The extraction of petroleum dates all the way back to 1878, in the Santa Elena Peninsula. In Ecuador, minerals are owned by the government and developed through government entities. In 1964, Petro Ecuador, which is Ecuador's state oil company and Texaco Petroleum, created a business partnership called a consortium, to produce oil in the Orient region of the Amazon. Texaco Petroleum's was under a 28-year concession agreement with the government. During this time period plaintiffs believe, the company is responsible for billions of gallons of oil dumped in the region. Also, that this pollution has caused the loss of livelihood, and the widespread health problems including 1,400 ...view middle of the document...
These exchanges are often completed to create holding company arrangements.
The recommendation for a merger or share exchanges must come from the board of directors in each of the corporations. The shareholders in both corporations are entitled to vote in agreement or in disapproval. The supramajority required for the approval can vary from corporation to corporation, but is well stated in the corporate bylaws.
In the case of Chevron, it was found that they did indeed have the jurisdiction to operate outside our nation boards in Ecuador. The legal operations were made possible after the merge between Chevron and Texaco, which was the merged corporation. Texaco had the rights and privileges to operate in Ecuador, and after the merge Chevron gained these rights.
B. The issue is whether or not the shareholders of Chevron can be liable for the damages done in Ecuador and responsible for creating the pits. Many pits were found in Ecuador full of oil and sludge. The pits are large areas dug out and created to pipe and dump toxic waste.
Each class of stock in a corporation has a voting right. Part of the shareholders job or roll in the corporation is the decision making by voting during a shareholders’ meeting. Only the shareholders that own stock in a corporation by a set date can vote during the shareholders’ meeting. These set dates are called record dates and can be found in the corporate bylaws. The record date keeps new shareholders from voting on an issue or recommended that may have occurred before they became a shareholder.
Most shareholders are protected by limited liability, were they are only liable for the debts and obligations to the extent of their capital contribution. These means they are not personal liable for the debts and obligations of the corporation. However, if a shareholder or shareholders own a large percent dominating a corporation and misuses it for an improper purpose, a court will disregard their protection and hold them personally liable for all debts and obligations of the corporation (Cheeseman Pg.623). This protection to the shareholders is also known as the corporate veil.
The corporate veil can be pierced by courts if found in two ways. One way is if the corporation has been formed with thin capitalization. Second way is if separateness has not been properly maintained between the corporation and shareholders. As an example lack of separation would include commingling of personal and corporate assets, failure to hold shareholders’ meetings and maintain proper corporate records and books (Cheeseman Pg.623).
As stated in the last issue, after a merge the surviving corporation automatically gains all the rights, privileges, powers, duties, obligations, and liabilities of the merged corporation. Therefore, Chevron as the surviving corporation is responsible for creating the pits whether or not they created them or Texaco. In Chevron’s case the corporate veil cannot be pierced, because the...