat
t   t b t


t
l Ia
 f ³thap t
l ´
t SH) [c E  t mpat (h m h th mak h

tm ala a pp)
[c "
t Cmmtt pt (h m h $  pat
mak  H l
 th a
t mmtt th th
a tat¶ k faal tatmt- ht)
NtΠMt ba
 (p bl pat   all) m t
ha at lat 3 mmttΠmpat, mat ,
a
t. Mmb f th mmtt m t b ff

p
t. (CEO a¶t b  mpat mmtt).
[c Cpat a 
l a
pat (h

 mm at SH h  ha th p a
CEO, h ll lbal am ll afft   b ).
[c SH a   a
th  h l
ha lt f fmat.

SEC P  R l [c R l 14a-7Œ ltat ata t SH.that a •"


•
 "
mak a 
p
t  ’ ’) •Œ D
¶t 
×c Cmpa m t p
 SH lt f  t 14a-8  14a-7 ba 
hl
 mal lt, OR mal lt matal 7  pt f
t thm. (CHOICE)  lt, a
8 lmt
×c E p   all l 
b tt tal 500 
. THUS,
t. t th DgCL 220
×c What 
ff b th p a
tat la
p (DgCL 220) S!  ’ 
   ’    ""

 " " ’   
#
 "$

×c "
ata  f
  lfŒ D¶t ha t 
th h 14-a8  l  a t m tha
500 
, a talk t th SH, tl tm .

[c R l 14a-8Œ SH ppal ( mpa¶ p 


tatmt)
×c "ll   alf SH t p t a ppal bf
th fll SH
×c "ND ha p  lt
 fa f thm 
th mpa¶ p  tatmt.

14a-8 E l  [c P


al  l Π ΠWat
(SH Ppal) ×c  ’    ’  ba
t fm

  % &)-t  l hl
at lat mmtt t t

pa  297 f $2,000  makt al   1% f ¶  t h  ppl p

tat t bk ttl
t b t
 th ppal at th mt f f a. Ppal 
at lat 1 a b
at   bmt th ppal. pat b

M t t  t hl
th  t th h pha
ba  f

at f mt . 14a-8()(1) hh
×c N m tha 1 () tat that m t b
×c š''  % at that  pp
×c  ’ " f SH t tat-m t
×c   ’  ’ ’  lk t tat la t
’’  "       "

 that  t.
 &   %% S lk at DgCL
×c M t appa t pt (h) 141(a). f SH t

c 11
[c S btat  l Πall 
t tat, tll
×c  ’ ’       k f pha
a
% %% ppal.
×c  
 ’   % %
×c 
   !()(7)[BIggEST Ba
f  t
EXCLUSION. l
 ppal
üc ³If ppal
al th a matt lat ba  f 14a-8()(5)Œ
t th mpa¶ 
a b  ³Cmpa ma
pat´  l
 ppal f t
üc (Ca¶t ak f  lat f ba
)  lat t pat
×c  !% % that a t f l
×c & " ’ % % tha 5% f at a

5% f t a 
NtŒ Maa mt t mp la. S f  a¶t "ND  t ³th 
 l
 
 la ba   fatl lat
t  fatl lat
´
b , th  f a  l
 
 maa mt. t th mpa¶
b . C t hl

that t IS ³th 
 fatl lat
´
ba  tll mak
m m  t-
ba
 . It
l
 thal al
 fa. Th ,
l
 t.
E ampl f What Nt 
a b ,  l
  SH ppalΠ
C t thk [c Dtmt  S th "fa
O
a B  [c gt  t f tba b 
I [c gt  t f  la p  b 
[c E
Stat affmat at
[c N-
mat  ba f  al tat 
ta tat 
[c E  t mpat

O
a B , 
¶t l
  SH ppalŒ
[c Empl (
a) mpat

Cmpa [c "ttmpt t  l
  p
al OR  btat
Rp t  
.
Ppal [c M t ha pf a t  l
 that  al


(5 pbl R l 14a-8
p) [c Il
 th pp tatmt.
[c N tat th ppt.
[c "
pt ppal a  bmtt
.
E l
 a STEPSŒ Ú 
, R t
Ppal P 1.c Maa mt fl t f tt t  l
 th SEC. f N "t Ltt.
"mpa
b  l p f a f tat

a l  l al  .


2.c U
 R l 14a-8(f), maa mt m t tf SH-
ppt f m
abl
f  th ppal
a
p
 ppt t f thm t b  
.
3.c " p f th fm¶ t tatmt m t al b t
t ppt, h ma (b t 
t) pl.

SEC Rp [c Staff


tm f a b  l

Π  a -at
(3
fft ltt ( ¶t f  tak at)

c 12
pbl [c Staff
tm h l
b l

Πtf   f
p) pbl fmt at f ppal   l

.
[c Itm
at ptΠppal t l
bl  pt
fm, b t a b  
.

If SH  Maa mt  happ, a appal t


Cmm  C t.

c 13
   S 

 S   S

NtŒ D¶ a
O¶ a f
a f th pat a
ha D t f Lalt a
D t f Ca.
D t f LaltŒ Slf ±
al , U pat f pat att (ba
fath th  )
 S SS  
FD t SH 2 "ptŒ
(1)c FD f Lalt[ ta D & O  th
p  t f lf-tt
a.c "tabl  f O D t mpt th
pat 
t t pal  at 
ppt t bl  t th pat.
b.c D m t b fa a
a

t SH  p  
th pal tt
(2)c FD f Ca [ F   D¶ ffal 
t 

t a
maa  b  affa f th
pat.
FD t 3
Ba
ha FD t SH, b t a 
 3
pat   ΠSH   D f
Pat tt f th  ³m atall lat
bft p a
 falt a
l 
Ctt  a  t th SH´  f t ba m aabl p f a ath tha
lat t al SH tt.´
tb t


 t SH¶.
C t ll t 



f f al t pa am t t ³ h
a ab  f
t  l

tt t a fa
 bah f

fath.´ Th  a that  t
 l

-  D¶
.
Fat f a a p la-ll
hl
tt.
B  BJRŒ
J
mt [c ³P mpt that  mak b 
, ["#"Π t

R l th D at
 a fm
ba  
fath la a 
a
 th ht blf that th at tak a
 th bt tt f th mpa.´ "Œ T
×c "bt ab  f
t,   m BJR, SH m t l 

 "     
 fa
, ll alt  flt f


 , th j
mt ll b tt.
pt
b th  t.
×c B 
  pat hall 
 t
tablh fat b tt p mpt.
§141(a)Œ b  a
affa f pat maa 

a


t f th ba
.
FD f D¶ m t fa pat¶ tt  h   *• +& CO
t
LaltΠh tt flt. mplat
l h D¶
U pat f   f CO  lt  flt
Cpat DE "ppah [ B,  g th fat b D
t t p. a
D¶
Oppt t -D  O ma t tak a CO f h   fΠlf-tt. Hl
that h

t
Dt (CO) 1) Cp faall abl t tak CO  p CO.
2) CO   pat¶ l f b 
DEL"W"RE 3) Cpat ha a tt   pta  th
CO
4) B tak CO f h  , D ll lat h FD t
pat.
-D  O ma tak CO fŒ
1) CO  pt
t D  O  h 

al, t

c 14
pat, apat
2) CO  t tal t pat
3) Cpat hl
  tt   pta  CO
4) D ha t  f ll mpl
  f Cp
 p   CO

