Chapter 10: Ownership of a Corporation Flashcards
What legal form is recognized by law for a corporation and what are its characteristics?
A corporation is recognized by law as a separate entity that can own assets, incur liabilities, expand and contract in size, sue or be sued, and enter contracts independently of its owners. It exists distinctly from its equity owners and managers.
How are corporations created and governed in Canada?
In Canada, corporations are created by applying to the federal government or a provincial government, governed by the Canada Business Corporations Act (CBCA).
They are regulated by federal incorporation laws and provincial business corporations acts, and every corporation is governed by a board of directors (BOD).
What must be included in an application for creating a corporation?
The application, known as articles of incorporation or a charter, must specify the name of the corporation, the purpose (type of business), the types and number of shares authorized, and the minimum amount of capital to be invested at the date of incorporation.
What responsibilities does the Board of Directors (BOD) have according to Canadian law?
The Board of Directors is required by Canadian law to make decisions in the best interests of the entity.
What is the role of share capital in the capital structure of a corporation?
Share capital represents the funds raised by a corporation through the issuance of shares to shareholders, which determines their ownership stake in the corporation.
Who are shareholders and what rights do they have?
Shareholders, also known as stockholders, are individuals or entities that own shares in a corporation.
They have rights to vote on major corporate decisions, receive dividends, and have a residual claim on assets upon the corporation’s liquidation.
What is the significance of the annual general shareholder meeting?
The annual general shareholder meeting is a key event where shareholders can vote on important issues like electing directors, appointing auditors, and making decisions on executive compensation and shareholder proposals.
How can shareholders participate in voting if they cannot attend the annual meeting?
Shareholders who cannot attend the meeting can still participate in the voting process by casting their votes via the Internet, mail, or other media through a proxy.
What information is typically provided in the proxy circular?
The proxy circular includes information about nominees for the board of directors, executive compensation details, audit fees, and instructions for absentee shareholders to vote.
How does the organizational structure of a corporation like BCE Inc. typically look?
A corporation like BCE Inc. has an organizational structure that includes executives with titles such as President and CEO, Executive Vice Presidents for different departments, and a Senior Vice-President and Chief Brand Officer, but the specific structure varies based on the company’s business needs.
Figure: Typical Organizational Structure of a Corporation.
What are authorized shares?
Authorized shares are the maximum number of shares that a corporation is allowed to issue as stated in its corporate charter.
What are issued shares?
Issued shares are the total number of shares that a corporation has sold and distributed to shareholders.
What are outstanding shares?
Outstanding shares are the total number of shares that are currently held by shareholders.
What are unissued shares?
Unissued shares are the number of authorized shares that have never been issued to date.
