1.4: The Corporation and the Business System Flashcards
What are the key types of business structures in Canada?
Sole Proprietorship: Single owner, simple setup, no legal separation between owner and business.
General Partnership: Two or more partners share ownership, profits, and losses.
Corporation: Separate legal entity from owners, with the ability to raise capital and pass ownership.
Co-operative: Corporation where members are co-owners, with equal voting power regardless of shares.
What are the pros and cons of a sole proprietorship?
Pros:
Flexibility
Minimal paperwork
Simple banking
Cons:
No legal or tax separation between business and owner
Cannot be passed to another individual
What are the pros and cons of a corporation?
Pros:
Separate legal entity from owners
Can raise capital from investors
Tax benefits
Cons:
Cost of registration
Extensive financial and administrative paperwork
What are the two doctrines of incorporation?
Concession Doctrine: Incorporation was traditionally a privilege granted by the sovereign for specific business purposes (e.g., exploration, colonization).
Freedom of Association: Modern view where incorporation is based on the right to associate for a common purpose, with protections for investors, creditors, employees, and customers.
What is the purpose of incorporating a business?
Incorporation creates a separate legal entity with its own rights, allowing businesses to operate independently from their owners.
It provides limited liability, protecting owners from personal financial risk, and facilitates raising capital.
How does incorporation relate to the business-society relationship?
Incorporation doctrines shape how businesses are viewed in society, determining whether they have a social license to operate and whether they are responsible to society for their actions.
Contemporary views emphasize business legitimacy and accountability.
