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WASTE OF CORPORATE ASSETS

Benefits of a Nonprofit Corporation

A "nonprofit" corporation may seem like a misnomer if activities of the corporation generate a profit. However, if the objective of the nonprofit corporation is not to make a profit but to achieve charitable, educational, religious, literary, or scientific goals, then those profits normally would not be subject to federal taxation. This feature of a nonprofit corporation has led to use of the term "501(c)(3) corporation" in recognition of the section of the Internal Revenue Code that provides for the exemption from taxation.

Premerger Second Requests for Information

Parties to mergers or acquisitions involving sales or assets of $100 million or meeting other threshold levels must report their planned merger or acquisition to the Department of Justice or the Federal Trade Commission and wait for 30 days (15 days in the case of a cash tender offer or a bankruptcy sale) following the report before completing the transaction. That waiting period allows the Department or the Commission time to review the transaction for its potential effect on competition before deciding what enforcement action, if any, will be taken.

The Quiet Period Pending Securities Registration Statement Effectiveness

There is a "quiet period" between the time that a company files a registration statement with the Securities and Exchange Commission for a new public securities offering and the time that the Commission declares the registration statement effective. During the quiet period, referred to as the "waiting period" also, the company and related parties are prohibited by federal securities laws from releasing information to the public that could be construed as promoting sale of the securities covered by the as yet unapproved registration statement.

Sarbanes-Oxley Act of 2002

Employers have a general duty under the Occupational Safety and Health Act (OSHA) to provide a workplace free from "recognized" hazards. A violation of this duty can lead to criminal sanctions in addition to civil penalties. An employer can also be exposed to liability under occupational safety and health regulations promulgated by the Secretary of the Department of Labor. Directors and high-level executive officers must act to reduce or eliminate workplace dangers or risk OSHA liability.