-NtΠNt a hklt-j t 


l
-Ptat t ba
t  
. ³Of  , [ B  t
pt t ba
at µaf hab¶ f D,
m pt f a pt h j
al
tmat
that D ha mppl  p
CO.´ [
IMPORT"NCE OF LE"VINg P"PER
TR"IL PROCESS

Cpat Rjt f CO = CW f CO a f ³ h b 


Wat (CW) mptat a
al  t pat that  p f

a  
b  j
mt  l
ha
jt
CO.´ Wat = Bah f FD. SH  l

b
at  t.
FD f   &  ’! (E. ., glb Wl) g •Ú
g
"
LaltΠD t t
l. Sl = btaal f lalt t. !%ΠMaa
 gW
Cflt  tll SH, CEO, a

Itt  Chama f th Ba


. "l
Taat  Uta¶ D a
Cha f th Ba

(CIT)  (b t    U tk). M 
 a gW hat a
at t
  gW 

al. "t ba

 mt , M
¶t a ath .
 C t hl
that a bta
 th h l. Ha a
t t
 a f
t f lalt. H ha
a

t t
l. Impta f
 pΠM h l
ha pk
 p at mt , 
tal, 

¶t att
mt at all f t
  t a ath  th
 a ak Q¶).

(U Et  

,&
Fa, t -DftΠIf 1 p,  t, tl bth 
 f NtΠgal  l that SH
¶t
BJR) th t , a
that pat  pat at t th   FD t  ath 
EXCLUSION f th SH. f th  l h th  a
-TtΠ   S 
h pat tll SH.
tt ha 
a bft t  l  f mt R lŒ
SH f  b
a a
at  p f mt SH f -Nt lf-
al l SH 
 b
a.  mth th SH 
-M t h 1) Fa p 2) fa p. t  .
-B 
Π pat ta
  bth 
 f th t . -S a lf-
al b S bft

(Sla) fm k b Sla Ol a


bft a
S  
100% f
  tta
 tk f Sla Ol.
 "t  l  f th SH b SO
 ¶t at all pa mpl
 th k.


c 15

 (!) 
     
g) 
   !N CIT hall b 
ll b a f C tΠj t b t,
¶t ma
flt f CITΠh  tt

t. CIT
1)c If aft f ll
l  t th ba
,  a  fa tt (DgCL
a th
b majt f
tt
144(3))[  a h t  fa t

t,  (144(a)(1)) th pat.
2)c F ll
l  t th SH,  app


fath b SH,  (144(a)(2))
3)c I fa t th pat at tm
a th
atf
b Ba
 SH
(144(a)(3)) (Fa
al a
fa p).
a.c NtΠIf   
 th p ,

¶t 

l  t ba

SH.
(Shap . gfl
)
NtŒ C" fll  DE¶ m
l
NtΠImptat t at th pap tal!

 ’ !  !


-§141(h)Œ D¶ ha a tht t f D mpat
l "tl f Ipat p
 th . Ba
   t tk pt
-§157Œ I ab f fa
, ba
all 
t   (fm f mpat). Mt
 ht pt  tk SH¶  
b ba

bfa f th hall 

Stk Opt TtΠU


 157(a) tk pt pla. Pttal
1)c I
tfabl bft t th pat flt f t  ht ba 
(Val  P )
l t th  ht ( ma
2)c Val  f pt aabl  lat t ha). C t  DgCL 157(a)
al  f bft pa t pat aal-2 p tt. Hl
Œ
(Bft P ) Fal
2-p tt h.
157(b) a that
t¶ al at 
l ,  l ft p ha al ma [
D¶ m t l h bft. NtŒ Rpt ha  ht t
(B) b  tk at t p
NtΠIf pat   tk  al, fall (  tk p). R ht t

 BJR. B t f th   tk t thml,  th f t . Ca bak
at tk
th m t  th tk pt tt. pt  that  b  at a l 
p,  th h  ah  t-
t¶ a lt.

è  """
 S
If Cflt f Itt T . 1)c I th a CIT t 
a.c " th tt

t
b.c DgCL 144(a)Œ ³k  t  b pat
a
1  m f t D¶  O¶  b a
p a
a th p ha a
faal tt´
2)c If YES,
¶t matt h m h ah th
ha
. Th  t Πa t b la

(Ma  t t 
abl tll al
).
3)c I t la

 144(a)(1) Wa th

tt
ba
t aft f ll
l 
ptat
4)c I t la

 144(a)(2) Wa th a SH 

c 16
fath appal aft f ll
l  ptat
5)c I t la

 144(a)(3) Wa th t  fa t
th pat
a.c Fa
al  (D
th  th h p
f fal)
b.c Fa p
NtΠI DE,  all f  a h fa p,  t
ll a t  F"IR!!
If Slf-
al aIf 1 p,  t, tl bth U It Fa ttΠFa
al , fa p.

 f th t , a
that pat  pat at
t th EXCLUSION f th SH, th
If lf-mpat, tk pt tt U tk pt tt
If Cpat U pat Ca U B g th Fat

c 17
   S 

S  

 S SS  


FD f Ca    [ D h l
at th a that a p  a mla 
pt  l
thk  aabl apppat 
 th 
F    mta. 
p

-Bah f a a a a

f     
t. 
-"ppl BJR b t f platff m p mpt, appl t 
fa (p p) tt. 
[-.!pl a
Pl f Lmt ΠVl ta a mpt f th k, tt tal f
t f a .
mpt, t t at tak k. 

Wa t VlatΠ
[c Ufm

 
[c Fal t t at 
[c La ba
p
 
[c N  pt appaal 
[c N fmal makt tt $
g ΠN ptt
f a fm

. 2
BahΠbah
t f a,  t fa ttΠh  mt f f 
amtal
(1)c Fa PΠh t  a tm
, h a t tat
, ha  (m ). BD

¶t
t t 
,  tat
,
l
t D, a
h k h t p, hat
appal f D a
SH  bta
. p a ba
, hat
(2)c Fa PΠm a
faal 
at f tl  th t b .
pp
atΠat, makt al , a , f t  O b t BJR, D a tll
ppt, a
a th lmt that afft th t  f h t fa
 ht al  f pat¶ tk. (p
al ). Hl
ΠBD
fal
t fa tt.
 %) [ Rp t Va gkm- B
ptt
f l
 
fath  pat¶ 
,   p, pt, 
tatmt pt
t th pat b a pat¶ O¶
 mpl  mmtt f ba
f D¶,  b a p a
t matt th mmb aabl bl
a  p¶  Ú, (t
pfal mpt a)Œ
b fa tt.
(pa  322).
FOR TESTΠNt aΠBhm . EΠpa  321-
t f a
lat mplat m t h that 1) D

¶t l   pt 2)
la a¶t  
fath 3)

¶t aabl bl E¶
a
 a  E¶ pfal mpt 4) E t lt

aabl a a
fa lt lt p a attb tabl t
D 5)  bjt matt a matal a
aabl aalabl a 
b  that ba
¶ fal  t 
 t a l  l t
 a
l f E¶ a
  lak f a
  6)
 f ba

a  abl a t tt t at  fa


.

