Newsletters

Responsibilities of Corporate Directors and Officers

Boards of directors and officers of corporations have distinct functions. Generally, directors set corporate policy while officers carry out that policy.

Ultra Vires Acts

In most states, the duty of obedience is recognized as one of the three fiduciary duties a director owes to the corporation. One component of the duty of obedience is that a director is prohibited from committing an ultra vires act. Ultra vires, translated from the Latin, means "beyond powers." An ultra vires act is beyond the scope of the powers bestowed on the corporation (and the director) by the corporate charter or bylaws. Thus, a director commits an ultra vires act when he acts without or beyond the authority vested in him by the corporation.

Sales of Foreign Options and Futures to U.S. Customers

The United States Commodity Futures Trading Commission regulates the offer and sale of foreign futures and options contracts to customers in the United States. Part 30 of rules of the Commission requires that sellers of such contracts must register with the Commission or seek an exemption from registration and that any seller, whether or not registered, must not engage in fraudulent activities.

Anti-Competitive Discrimination By Sellers Under the Clayton Act

The federal Clayton Act contains prohibitions against various specific anti-competitive practices and is designed to supplement the broad prohibitions of the Sherman Act against anti-competitive agreements and monopolization. Section 2 of the Clayton Act, 15 U.S.C.S. § 13, as amended by the Robinson-Patman Act, specifically prohibits discrimination in the price of commodities or in commissions, allowances, services, or facilities if such discrimination is anti-competitive.

Medallion Signature Guarantees

Transfer agents and issuers of securities, pursuant to the Uniform Commercial Code, may require a guarantee of the validity of the signature of the person transferring the securities in order to prevent a fraudulent transfer. The Securities and Exchange Commission has designated institutions that may issue such guarantees, and the Securities Transfer Association has developed the Medallion Signature program for those institutions to follow in guaranteeing signatures.