Chapter 11 - corps

Question 1

incorporation/corporations

Answer 1

separate legal entity that has a legal personality separate from the people who own shares in it

Question 2

corporation

Answer 2

“owner” owns shares that can be bought and sold
shareholders can be continually changing while the company remains intact
flexible
shareholders do not own assets of business
legal fiction

Question 3

separate legal entity

Answer 3

slide 5

Question 4

advantages of corps

Answer 4

limited liability
taxes
successsion and transferability
obligations of participants
management

Question 5

limited liability

Answer 5

shareholders protected from unexpected corporate obligations

Question 6

limited liability is lost when

Answer 6

directors/officers give personal guarantees for loans
courts lift corporate veil and hold principals liable for company obligations

Question 7

disadvantages

Answer 7

major changes in corporate structure require amendments to the incorporate documents
position of minority shareholder is weak
free transferability of shares may be restricted
most expensive way to operate a business

Question 8

process of incorporation

Answer 8

registration of a company
letters patent
articles of incorporation

Question 9

registration of a company

Answer 9

file memorandum of association and articles of association with govt agency

• name of company
• authorized share capital
• objects of the incorporation

Question 10

articles of assn

Answer 10

internal procedural regulations for governing the operation of the company

Question 11

parvalue shares

Answer 11

company places a monetary value of the share at issue may not reflect actual value on the market

Question 12

no par value shares

Answer 12

value of share is determined by the market

Question 13

different classes of shares

Answer 13

common
preferred

Question 14

common shares

Answer 14

vote at shareholders meetings
receive dividends declared by the corporation
receive property of the corp on its discussion

Question 15

preferred shares

Answer 15

give shareholder preference when dividends are declared

Question 16

where can corps borrow funds

Answer 16

single creditor: bank loans
multiple creditors: debentures and bonds

Question 17

funding of corps

Answer 17

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Question 18

closely held corps

Answer 18

few shareholders
shares not sold openly on stock market
private corporation

Question 19

broadly held corporation

Answer 19

public share offering
more highly structured and regulated

Question 20

directors

Answer 20

elected by shareholders
owe a duty to the company to be careful
fudiciary duty to the corp

Question 21

directors liable for

Answer 21

unpaid wages
breaches of company employment standards
unpaid taxes
damage to the enviro
breached of legislation
commission of tort
causing employees to commit crimes

Question 22

senior management

Answer 22

owes the same types of general obligations, duties of care and competence to the corp as the directors

Question 23

promoter

Answer 23

assists corp with a public share offering

owe a fiduciary duty to the corp

Question 24

corporate structure

Answer 24

slide 31

Question 25

dissolution of a corp

Answer 25

may be voluntary or involuntary
induced internally or externally
bankruptcy
neglecting to file annual return