Module 5: Corporate Law

Question 1

identification theory

Answer 1

a theory specifying that a corporation is liable when the person committing the wrong is the corporation’s directing mind

Question 2

directing mind

Answer 2

an individual who exercises decision making authority in matters of corporate policy

Question 3

regulatory offence

Answer 3

an offence contrary to the public interest

Question 4

self-dealing contract

Answer 4

a contract in which a fiduciary has a conflict of interest i.e. luke the corporate director wants to buy from luke the individual

Question 5

indemnification

Answer 5

the corporate practice of paying the litigation expenses of officers and directors for lawsuits related to corporate affairs

Question 6

lifting the corporate veil

Answer 6

determining that the corp is not a separate legal entity from its shareholders

Question 7

preferred share

Answer 7

a share or stock that has a preference in the distribution of dividends and the proceeds on the dissolution

Question 8

common share

Answer 8

a share that generally has a right to vote, share in dividends, and share in proceeds on dissolution

Question 9

proxy

Answer 9

a person who is authorized to exercise a shareholder’s voting rights

Question 10

pre-emptive right

Answer 10

a shareholder’s right to maintain a proportionate share of ownership by purchasing a proportionate share of any new stock issue

Question 11

dissent and appraisal right

Answer 11

the right of shareholders who dissent from certain fundamental changes to the corporation to have their shares purchased by the corporation at a fair price

Question 12

derivative action

Answer 12

a suit by a shareholder on behalf of the corporation to enforce a corporate cause of action

Question 13

oppression remedy

Answer 13

a statutory remedy available to shareholders and other stakeholders to protect their corporate interests ; most widely used in canada; applies when the actions or ommissions of the corp or its directors have oppressed or unfairly disregarded or prejudiced the interests of the shareholders ; avail when the reasonable expectations of the SH about mgmt conduct have not been met

Question 14

shareholder’s agreement

Answer 14

an agreement that defines the relationship among people who have an ownership interest in a corporation

Question 15

winding up

Answer 15

the process of dissolving a corporation