Formation and Operation of a Corporation

Question 2

Two principles from Salomon’s Case

Answer 2

1. a company, once created, has a separate or distinct legal existence apart from its shareholders
2. A shareholder is not responsible or liable for the debts of the coporation

Question 3

The Corporate Veil

Answer 3

this is a form of protection to the shareholders from personal liability

Question 4

The Corporate Veil

Should it ever be pierced??

Answer 4

Yes if…
1. if the company was set up to fraud
2. If you cannot tell the different between the company and the owner
3. If you have one trading enterprise high level of control from parent company and substituent

Question 5

What are the rights of shareholders?

Answer 5

1. The right to financial disclosure
2. The right to document the financial disclosure
3. The financial right
4. The right to an AGM (annual general meeting)

Question 6

Shareholders Remedies

Answer 6

1. Investigation
2. Oppression
3. Deprivative Action

Question 7

You don’t have to resign, instead…

Answer 7

1. Give notice (should be in writing)
2. Recuse (completely withdraw from anything to do with the conflict)

Question 8

Fiduciary duty

Answer 8

the duty of utmost loyalty and good faith in a relationship of trust