FD f Ca DftΠLmt  lmat


t¶ lablt f bah f 
 (#"Œ
FD f a l (t lalt). F
k aΠBah f FD
Ba
Df f a
m
h
" at ('%&%#! E  lpat Cla  m t b l

 "tl f pat ha   lpat
Lt at
pat al
a l a th
¶t lmt lablt fŒ la .
* ’ " -bah
t f lalt
 -at  m
  ba
fath
-a taat h
t t mpp bft

c 18
FD f Ca D t f CaŒ •

/ΠSH
D t t Mt 2 k
 f lap f aŒ
at  t. Hl
Π"
1)c Lablt f
 (lk Va gkm) BJR ba
f
t ha a
p mpt appl (pa  337) affmat
t t attmpt 
a.c F   th p- f
  t p
- 
fath that pat
 t ¶t tf f ba
t th h fmat a
pt
pp p. tm  t a
 a at.
2)c Lablt f at fal  t mt (pa  339)- Ba
ha
t t mt,
b 
. b t t ha t p. Ol
a.c Camak a
t t mt. tmat fal  ta
a
.
b.c If a p t  t a
th fal t at, lablt
ma fll -h l
¶t ha t p  mpl, RatalŒ
b t h l
ha p  pla t f   t 1)c Ia mpha 
ll al att (gaham) a la  l f

t pma
Wh  th a bah f
t t mt 2)c Va gkm
-Th  l bah
f a µ ta
 tmat fal  f ba
 mt that
t    ht.¶ ba
 mak
-µS h a a tt fal  t attmpt t a  a aabl fm


fmat a
pt tm  t- ll tablh a lak f 3)c F
al t

fath that  a a 
t t lablt.´ (pa  342). 
l at
t f la
Efft mt mpla p amΠmpla
" k, tablh,  pl t a

 k, tablh p am.


p
 t   mpla th mpa pl (ta ,
pt , mt , fmt) ba
a
maa mt
 ht, mplmt mpmt.

P
 P am m t bŒ
-ll tal
t ¶ pat la b  a
aat
l al
k
- tl fabl a
fftl 
t
b mpl

BUTSt Hl
 ΠCha  Camak ta
a
t  f lalt a
t &
 Rtt
t f a. 2 FDŒ
1)c Ca
Dt  ht labltΠ2)c Lalt
³(a) th
t ttl fal
t mplmt a pt  a.c Vlat f
t
fmat tm  tl  (b) ha mplmt
 h a f 
fath 
  tl,  l fal
t mt   t at f ba
fath
pat th 
abl thml fm b fm
f k (b
l
 pblm   th attt. I th a, mpt f  l t kl
lablt   a h  that th
t k that th  
) 
t
ha  th f
a bl at.´ 
 lalt.
-K  lat ta
a
, ath tha  l  ta
a
. SH b.c U pat f
ha t h m f  t t f
th ba
labl. pat
ppt t
ImplatΠDp
  h  a  th, a tak t at .c Cflt f
a a fm a ta ht bah f
t f a ( h pat¶ tt
  lpat la  a ptt thm 
 102(b)(7)) t bah f T  Camak fm
FD f lalt ( hh pat a¶t ha p a at). fm

- h l

b
   k a a

t-t a k  h 
f ba
fath ta
a
b
hahl
 (
t f

c 19
lalt). It  t a k 
lat ta
a
, ath tha
a  l  ta
a
.
"
t Pt-E R mt Bk
Cmmtt N  t la , 

"0,1)2332
-R  p t l
 mpla p
  th a al
pt
-F
al  mt  t mt

Maj f   Saba-Oa l a


ha   NYSE &
N"SD"Q. Cha  f   a (1) 
p
 a

 pt f a
t mmtt mmb (2) a
t mmtt¶
tl  th faal a
t p, l
 lt f
 t
 a
t (3) mm at bt  a
t mmtt a

th ba
a
(4) tal mm at bt  "C, CEO,
CFO a
th
FD f Ca U
 Saba Oa l "t, CEO a
CFO a tal t t t Ú  "&
Mt f a pat¶ faal pt  , t 
 tat la t  Mll CEO  
fm
D t b CEO
tll th BD¶ pblt t   that th pat ha Cmpa f fal t
Off¶ a
 at tl a
tm  pla. p
 hm pt-
O ht a
tmat bft.
Rpt D t Cmpa  t 
,
lam lat f FD.
Mll tat
  [
a t fa
. H h l

ha  pt

 .
Labl ba  h ha

t t tat  


ba  b 
p


  tat
. H at

ba
fath. H k th 
ak tl a
h l
a

a
th  b f 
.
Hl
Πmpa ha lam
a at Mll, t  a.
I g
Fath Cf  f paat
t ba  h  p  BJR, 141(), a

"•
"Π"ll at
a 102(b)(7). that ba
fal
t  

p
t  ht  tat. Hl
Œ
ta
a
f BUT NO- bl at t at  
fath. at t  h t
lablt tt t lat f ba

Ba
fath  p t 

t f lalt. fath.
-C t
l
t


hth th a FD f

fath. Ppl tat

b  a a lat f



fath b t  t a
that
 a¶t b th ba 
lablt thhl
 m h
h h  
fath a
tha  a a.
-N  t ha f 
lablt

 th a  f at.

‰SS (1)c I t a b 
 Pa  321
S++ (2)c Pl ha b 
 m t m b t BJR t h that
Ba


¶t at  fm
ba  
fath.

c 20
(3)c B t abt ab  f
t, fa
, ll alt, flt
f tt,    l ,  t ll  th th
ba
.
(4)c Pl m t h Œ
a.c Bah f
t f a, OR
b.c Bah f
t f lalt (lf-
al ,
 pat f pat ppt t, ba
fath
th  t th m )
(5)c E f Pl¶ a abl t m th p mpt,

t
¶t al ha lablt.
(6)c Th Dt m t  h faŒ
a.c Fa P
b.c Fa
al

c 21
   S 

 SS

 S SS  


What  a If  ¶ ma
a a SH,  aΠat tl  t l a

at  t p t   t f D¶, l t  laf


ba
. Ca¶t
p t  SH ppal b f  l  (maa mt)  l

ha t p t   lat b   p  tatmt a ll


ha, a lt at!

 "[ D¶ pbl f maa  pat
(141(a)) l

tm hh lt at  
pat¶ bt tt. Pt pblm h


 hth  t t p   la  t a at D.

