This is an extract of our Corporate Governance In The Public Corporation document, which we sell as part of our Corporations Outlines collection written by the top tier of Georgetown University Law Center students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Corporations Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Corporate Governance in the Public Corporation A. Sources of Corporate Governance i. State Law a) Corporation statutes only describe directors' responsibilities in general terms.
? MBCA 8.01(b) states that "[a]ll corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed by or under the direction of its board of directors . . . ."
? DGCL 141(a) provides that "[t]he business and affairs of every corporation organized under this chapter shall be managed by or under the direction of the board of directors . . . ." ii. Federal Law a) Securities Exchange Act of 1934 (1934 Act):
?????Much of the federal corporate governance lawmaking is done through disclosure and the SEC regulations under this act (e.g. SEC Proxy Rules) b) Sarbanes-Oxley Act:
? Requires that a corporation's audit committee be comprised of "independent" directors
? Requires the chief executive officer and the chief financial officer of a reporting company to certify that the company's quarterly and annual reports do not contain material misstatements or omissions and that the company's financial information fairly presents the company's financial situation in all material respects.
? The signing officers are also responsible for establishing, maintaining and regularly evaluating the effectiveness of the internal controls
? These controls must be evaluated within 90 days of any periodic report, and their effectiveness and any significant changes must be disclosed in the company's reports. SSSS 302, 906
? The annual report must provide an assessment of the adequacy of the company's internal controls for financial reporting. SS 404
? There are criminal penalties for false certifications.
? Public companies must file and annual report on Form 10-K with the SEC
? In that report, the company must disclose that it has adopted a code of ethics for the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
? The code of ethics must prescribe standards "reasonably necessary to promote honest and ethical conduct," including the ethical handling of conflicts of interest between personal and professional relationships, full and fair disclosure, and compliance with applicable
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