COMMERCE 1AA3 Lecture 10: Chapter 10
9 Jun 2016
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Separate legal entity: a distinct entity from its owners. Continuous life and transferability of ownership: has a continuous life regardless of share transfer. Limited liability: no personal o(cid:271)ligatio(cid:374) to (cid:396)epay (cid:272)o(cid:373)pa(cid:374)y"s lia(cid:271)ilities. Separation of ownership and management: shareholders own the corporation, board of directors appoint officers that manage. Corporate taxation: pay income tax not borne by shareholders. Government regulation: monitors corporations to protect creditors and shareholders. Advantages: can raise more capital, has a continuous life, ease of transferring ownership, limited liability of shareholders. Disadvantages: separation of ownership and management, corporate taxation, government regulation. Right to sell their shares: when they no longer wish to own them. Right to vote: participating in management by voting on matters. Right to receive dividends: share of distributions f(cid:396)o(cid:373) the (cid:272)o(cid:373)pa(cid:374)y"s (cid:396)etai(cid:374)ed ea(cid:396)(cid:374)i(cid:374)gs. Right to receive a residual interest upon liquidation: share of assets remaining after corporation pays all liabilities.