   ΠS t h SH mm a


maa  FD
lt at  pat¶ bhalf. 2 atŒ
1)c "t a at pat f fal t b
pf
 t, a

2)c "t  bhalf f pat f ham t t

tal t  pat fal
t b
R mt S  (Dl. Cha R l 23.1) DE "#"& f tl
ma

  SH t mak p- t


ma
bf th ba
,  mt. If  at
 pla lam h h t at
a
m

. aabl
 bt f th  f th
Up t ba
t

 h t
al. t  pat, th
ma
   
.
If ba
jt [ SH ma hall 
 a bah f
FD ba  ha   ht t p    al lam
tl
 l ba
at a t 
 BJR.
  ΠBa
t t
, Π(") h mak p- t mplt  a a mt

ma
 l
b f tl. Dma
f tltΠm t h that b Lmt
a
W l T t. Slf-
th  a aabl
 bt at
that th  t t Πt
  l
  at
bt
1)c Dt a
tt
a

p
t f mpa. P a 
that 6 12
a.c I
p
 = h D¶
  Ba
mmb mak th

ba
 pat mt f  bjt ³ l
b´ tt
a th 
matt bf ba
ath tha l t W l.
 ta  
at  fl  Hl
 ΠS fft that th a a
(I  th Lmt
). aabl
 bt f
b.c Tt = ³ bjt at al p´
tt

p
,  mt
2)c Chall 
t  a th  p
t f a al

ma
. "bl t h that at lat
b  j
mt half th ba
a tt
 th
a.c Rall ha
t h that D¶

¶t t   lak

p
 fm
mak fm
b 
. W . St
f
tm

p
ΠS bjt at al
What  at t h Πp tt.
(1) I
p
t
tt
Πh m k
f
lathp th p h bft
t at bl
 bt RŒ Bah f FD f Lalt lamŒ
ab t lalt ll. Nt  h f f
 f pat
(2) Ifm
b  j
mtΠh CEO ha
at
t f a bah.
Dmta, paff, t.

What  th Tt t tll hat k


f  t t  Tl TtŒ
1)c Wh  ff
all 
ham, th pat 
th   hahl
, 

all

c 22
c Wh  l
 th bft f a 
 th m
, th pat  th SH¶,


all
       
Mt  t a
at Ul mpla SH ha  ff
a paat a


tt ham fm that  ff
b th SH   ba

 k¶l  ht.
B ht  Cpat¶ bhalf. B ht b SH  h am

Ca  f at bl  t pat a a tt Ca  f at bl  t SH  h 



al apat.
E ampl a lam ba
Œ
1)c SH t  ht
2)c Pmpt  ht
3)c R ht t pt bk, t.
"  t f j 
 t pat a a tt " fm j 
tl t th SH
NtΠIf Da  a D, O, a
SH. I
t
b mt f
att t lat  tt "¶ p
t p. "
f  t a
a l al  p t Da. Da  
k a
amt f  p 
 D¶

mfat tat t.

Th  t
t 
at  t, ba  Da 
b  t a h l a th ff
t (t a SH).

     (('%&%

1.c T
a, all tat ha tat t p a th
t 
mfat t m
 .
2.c "l a kp
at  t paat fm mal a.

DgCL 145(a) DgCL 145(b) DgCL 145()


³Cpat hall ha th p ´ ³Cpat hall ha th p ´ ³M t 
mff ³ha b
 f l  th mt 
th ´.
S t b ht b SH  Th
Pat Dat  tΠb ht b   Ma
at . Pm
bhalf f th pat I
mfat.
gt  p, att¶ f, a
gt  p a
att f gt all  p a
att¶
all m  ttlmt.  
(
 t t j
mt  f.
ttlmt)
Il
 NtΠIf a tablh that th Df
Off Dt Empl " t f at
at  t f ath
Cpat, OR  at th pat, th  l
ha t
REQUEST f th pat a a 
mf h t.
D O EE  " t f "NOTHER
pat.

Th , f C. 1 ak Df t  


C. 2¶ BD, th C. 1 ma b
labl.

c 23
     S 

    S 

"SKŒ

1)c What k


f b   th (tat t CC)
2)c What apat  th pat at 
3)c I th pat lat m k
f k Stl k, SH t a mt O FD f a  lalt
4)c Sh l
th b a
t 
at  t
Sm  t ll all SH t b
t  t f f t ll tŒ
1)c Ufal  p th pat t a m ltplt f at.
2)c Matall pj
 th tt f 
t
3)c Itf th a fa
tb t f  am all tt
pat
Æ !" t a, pa  455-57

   


Ba [ m t mt tat t  mt t b CC (§§342, 343) M t ft CC ft tt ha
101, 102, a
103,  a

t t th  mt. taf (lk


)-Taf
×c š30 SH (342) ttŒ  ht f ft
×c Stk t ff
p bll (342) f al, ft pt, b  ll
×c Nt tafabl t th l th  tat
f a mt
(taf tt) (342)
×c Ctfat f p. hall ha ha
 that a  CC (343)
×c R t
a CC  atl f pat th tat (§344)
Vl ta Tmat [ b am
 tfat f p. (346)
Implat [ a t    t mt SH b  l 
t
-N 
a makt f haΠt p bll ta

. NtΠIf  fal t mt th
-Stk  hl
 ha
 f a f ppl. tat t  mt 

-C t pa pal attt t mt SH DE, th  j t bm
-If mt CC  mt, a k a 

fa lt  l (350, 354)  la pat a


fa lt  l appl.
NtΠC"   l tha 30 SH al.

Wa 1.c Stl " mt 4


ΠS pm
M
Mt SH a.c Ta
tal appahŒ [ D a¶t  a a FD th h SH a mt that h
a Ha ba  p  t maa  bl  t pat.  l
ta M a
t
SaΠb.c M
 appah [ SH a a  t lmt D¶ a
ff, b t lat f

t t pt ab . hm. Hl
ΠSH a mt t
" mt .c DEΠCa k t tl D ONLY f CC  fabl ba  S
lat t tat t CC (§350).  l
¶t  a a h
lmtat  1.c §351Œ Ctfat f p f CC a tht t h a
f.
ba
¶ ma p
 that b  hall b Dt ha FD t SH¶

t. maa 
b SH. a
pt th mpa.
.c NC OthΠCt phl
 SH a mt l D¶ a¶t  a a FD
" mt t lat la ,  hbt fa
,  pp ba  p  t maa 
lat t t mt SH,   ma
 t  1 pat bl  t th pat.
t f a pal bft.
ha. •
 ΠC t
f
SH a mt
ba  a  pat¶
bt tt a
th 
th l SH a
ha
bth
 
th a mt.
Dfft tha MQ a
 b

c 24
l 2 SH h-
pp.

ö' * (NY appl


DE la )Œ D¶t fall 

DE 342  mt f CC.
C t tll f k-
2.c Shahl
¶ Vt " mt (Mt SH appal f
a.c §212Œ t  ht f SH, p , lmt p att 
b.c 2 K
Πfabl). Ctat th
.c Vt Pl " mtΠSH a a  t N .
t  ta a,  a fabl K¶
.c Vt T t + Oth Vt " mtΠ (
)5.•)Œ If p t
§218. Cp f t t
 mt m t b fl
SH a mt t bla 
pat¶  t
DE ff. that a SH a am

bla  b majt, th


m t fll t. Pat PtŒ
P t a mt t paat
a mt ta
f bla .


