BUSI 3005 Chapter 15

The Corporation

• Predominant business because it’s a seperate legal entity

• It alone is responsible for own debts and liabilities

• Shareholder’s aren’t responsible for its obligation failures

Federal or Provincial

• Federally incorporated corporations have the right to carry on business in each province

• Provincially incorporated corporations generally have the right to carry on business only in the province in which they are incorporated

share

• Represents an ownership interest in the issuing corporation

• Corporation may have one or more type or class of ______

3 rights of shares

• Right to vote (and elect directors for the company)

• Right to share in profits through dividends (if declared by the directors)

• Right to share in the assets of the company upon its dissolution

A company must have shares that cover all 3, they can be split between different classes. However, at least 1 class has to have all 3

common shares

have the 3 rights

preferred shares

• Has 3 rights + others

  • Right to receive dividends before other shares (“preference rights”)

  • Right to have dividends not paid in one year carried forward and added to the next year (“cumulative rights”)

  • Right to have the company buy back the shares at a set price (“redemption rights”)

Income sharing

• used for kids

• Class A shares

• right to dividends, but not allowed to vote

public corporation

• Shares are normally traded on the stock exchange (available to the general public)

• More than 50 shareholders

private corporation

doesn’t sell its shares to the public. share aren’t traded on the stock market.

• less than 50 shareholders

NUANS Report

• Document that shows the result of a search for a business name to ensure the name is not already in use

• Not as comprehensive as trademark search

equity financing

• selling shares

• shares are issued to investors in exchange for a purchase price

• provides flexible means of raising capital

• provides opportunity to benefit from corporation’s growth

debt financing

bank loans, bonds, and debentures

bonds

Document evidencing a debt owed by the corporation, often used to refer to a secured debt

debentures

Document evidencing a debt owed by the corporation, often used to refer to an unsecured debt (bond and debenture holders don’t have ownership)

securities

Shares and bonds issued by a corporation

Insider Trading

Transactions in shares based on confidential information of a material nature

Insider

• Person who has a special relationship with a corporation

  • Director (CEO, CFO, COO)

  • President

  • Higher employees

• Have to report any trading they’ve engaged in

• Have access to MNPI that can’t be sold or else face criminal charges

Tipping

information spread by an insider to 3rd party (tipee)