Chapter 17: Corporation Law Flashcards

16192463730	Corporation	a type of legal entity created by the state. A person in the eyes of the law with similar rights and responsibilities to that of an individual	0
16192480891	Characteristics of a corporation	- not an individual nor a partnership - separate legal entity from its owners - existence at law, but not material existence - rights and duties set forth by law - agents can bind corporations - shareholder's have limited liability	1
16192500161	Shareholder	a person who holds a share interest in a corporation, a part owner	2
16192504508	Director	a person elected by the shareholders to manage its affairs	3
16192504509	Officer	- a person elected or appointed by the directors to fill a particular office (president, secretary, etc.) - shareholders elect directors and directors appoint officers	4
16192555182	Control of Corporation	- management lies with directors -shareholder's cannot bind the corporation in contract (only officers and directors) -Limited Liability	5
16192581306	Limited Liability of Corporation	shareholder loss limited to investment personal assets generally are not subject to creditors	6
16192617434	Methods of Incorporation	1. Royal Charter 2. Letters Patent 3. Special Act 4. General Act	7
16192640630	Royal Charter	original method used to permit a monopoly or own land (ex. Hudson's Bay Company) - royal prerogative	8
16192643813	Letters Patent	a government document that creates a corporation as a legal entity	9
16192643814	Special Act	a corporation created by an act of parliament or a legislature for a specific purpose - for public or quasi-purposes (ex. Canada Post) - Ultra vires: if corporation attempts to perform something outside its powers	10
16192647559	General Act	a form of incorporation whereby a corporation may be created by filing specific information required by statute - used by most provinces Certificate of Incorporation - a government certificate creating the corporation	11
16192763594	Doctrine of Constructive Notice	presumption at law that everyone has knowledge of the content of all statutes	12
16192763595	Indoor Management Rule	a party dealing with a corporation may assume that the officers have the valid and express authority to bind the corporation	13
16193713653	Floating Charge	a debt security issued by a corporation in which assets of the corporation, such as stock-in-trade, are pledged as a security. Until such time as default occurs, the corporation is free to dispose of the assets	14
16193746428	Debenture	a debt security issued by a corporation that may or may not have specific assets of the corporation as security for payment	15
16193878546	Taxation of Corporations	- separate entity at law and is subject to taxation on its business activities - shareholder's may be taxed on dividends declared by the corporation - corporations earnings are its own for taxation purposes	16
16194685896	Due Dilligence	the obligation on the directors to ensure that effective systems are in place to comply with the law, and to monitor the systems to ensure compliance	17
16194709213	Business Judgement Rule	the reluctance of the court to interfere with decisions of the board	18
16194714878	Shareholder's Rights	- right to information - right to elect directors - right to approve actions of directors - right to vote - auditor's duty to the shareholders not the directors	19
16194739285	Majority Rule	shareholder meetings decide matters by a majority Exceptions: - where the act objected to is ultra vires - the act personally affects the rights of minority shareholders - corporation fails to comply with procedural rules - act constitutes a fraud on minority shareholders	20
16194885217	Dissolution of Corporation	- corporations have perpetual existence -inability of a corporation to make a profit a) corporation is solvent and may wind up its business b) apply for dissolution c) corporation ceases to exist when process completed d) procedure dictated by statute	21
16194922616	Purchase and Sale of Corporations	Can be done by two methods: 1. Share Sale: buyer buys the shares of the corporation (taking the good with the bad) 2. Asset Sale: - buyer buys certain assets of the corporation - can buy the good and need not purchase the undesired	22