"%"

ΠB 
t
SH a mt f  a 
a  t t ha a
ta a,  t ll hl

 t that.
Pathp DEŒ DOES NOT RECOgNIZE ö Œ Ill tat pp
"al  ×c M t b tat t CC a
al ha a mt t tat CC lk f mt SH ha
f hm
P-hp
tŒ §354Œ Opat a P-hp. (N ) t m BJR.

M"SSΠ"ll   t t a  ptat f CC mla t p-hp. 


  Π(Ma.)
×c Sh ha am  ht t patpat  maa mt f Cmpa b ht R

¶
pat lk pat, ha FD t ah th, a
l at (majt) ha bak at
ll ba  CC ha t t lathp lk P-hp. (Dah ) $800 ha, b t  l
¶t b 
Dah ¶ at am p.
Va  Ma
ft f
CCΠmall  mb f SH, 
a
makt f ha,
majt SH ha  btatal
patpat  pat 
th pat. R lŒ
Rmbl p-hp  SH  
ah th FD.

.1
# (DE)Œ
Nt a tat t CC. If 
at majt SH t ha FD
t mt SH,  ha t
b a 1) tat t CC a
2) k
f t. "LL "BOUT K.
(Ctat th Z).
Il ta C"Œ CgCL §1800Œ C" all  SH t ptt f
l t. I CC, f
Dl t l 
at  aabl a f ptt f th  ht  tt
f th mpla SH.

c 25
CgCL §2000Œ "

l t b p ha ha.
Sm tat
ha all 

tat t f th NYŒ NYgCLŒ §1104Œ all 


f th  fa
, pp, ll alt b
 CC. majt t mt. '  (NY)Œ
-NY ha 20% thhl
ΠSH m t   m tha 20% t
 th. (C" Raabl  ptat ttŒ
2 Rp t

¶t ha ). Dapptmt  t
ll 
t
pblmΠ h t tt t
-l lat NtΠMt SH that p h f
l t a¶t  f tl  CC pp. Opp =
 
 f ( lk p-hp). Stat that all th all th pat  majt t 
t that  btatall
j
al a

l t b p ha mt ha at fa al .
fat bl  ptat hl

l t
-
t, b mt SH.


al SH
at f bah gmpl . Blt (NY)Œ
f FD. C t hl
t pp
ba  1) N lat f
aabl  ptat b h
ht
h ha a
2)
Nt   hm


 
t b 
m, hah, a

 f l 
t (th j t
  



 f 50
a). BUT C t bal hm
 t b
¶t at hm t b
a  tat,  lt hm b
b ht  t f a aabl
p.

NtΠRaabl p  l

b ath ,  th l l


bk al  ((at-
lablt) # f ha)

NtΠC"  b  ha


at fa makt al . I C" f
Majt Mt a¶t a 
 FMV,  t

.
Sha R- -Spf  a
a 
t p f pat t -p ha •  
p ha tk  Œ(Ma) ³Eah p
a mt -lk at tk l 
t  f pat ha  hall b  
at a al
mt ´ b t  a al
P pΠa p
 f 
l l 
at f SH tmt aft mt a hl
. E ampl f
tmt
ath  majt SH ablt t  l
 a
ha 
 p
aft f p ha
pmat l th
a  SH fm f th patpat  pat¶ a mt, b t  t ll
pftablt. hl
 t t. Imptat t

aft lal fal ( tal
PΠth
pat

  

-pt
tat  SH lathp, k hat t  pt, pt fath).
lt at

CΠg


Π(NY)
-K a tl, h ma atalt  lmt
, k ma pt pblt Ma
at b bak
f pp. p. C t ll hl
a
phtat
p, p f
ha att t
aft, t
Rm
Œ IN DE, a¶t p h f ha p ha a mt ba  a mt.
 p-hp aal .

c 26
   (MN)Œ
NtΠIN p-hp h p
, th pat a p ha th Bth mblmt aŒ

aat
pat¶ ha th  lk that  CC.  t   p-hp
aal  a
 bth
FMV f ha a
faabl

  lftm
mplmt. Pf a  t
tpp
hΠ l
ha
 
bth f FD f
lalt lat p h  

t k f  ht.
O ttΠgappl th fat. What ha pat b
 all al  H ha mt SH b tat
 D

th ha ha f pat a   pla  maa mt If  t apt p-hp aal -lk at TYPE f

t  .

NtΠN  t fa  DE ha


l  l. "l,   t  RUP" (lk h ma aptal).



   


What  a LLC -B   aat th ta a
ata  f g"
(W)Π2 bth + M
pathp (pa-th h ta ) fm
LLC. 2 tk l ppt a

-Lmt
lablt f pat  pal taf
t t a  LLC th at

lablt f mmb mmb ta


t l  ak M[ Cflt f Itt. K
aptal tb t b t pal at a t tptat 1t ³llt´  hat
pat f t. pat tmplat
. C tΠT  ka 
-N f th tt f CC. (#, tp f SH) l a M a
1B
alt fal.
-Mmb tb t aptal  ’  -  t ll t 
-Maa mt amb   k a t jt t t that
×c Mmb-Maa 
Π(lk p-hp)Π al la
 t aabl fa  lt. E
 ht f maa mt, abt ta f  a  LLC,  ma ha
a mt, mt matt


b bak  
FD that m t pla (lk
majt t,  fat matt   p-hp- 
fath)-t lk pat
am . h  m t ha la (144)).
×c Maa -Maa 
Π(lk p)Πa b
t t 
a BD, CEO,  bth. M t $g +.Œ (C t f Cha f DE)Œ
b pf
 atl. Maa  
 LLC a mt m t
Faal IttΠ 
t f lalt b at  

-Pft a
l ha Πabt ta fath t  ath (Cmpa
t
a mt, mt tat t allat pft l  "
lt-at th t  t 
ba f al  f mmb tb t. at  ba
fath). C t-ma
 FD
-Wth
a alΠmmb ma th
a a

ma

t t a

t LLC a mt.
pamt f tt p  t pf

tat   LLC¶ pat a mt.

FmatŒ
1.c Fl "tl f O aat 

 at
tat ffŒ ULLC" §203Œ
"tl f O .
a.c Nam ( th LLC), a

,
a

 f a t,  a,


hth t  mmb-maa 

 maa -maa 
, hth
mmb labl f
bt a

c 27
bl at,
2.c Opat " mt ULLC" §103Œ a
 lat affa f  a

t f
b ,  lat am
mmb, maa , a
mpa.
a.c Ha atl f pat
a
al th, h tal
a h m t
pa

 p 
 
.

DE !.   '%&! ³t  th pl f th


haptwLLC "CT] t  ma m m fft t th
ppl f f
m f k a
t th fablt
f LLC a mt.

" mmb¶  ht l


 (pat a mt
a th)Πfaal tt ( ht t
tb t
a
l 
at patpat) a
maa mt
 ht.

 ! th ba appah f th Dl "t  t


p
 mmb th ba

t 
aft [%)  (t pa  496)
a mt a
t f h
fa lt p h
th mmb¶ a mt  lt.
E t a
L 
t Smla pblm a CC. #
ΠWhat

mal
ma I t l

 th
a al  
L 
t  a pblm. t  C t 
ta.


