This document discusses Amazon as a corporation, including whether it is a for-profit or foreign corporation subject to state regulations. It outlines Amazon's history with sales tax collection and battles with states. The document also covers corporate structures like boards of directors, fiduciary duties, and liability. Amazon uses subsidiaries in different states and countries to potentially isolate liability and avoid taxes. Some view Amazon's tax practices as unfairly avoiding taxes that could fund state improvements.

1. What We Can Learn from Amazon.com
Discussion led by: Lisa, Reza, Ara and Jay

2. Corporations
Not For-
Profit
Government-
owned
For-Profit
• Public
• Closed
• S-Corp
•Is Amazon a
For-Profit?
Amazon

3. Regulation of Corporations
For-Profit Corp
Model
Business
Corporation
Act (MBCA)
Non-Profit
Corp
Model
Nonprofit
Corporation
Act (MNCA)
Foreign &
Alien
Corporation
Due Process
Commerce
Clause
• Is Amazon a
Foreign Corp?
Amazon

4. Regulation of Foreign & Alien
Corporations
Due Process Clause Commerce Clause
 Jurisdiction over the
foreign corporation
 Minimum contacts a state
 Does not offend traditional
fair play & substantial
justice
 benefits theory
 May require foreign
corporations to comply with
local laws
 Law serves a legitimate state
interest
 State has chosen the least
burdensome means of
promoting that interest
 Legitimate state interest
outweighs the statue’s
burden on interstate
commerce
• Is there min
contact with CA?
• Is there a state
interest?
Amazon

5. Foreign Corporation Doing
Business
 Subject to state courts
 Subject to taxation
 Qualified to carry activities in state
 State regulation of internal affairs
• Is Amazon a
subject to CA
taxes?
Amazon

6. The Board of Directors
 Provides general direction of
corporation; delegates day-
to-day to executives
 Authority to appoint and
remove officers
 Power to issue and
repurchase stock, set
dividend policy adopt laws
 Most large companies have
15 or more board members
 Elected by shareholders

7. Directors’ & Officers’ Fiduciary
Duties
 Acting within authority of their position
 Acting in good faith
 Acting in best interests of the
corporation
 Duty of care (business judgment rule)

8. Liability of the Corporation
 Doctrine of respondeat superior – liable
for employee’s tort if authorized conduct
 Criminal liability of corporations when
criminal act performed by:
 Board of directors
 An officer
 High level administrator who has supervisory
responsibility

9. Unocal Test
 Supreme Court of Delaware ruling
 Board must show
 Make reasonable investigation into threats
of takeover
 Motivated primarily to protect company and
shareholders against those threats
 Only reasonable defenses against threat

10. The Sales Tax Battle: A
Timeline

11. Amazon’s “Good” & “Bad”
States

12. Estimated Losses
• An estimated $11 billion
uncollected taxes from
online sales last year
• Since the financial crisis of
2008, about $50 billion
• Amazon will lose about
1.4% of $45 billion revenue
by collecting tax in all
states

13. Entity or Liability Isolation
Shareholders
Amazon
Corporate
LLC (DE)
Amazon.com
Int’l Sales, Inc
(DE)
Nv
Services, Inc.
(NV)
Amazon EU
S.a.r.l.
(Luxembourg)
Amazon.com
(WA)

14. Ethical Issues
 Issue
 Unfair competition
 Unfair price
advantage
 Tax
avoidance/practices
 Higher taxes on other
state improvements
 Amazon
 Retreat from states
with unfriendly tax
requirement
 California Indian
reservations tactic
 Wholly own
subsidiaries tactic
 Limiting activities of
candidates/employees