In: Business and Management

Submitted By yellehselliott
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Corporations – Study Notes
- A corporation is a legal entity that is separate and distinct from its owners
- It has the rights and privileges of a person (exceptions: voting, hold public office, marry)
- A corporation has the same duties and responsibilities as a person
- It must respect the laws and pay income taxes
- Corporations may be organized for the purpose of making a profit
- Not-for-profit corporations are organized for cultural, social, charitable, medical, educational, and religious purposes
- A publicly held corporation may have thousands of shareholders
- Its shares are traded in an organized securities market such as the Toronto Stock Exchange
- Most of the largest Canadian corporations are publicly held
- A private corporation (closely held corporation) has only a few shareholders and does not offer its shares for sale to the general public
- Crown corporation is similar to a privately held company except that it is owned by the government (Canada Post, GO Transit)
Characteristics of a Corporation
Separate Legal Existence
- The corporation acrs under its own name rather than in the name of its shareholders
- Corporation can buy, own and sell property. They can borrow money and enter into legally binding contracts in its own name. May sue or be sued and pays its own income tax.
- The acts of the owners (shareholders) do not bind a corporation unless these owners are duly appointed agents of the corporation
Limited Liability of Shareholders
- Creditors only have access to corporate assets to have their claims repaid to them
- The liability of shareholders is normally limited to their investment in the corporation
- Creditors have no legal claim on the personal assets of the owners unless fraud has occurred
Transferable Ownership Rights
- Ownership of a corporation is held in capital shares – transferable units
- Shareholders…...

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