(
ΠCa a t f
ma mmb  tp t
b bak
pat mmb¶ tt
Wh - al mmb f a LLC
at a   a   f at, a
f
a  t mham  th pat
a mt   tabl, th  t ma


l t.

NtΠCpat t ta 
t Π pat m a



 t t SH.

c 28
   S 

   S   S    Sè

Ptt C
t B (1) Captal L al R mt (E t)  (2) P th Vl

E t P pΠ
 k f  t
 
t t pat. Pblm 6-1 (ha
 t)
C h
Fm laŒ
×c E t = at ± lablt
×c S pl  =  t ± aptal
×c Captal = pa al   # f ha  tta
 (§154)

-Pa al  = mm m p ha that ha m t b  


f 

 t b f ll pa
.
-DE   mm m  t (pa al   # f ha) IF
pat¶ tfat tat a µpa al ¶ f tk.

NtΠCa ha  at  t.


NtΠCaptal &  pl  a t lablt.
NtΠS pl   t pft.

Tp f 1) D

,

tb t (2) R


mpt f ha-p ha  ht t 
m ha ±a mt
( a th SH-, a

pat (3) Rp ha f ha-   t a


ak SH t p ha ha, lk

tb t $ t Lmt


a.
SH)
Lmt  Mm m Ital Captalat R mt '
 /" 
Dtb t üc DgCL §154Œ pmt a p¶ D t pf b l t hat ! •"Œ D
t amt f th 
 pa
f ha hall tt t aptal. Ol a  FMV a
Shahl
 lmt  that aptal a¶t b l tha am t  al t a  at apppat f
pa al  f  
ha ha pa al . pt
f t
¶
üc §153Œ   ha pa al  b l
f at lat that mth
f al at
am t.  pl  l Pl a
Q alt & Val at f C
at pa
f Sha h D¶ 

×c §152Œ C
at lt
lft t
t f
tŒ ³ aptabl
ata´,
³t f ah, a ta bl  ta bl ppt,  a ba
fath,  fa

bft t th pat´ al at al  f
at. Cp¶ bala
Lmt  Dtb t t SH ht t l  f
×c §154Œ Dtmat f am t f aptal (Captal = pa al   hth DE tat t
ha  tta
 ) fb

 mpamt
D

 ×c §244Œ R
t f Captal (244(a)(4) pmt
¶, at b f aptal ha b
l t, t taf t  pl  m  all f th aptal lat
.
pt
b  tta
 ha, hh     f th
a  at pa al  f  h ha)[ a ha  pa al  t
mth l   that   aptal  l  a
 pl  
h h.
×c (#'!  " Œ m t b pa
 t f th  pl , NtŒ Pblm 6-1Œ
 f tt ha   pl , m t b pa
 t f t pft that U
 §152, ba
ha
th fal a



la
 th a bf. (If aptal
t t
tm
 l tha a  at amt f aptal pt
b tk, D ma hat 
at 
t
la pa


.) th a

¶t¶
×c §#!   ’" Œ  p hall  


 matt f lat
m

c 29
th tha  a
a th th hapt (§170). thl D ll a 
×c (#! &  "  ’"     t a fm

 -’  (a)Œ  



 lat f §173,
¶
 at th tm t
hall b jtl a
all labl  6 a aft pa al 
t.
 h la f l


t th p a
t t 
t  th
t f t
l t  l t th f ll amt f th NtŒ Pblm 6-1Œ



la f ll pa
. (S f
¶ pa
$100,000  t f ba
a al  f 

$20,000  pl , m t pa  ta $80,000 thml). at,  FMV,


Nt th llf l  l t p. bf
la



,  that
pat ha a lt
m  pl .

2 "ppah 1)c L al Captal Tt (DE)


t Lmtat a.c I
a f paat a t f llatal t ptt
 
t.
Dtb t b.c PblmŒ mall am t f m aptalŒ
¶t

m h t ptt 
t. W a m ab t fa
makt p (aptal   mmal b f pa al ).
2)c Il Tt (mt tat)
a.c N
tb t ma b ma
 f mm
atl
aft a
 pat  l
b lt.
P th ×c Rm l al ft f pat lmt
lablt a
•" /"•0,Œ
Cpat Vl ah t SH tt bh
l. "pplat f th tt.
×c C
t   t mak SH labl f pat
bt. Ct

¶t p l b
×c V fat pf.  j t a
Blak Ltt La ( 
aptalat
×c Vl P ³ lŒ a  t ll p th l h Pl p al  t j t)
thatŒ
×c SH ha
COMPLETE
mat a
tl "•.Œ Ct
×c SH 
tl f pat fm  j t, p
l b
fa
lt,   f l a a
tll SH 

×c SH µ j t  f tl a 
at al ham t th p¶  t t
Pl. pptat tt  
×c What  th  f th tt 
t. Pa
3-pat
×c E tabl tt tt.
×c Rall ab t k th h th fat "pplat
mptat. 

*#

K CaΠTt aΠ th h 3-
×c C t m l tat t p l  th a m
th
pat tt. " Ba
pat a  tat a
a
j t tm a
 l. P  t 

k t p
a
t. P- t lathp bf th l. Vl ta h ht m  a.

 t bm a 
t,  
t ma ha " SH¶ labl Ct
ba a
f th k.

¶t p l. D

×c E  tl  t  h, m t h t  tl  a


j t a 
fa
lt a.
×c Lk at hth th  a mplt lak f
fmalt 
×c Lk at hth SH la
 3
pat t bl h  
pat pat l tmatl. 
Tt CaΠ
×c C t m ll t p l h p pat  

tl l
 a  tt t  . 
×c Wh h l
ba th k Wh   a btt pt t 
pt th t N ablt t a
. S  . 

c 30



Pat S b
a RlathpΠ t ll p l fΠ
1)c Pat
mat
 b
a  that  ha
 paat 
 t, "ND 
2)c Pat ab 
lathp th S t mmt fa
  
•
" ""Œ
ham. Pttal tl 
 b
a t  h
t p. Lkl, OK f
a h paat
ba
, faal,
bk, 
,
lt. T p
pat, m t h that
th h pl b 
pat, that
pat  b
a a
k a 1 tp.
Impta f
fmalt.

Ú ") "Œ D

th pat   pat


th  b
a M t
h ttal
mat
a
tl. Ul l
p
, pat
pat t labl.
P  Pa  587-88 '
(Wm )Œ
LLC Ca SH¶ a mt  a
 pt t th l
p . If LLC a
t lk pat,
th h l
t appl
pat l p

t  LLCS a

h l
all f ll
lmt
lablt  th
LLC t t. C tŒ
Wat t  a 
am  tabl
t
a
 th am 3-pat
tt.

