Chapter 7 (2) Flashcards

1
Q

What is business structure?

A

The form of carrying on business that dictates key aspects of a business’s creation. For example, it’s creation, how it conducts internal affairs, it’s relationship to other businesses, how it pays taxes, and the extent to which it is legally liable.

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2
Q

Why are business structure, aka business forms, important?

A

They clarify your legal relationship with colleagues and Co workers, they can strike the right balance between the need for simplicity and the need to limit liability, they can help plan for the future, and they will affect the amount of professional assistance you need

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3
Q

What is solo proprietorship?

A

Carrying on business whereby one person owns, and operates the business with no legal separation from the owner and business

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4
Q

What is unlimited liability?

A

Being forced to take full responsibility for any debt incurred or loss caused by a business (this is the main disadvantage of sole proprietorship)

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5
Q

What is a partnership, aka a firm?

A

The form of carrying out business where two or more people operate a business, with no legal separation between the owners and the business

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6
Q

What is a partnership agreement?

A

A contract singed by all partners that sets out how the partnership will operate and how it will end

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7
Q

What are the three types of partnerships in canada ?

A

The general partnership, limited partnership, and the limited liability partnership

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8
Q

What is a general partnership?

A

The partnership that is not registered with the government as a limited or limited liability government

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9
Q

What is joint liability?

A

A creditor may sue or collect from all partners for a partnership debt. The partners will contribute equally or as set up in their agreement

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10
Q

What is several liability

A

A creditor may sue or collect from one or some of the partners for a debt if the other partners are unable to pay. Partners who have paid this debt can then look for reimbursement from the non paying partner

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11
Q

What is a limited partnership?

A

A partnership composed of a minimum of one general partner and one limited partner who provides money or property to the firm and shares in the profits but who does not participate in the business affairs of the firm and whose liability is limited to exclude any personal assets

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12
Q

How do you create a limited partnership?

A

Unlike sole proprietorship or a general partnership, a limited partnership is formed when a partnership declaration is filed under a provincal limited partnership statue. This declaration must include basic information such as names and contact info of all partners

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13
Q

What is an limited liability partnership?

A

Typically only given as a option to professionals such as lawyer, expect in the northwest territories and BC, the LLP is composed of partners who are personally liable for their own negligence and negligence of those they supervise; but, they are not liable for the other partners negligence

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14
Q

How can one create a limited liability partnership?

A

When two or more people enter into a written partnership agreement that designates the partnership as a LLP. The LLP must also enter their name under the business names act before it can conduct business

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15
Q

What does a partnership agreement typically consist of?

A

It is a comprehensive agreement including financial matters such as bank accounts, compensation matters such as division of profits, business matters such as managing employees, membership, and dissolution of the partnership

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16
Q

What is a corporation?

A

The form of carrying on business by means of a legal entity that is distinct from its creators and enjoys almost all the rights and obligations of an individual. Even if the original creators dies, the corporation lives on.

17
Q

What is a private corporation?

A

A corp whose shares are held by one person or a small group of people and are not offered go the public for sale

18
Q

What is a public corporation?

A

A corp whose shares are offered for sale to the public

19
Q

What is an incorporator?

A

A individual or another corporation who completes and files the required documents, assembles initial capital, and causes a corporation to come into existence

20
Q

What rights are afforded to shareholders ?

A

The right to vote in the election of directors of the Corp, the right to share in profits via dividends, the right to share some or all of their shares, and the right to share in the assets of the Corp. All of this depends on the type of share and agreement the shareholders have with the Corp.

21
Q

What rights are afforded to shareholders via statue?

A

The right to be protected from oppressive acts of the directors, the right to vote in respect of certain fundamental changes, and the right to review corporate records

22
Q

What is a director ?

A

The person who makes major decisions regarding the business of the corporation. They are accountable to the shareholders

23
Q

What is fiduciary duty ?

A

An enhanced duty of care that flows from a relationship of special trust, such as the one between doctor and patient. In a corporate context, it is the duty to act with the best interests of the corporation in mind.

24
Q

What is a officer ?

A

The person responsible for the day to day operations of a corporation. The officer is appointed by reports to the board of directors. They, too, have the fiduciary duty.

25
Q

What is, and is included in, articles of incorporation?

A

It is a document that creates a corporation.
It includes the name of the Corp, the location of the office, the names and address of the incorporators, the name and address of the first director, the number and type of shares that are to be sold, a statement of restrictions on rights associated with the shares, a statement of the corporations purpose, and a signature of the incorporators

26
Q

What is due diligence?

A

The defense claims that they did everything reasonable to prevent an offense from occurring

27
Q

What is a oppression remedy?

A

Where a corporation acts unfairly or oppressive and disregards the interests of shareholders, creditors, directors, etc. If this happens, the remedy is for the court to rectify the matter

28
Q

What are appraisal rights ?

A

The right afforded to shareholders that allow shareholders to sell their shares back to the corporation at fair market value if the balance of power sways against the shareholder.

29
Q

What is a derivative action?

A

A shareholder, director, or officer may defend or bring an action in the corporations name if the board of directors decides not too

30
Q

What is a shareholders agreement ?

A

A contract that governs the relationship between shareholders or between shareholders and the corporation, or governs how the corporation does its business

31
Q

What is a Prospectus?

A

A document containing detailed financial information about a corporation that is required to be given to the public before any shares are allowed to be publicly sold. The document also contains information about the directors and officers of the corp

32
Q

What is an Agent ?

A

A person sho has the authority to act on another’s behalf.

33
Q

In Agency law, who is the Principal?

A

A person who gives an Agent the authority to act on their behalf

34
Q

What is a preincorporation contract?

A

A contract in which was entered into prior to the Corporation becoming legitimate, but after which, the contract is ratified by the newly create corp

35
Q

What is a agency agreement ?

A

A contract between principal and agent that describes the rights and authority of the agent.

36
Q

What is a joint venture?

A

The temporary relationship create between entities to complete one or more business projects

37
Q

What is a franchise?

A

The right to operate a business using the name, products, methods, and advertising of another business