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A lot of venture capitalists still prefer C-Corps

When you go public having a C Corp is good for tax purposes


o With an LLC you have to convert to C-Corp then go public

Primary objective: shareholder wealth maximization


(Dodge v. Ford) Directors owe fiduciary duty to shareholders
to maximize profits ( can ignore society, employees, officers,
but not sh.holders)
o Board not required to change working strategy to
potentially earn more profit
o Can be other important interests, but if conflict, s/holder
profit maximization must prevail
o But See ALI principles of corporate governance
Objective should be to enhance corporate profit
and shareholder gain.
May devote a reasonable amount of resources to
charity (even if corporate profit not enhanced)
NOTE: Public Benefit Corporation S362 DGC:
NY and CAL also has
90% of shareholders must approve. Other
10% get fmv. Name must contain PBC
Balances stockholders pecuniary interests,
the best interests of those materially
affected by the corps conduct (employees),
and the public benefit Operate in
sustainable manner
A. Social Responsibility (CTS usually refer to corp through BJ
Rule)
NEW JERSEY A corporation may make reasonable
charitable contributions that benefit shareholders, provided
its not a pet project. Donations limited to 1% of capital and
surplus by statute.
A.P. Smith v. Barlow A donation made to
Princeton was reasonable and helped strengthen
the companys relationship with the University
which would hopefully lead to top grads joining
company
DELAWARE Making contributions is a specific power of the
corporation, but is subject to corporate benefit (ie. some
profit maximizing rationale). As long as serving corporate
benefit the donation may serve a laundry list of purposes

scientific, educational, emergency relief, etc. (tolerant, can be


tenuos).
NEW YORK Contributions are within corporations authority
irrespective of corp benefit
a. Factors to consider (from A.P. Smith v. Barlow) Was
donation:
1. Discriminately (opposed to indiscriminately) made
2. Made to pet charity of directors
3. Modest in amount and well w/in statutory limitations (if
applicable)
4. Voluntarily made in the reasonable belief that it would
aid the public welfare and advance the interest of the
corp in the community (ex. of benefits good will; tax
benefits)
Pennsylvania: Not just charitable, but can be
communitarian because directors not liable under
consumer live (no fiduciary duty). Has to benefit
something, not just sholders