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Lecture 8

MGTA01- Lecture 8- Nov 4.docx

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Lecture 8- November 4 3 major ways in which you can own a business in this Country 1. Sole proprietorship 2. Partnership 3. Corporations On final exam: advantage of sole proprietorships, in a market economy, you don’t need to fill out any forms, you don’t have to pay any fees, don’t have to ask or tell the government. You just start your business. It’s easy and free. Risks: if you screw up, harm your client, etc. you are solely liable- they will sue you personally and they will sue as much money as they can get away with On final exam: personal and unlimited liability ; joint and several liability (each partner responsible for debts of partnership, even when incurred by another partner Review: Sole Proprietorship Easiest way to form a business Most common form of ownership But: Personal liability Unlimited liability Review: Partnership Two (or more) heads are better than one But: Conflict (more than 1owner) Personal liability Unlimited liability Joint and several liability each partner responsible for debts of partnership, even when incurred by another partner. Review: Corporations Does require paperwork and fees Appropriate for businesses that want:  larger number of owners: you try to get your family and friends to join the business, to help you  split between owners / managers  limited liability for owners: a corporation is a separate legal entity; that’s why you have to fill out all the paperwork  Responsible for its own debts.  Owned by shareholders  Shareholders have limited liability:  (Can’t be sued. Can lose only their investment- whatever they paid for their shares) Corporations – Shares -is a piece of paper; a receipt; it’s what an investor gets for pumping money into a corporation A shares represents ownership Investor pays $$ for a share of ownership 1 share = 1 vote More shares = more ownership = more votes - when the prof googled shares certificate, the first one to come up was Microsoft - Bill Gates doesn’t own Microsoft. He owns a BIG chunk of Microsoft Chris “Owns” the Royal Bank Prof. Bovaird owns 212 shares in the Royal Bank of Canada 400,000 other my slice people also own shares They own approx. 1,400,000,000 shares Shares: Worth What You Pay Articles of incorporation in Canada A share has no fixed or inherent value. A share is “worth” what you pay for it. People will pay more if they think the business is well-managed, and growing. “value” of a share goes up and down every day, with changing developments. Mixed Market economy: we put up with a certain amount of government regulation We put up with CRTC Bell is gonna continue to screw Canadian consumers. Corporations – Minimum Size In Ontario you can create a corporation: Selling 1 share To 1 shareholder Who pays 1¢ Shareholder elects 1 director Corporation hires 1 employee Not a sole proprietorship – a private corporation I have to do extra accounting, work, etc. so I’m gonna contact the other shareholders and say I want to delist the company. Lets only se
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