   S

c 31
   S 

  /S 

 

Ba PΠ# ΠImpta f


×c Ba
a
pt a l t app a mt f m  P (tat t Va
 fa f m  (251(b)) gkm). N
SH t t
×c " mt hall tat (1) Tm & C
t f m  a a th
tk f
(2) m
 f a th am t fft (3) f m Πm  am
tfat f
am
mt  ha   tfat f pat f pat. Clam f t
  pat (4) f 
at (5) ma f b  a
lam f
l Œ
t ha (6) th
tal. C t a
bth  fΠt
×c Ba
 bmt l t a
a mt f SH t t at  h 
 f 1t a

a al  pal mt f t   


. tmat a f f 2
(t
×c Vt  
Π"  Ta t mpa all matal fat that 

t b
(251()). N
a majt f  tta
 ha ttl
t
l
).
t.
×c Nt  
, "  Œ
×c D mm m Œ 251(f)Œ f 
l t (Pa

ah),  f mmal
l t (ha a 


¶t  
20%)
×c M  f pat &  b
aŒ Sht-fmŒ
253(a)ΠIf pat   90%+ f ha,  t


.
Wh t §251Œ Bth tt t pat atfŒ
×c Ba

×c SH, Majt  

×c What 
 t b t t SH
×c P bl -p  tatmt
×c Pat mpa-
 mt a  
b tat
pat la .

TpΠM Π" 


tt
appa a
a  tt ht
lablt b la .

Cl
atΠ mpa  th   tt.

§259Œ L al fft f m .


Vt & If SH t
  a m , SH a   appaal  htŒ
"ppaal ×c If, t a 

t app §262(b)(1) t appaal.
R ht ×c g t
t SH th  ht t
ma
that
pat b  ha at j
all
tm
FMV.
×c g t ll fm SH, b  fm SH UNLESSŒ
×c Makt  t  pt (262(b)Œ I
×c B ht- t hahl
ΠN appaal  ht
f tk a p bll ta

lt

Natal S t E ha  ( hl
b >
2000 hahl
) at tm f m  a

hahl
  ff
a 
at
f th ha th tk  th   
tk that  p bll ta

( hl
b >
2000 hahl
)
×c Ct  hahl
ΠN appaal  ht
f tk a p bll ta

lt


c 32
Natal S t E ha  ( hl
b >
2000 hahl
) at tm f m 
üc E pt t makt  tŒ f ta t

ah a 
at (§262),
 tk  pat mpa t
appaal
×c If t a t 

t app 262(b)(1)-NO
appaal.
×c Pft "ppaalŒ 262(
)


S

Ba Nmal pΠNtΠF


al S t La 
1.c "  b  ha f Ta t  p bl that appl hŒ
makt, l tha 5%. ×c SH t  p bl
2.c "  p tt t tak  T. mpaΠf
al
3.c T jt. p   latŒ
4.c "  ba h ltt. §14(a) f ¶34 "t,
5.c T 
f tat. SEC R lat 14".
6.c T¶ SH (l
 ")   T f bah f FD, ×c T
 ff f
a
 ha f p bl
7.c T
 Off, a
 mpaΠWllam
8.c P  f ht "tΠ3
pat t

If T¶
t f  t p at t a , hat a ffŒ §14(
), (), SEC
"
 (  all
 bth). R l.
×c 2 T T
 OffΠCah
al-mtm
tk. B

 ff a lt f m t ta t


SH¶. "   h ha t tl ba

th h t
 ff a
th a 
ma ha th h m .
×c P  F htŒ la h a p  f ht 
 t
p  tatmt t th SH  thm
t t  t l
ba
( p  m t
t  t   tatmt).

Df Tat 1.c Dt-lat


p, lk ta 

ba
,   m lat t , lmt  mal
2.c Ba

t  aptal t t 
a th  
tk, blak hk pf

tk.
3.c SH ttΠlmt  ablt t all pal
mt ,  at b tt t, a
a
t.
4.c S pmajt t  mt
5.c S p-t tk
6.c gmal
7.c Wht K ht
8.c Cha  f tl mplmt k¶ ( l

paah t)
9.c Pa-ma
f
10.c P pll
11.c Lt at (  f FD bah-  ba
f
htl b

 f at $)
12.c " t f at that htl b


¶t
at

c 33
13.c R lat ptt ma 
"
f tat Th Ual tt b  th b 
 f pf  Ual . Ma
OK Dt.
1.c Wa at  p   a tht f th
Ual Tt ba

a.c D th tat t a th th
f
a

b.c If t  ka,
 th fm¶ hat
mp a tt 
f 
2.c RaablΠD
th ba
ha aabl
 
 f bl that a
a  t pat
pl a
fft  t
 (B 
 
ba
t h 
fath a
aabl
t at-p mptat). wa t p
t aabl]
3.c PptaltΠWa th
f
pptal aabl  lat t th that
p

a.c Fat t 
ΠWll t mak th
  attat that b
  l

at t Ia


 a f p ff
,
at  a
tm f tak,
ll alt, mpat  tt 
th tha SH, k f -
 mmat,  alt f  t
b ff
  ha .
4.c If th
t pa th 2-p 
tt, th
kk bak t th BJR  l (BP  Pl)
5.c If th
t
 NOT pa, th ll b abl
t ha th ha t  th h th fa
p a
p tt t ap lablt.
P Pll "ka SH R ht Pla,  
b mpa. 
  " ΠN
R ht bm  abl p m t  t  plt p  DgCL that
 h aΠa t f pf
pta  f ta t a
t a a
pt p
ha,  a mt f t
 ff f m bll, b t C t hl
 that 157
pf
pta  f ha. 
¶ ablt t at  ht
a
pt f hat a
Flp  PŒ Ta t¶ SH¶ ha  ht t b  th at. C t hl
 that
a

tal Ta t mpa tk at


 tΠmpa BD a mak P Pll.
ha m tk  tta
  that   m  p Th  th h Ual tt
b t t  tt lttl ah f am t f tk t  a
f
 f Ba
. P 
ll . 
§ 151(a), § 151( ) a
§
157 t
 th
.
Flp-O PΠg SH  ht t  B 
tk  a 2
ta  f- t m  (b  tk 
m 
tt)Πtp b  fm b abl t tl
tt ba  a¶t    t th mt SH, b
th th ha  ht t b  tk at
 t.

NtΠCmpa ha 


mpt fat Π ba

pt f 
m  ht at mal t t all

abl a t t  f a
.
Rl R lΠWh ba
p t p mpa f al  th  a
ha   pat tl, ba
ha
t t ma m
mpa¶ al  b ll t th h ht b

.

c 34
³Dt¶ l ha 
fm
f
 f th
pat bat t a t ha 
th tt
bt p f SH at a al f th mpa´.

DE R lΠWh ba




 t ll,
t t ma m
th ¶ al  b ll t h ht b

. B t f th

¶t¶

 t ll, ha FD t th pat- a¶t

 hat  at a a
t t mak th tk
p  p.

NtΠRl l appl  ha  f tl


taat-t j t t  h ba
ha


t
f
a ht  ht. ³I am ll m  t hm. SH  ht
a b t
t $5 a ha´- th  a t .

"   Ual La


 (Df tat)-th  2-p tt.

"   Rl La


 Ha th ba
ma
 a
 t ll th mpa If , t  "LL ab t ma m
SH pft.

