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Wilfrid Laurier University
Daniel J Fife

1READING NOTESCHAPTER 28Internal Affairs of CorporationsStructure of the Modern Business CorporationPower originates with the general meeting of shareholdersThe shareholders appoint a board of directors to manage the corporationoThe board of directors are responsible for the management of a corporations business outside and affairs insideDirectors in turn appoint a CEO who is in charge of the daytoday running of the corporationIn closely held corporations shareholders are often directors blurs distinctionIn widely held corporations there may be as many as fifteen membersDirectorsSection 102 of CBCA outlines that the most important powers given to director for internal affairs areoIssue SharesoDeclare dividendsoAdopt bylawsoCall meetings of shareholdersA corporation is required to have one or more directorsPublicly held corporations must have more than three directors two of whom must be outsidersoAt least 25 of the directors must be resident CanadiansDirectors are elected by simple majority once shareholders have elected the BOD they have virtually no say in the management of the corps Business and affairs with small exceptions discussed laterDuties of DirectorsAccording to Section 122 a of CBCAoEvery director and officer of a corporation in exercising his powers and discharging his duties shallAct honestly and in good faith best interest of corporationExercise care diligence and skill in comparable situationsMust comply with the CBCA bylaws unanimous shareholder agreementoUltimately they owe a fiduciary dutyTo the CorporationoDirectors must act with a view to the best interest of the corporationTo ShareholdersoThe interests of the corporation are normally taken to mean the interests of the general body of shareholders present and futureoDirectors generally owe no duty to individual shareholders under corporate lawTo the publicoApart from statutory obligations the courts have generally resisted the notion that directors owe a duty to the public oBut it often is good business sense to have a good relation with the public
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