NtΠMa b fat h bth ta


a
 appl (. ., Rl). P t p tal
f. Th  f 
ht k ht,
l ha  t a t.

c 35
 
 S    SS  S 

 

Rmmb t ft akΠI all 


m
t t
t p ha  al f a  t (M   t t-m
f ha)

Wh mptat ×c P


 fmat f SH t mak
fm
t
. Hlp
¶

btt jb, 
b t, ha
mt b a tat, faltat
fmt at b ¶t.
Ma
at Dl  
)) 1&
VlatΠfal, mla
 bk,

, a t,  fft
tal a t tl. Cl
p hmt m
ΠC & D 

(tpp f t  lat).
R l 10b-5 St 10(b)  • 
"ΠPat a  f
It hall b la f l f a p t   atΠ la C al tt
mpl,  t th th p ha  al f f pat a  f at,  tak t
a  t  t
 a atal  t a OK. (J
al ak  t f
 ha   a  t t   t
a l lat a).
map lat 
pt
  ta

R l 10(b)-5

Œ Sht-tm m Œ

¶t
-It hall b la f l f a pΠt t t. SH a   ha t
". t mpl a
, hm,  atf t t (b t m  p  tat

fa
p-f
al  l
¶t appl
B. T mak a t  tatmt f a matal h), a l a  mpl th
fat  t mt t tat a matal fat a  tat pat tat t, p f

 t mak th tatmt ma
,  th l ht f DgCL 253 atf
. If
¶t lk t,
th  mta 
 hh th  ma
, a b FD lam  tat  t-
t mla
 ,  C"N¶T b a 10b5 lam  a
C. T  a   a at, pat,    f tat la . Th al at appaal
b  hh pat   l
pat a a at tatmt m
 
b
fa

t p a p tat la -b f
t ll
-I t th th p ha  al f a  t. UNF"IRNESS IS NOT
 t FR"UD.

Lmt th ah f 10b-5Πh l

t at f
al a  f at f

t ta
tall 
b
tat la .
Wh ma b a 10b- SEC, Dpt f J t (mal), Pat pat
5 at (  p pat m
 
 §10, pat
a  f at mpl

 R10b-5

c 36
 S  

R l 10(b)-5
-It hall b la f l f a pŒ
(a) T mpl a
, hm,  atf t
fa

(b) T mak a t  tatmt f a matal fat  t mt t tat a matal fat a  
 t mak th
tatmt ma
,  th l ht f th  mta 
 hh th  ma
, t mla
 , 
() T  a   a at, pat,    f b  hh pat   l
pat a a fa

t p
a p
-I t th th p ha  al f a  t
SEC Dft Rf all t b   ll a  t  bah f FD t th
f I
 lathp f t t a
f
 hl  p f matal,
Ta
 -p bl fmat ab t th  t.

Vlat SEC R l 10-b

³Matal´Œ
M

ftΠWhth th  a  btatal lklh
that a
aabl t  l

 th mtt
fat mptat 


 hth t b   ll  t.

TgS  tΠhth a aabl ma  l


attah mpta t th
fmat.
³I
´ §16b f SEC "t f 1934Œ
Df
-phbt 
 (
t, ff, a
  f 10%  m)
fm mak ht   pft
-B phbt 
 fm p ha a
ll tk th 6
mth (ha
l)

OVERINCLUSIVE
Cpat a   th 
 a
mak thm t  pft.
Tt f I
 T a g lf S lph Œ T a g lf S lph Œ
Ta
 ×c "NYONE  p f matal -p bl fmat FN 12Œ t a
m t that pat ha
×c Dl t,  t
l th
×c "bta fm b   ll ( hl fmat fmat.Tm 
ma 
l
) ba
 BJR. B t
th
l 
Matalt fatΠabta.
1.c Nat  f fmat
2.c Cmpa p
3.c Makt p
4.c C
t f 


NtΠR l 10b-5
ft f 
 l
ΠTgS
t,
ta, l t, jat (FD t pat).

Cmpa t §16b f SEC "t f 1934Œ Off,


t, 10% SH

N-I
 N 10b lablt h p ha f tk h ha 
t t a •

Ú Œ
ppt ll ba  h  th a 
  a f
a. Ha mak- p  f 

 bl at t
l matal fmat h ha a 
, a
h  t p ll la h
fal  t
l fmat
 t tt t a lat f 10b. tak a
ha
ll  p  b ht
ha a
l
pt
tak.H ma


c 37
$30K  14-mth
p
. H ha

matal-p bl
f. SCOTUS a

 lablt ba 
 FD t SH f ta t
tt. Nt 
faal fa 
a lat f 10b-5.
10b-5  t ba

 al a t
fmat.
Ct t 1.c Wh th bta
matal, -p bl fmat fm Dk, FN 14
I
   th
2.c "  ptat  th pat f th pat that th  t

ll kp
l
fmat f
tal, a

3.c Rlathp at lat mpl  h a


t (m lathp f
t t).
NtΠIf  a a jat h t f at a la fm,  ha a k th
th fm, th   ma b 

a t t 
.
E amplΠSm h ha a
t f a p
f tm (la ,
a tat).
Tpp Labl hΠDk
1.c I
 tpp bah
h FD b
l matal -
p bl fmat f pal a (bjt ta
a
)
"ND
2.c Th tpp k   ha a t k f th bah f
t

Tpp¶ lablt 
at f th tpp¶ a fm l a
patpat aft fat  
¶ bah f FD.

NtΠDk a

 bft laΠTpp m t t a bft, hh  l

b ath Π$, p tat, ft, t.


Mapppat DftŒ O¶Ha a
Th " f
a¶  f 
l
fmat bl  t h ppal,

 
   

  , f pal a
tt t fa
 t th th p ha  al f a  t
a
th  lat R l 10b-5 (pa  1088).

If p tll ppal bf ta


  th fmat, a¶t t
thm 
 10b-5.

R l 10b5-1ΠTa
  Ba f Matal Np bl If (aft O-
Ha a, a


th).
P ha  al f  t " ba f a a f" matal -
p bl fmat atm th  a bah f t t, f


tl, 
tl t th    th hahl
 f that    t
a th p h  th   f th matal -p bl
fmat. (apt  la, t t, a
tpp,  a
h a  matal p bl fmat ± 
lathp)

10b-5(2)ΠN- l  lt f 3 t at  hh p ha a


t
f t t  f
 f p p f mapppat th.
1.c " mt t mata f
  t
2.c Ht  patt f ha f
t f,  h that pt

c 38
k  h l
k that mm at  pt f
talt
a.c Capt  mat lathp ha , t.
3.c If  bta
fm p , pat, hl
 bl
a.c UNLESS pt h  ht   ptat
f f
talt

Ula f l T
 Phbt "NYONE t
th th t
 ff fm tpp
Off P ha matal, -p bl fmat ab t t. (t 
  th ).
14-3

Challa a
DkΠ10b-5 lablt f 
 ta
   pm
 a
t t
l a fm a
lathp f t t a
f
 b pat t th taat.

Cla Ta
 ΠI
 ha FD t pat a
t SH. I
  fmat hmlf.

Tpp (Dk)ΠI


 ha FD t pat a
 tp t ath p. That th p h
¶t ha
FD th pat at all ta
  fmat. Tpp b  ha fm SH.

c 39