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Lecture

ADMS 2610 Lecture Notes - Uberrima Fides, Absolute Liability, Toxic Waste


Department
Administrative Studies
Course Code
ADMS 2610
Professor
William Pomerantz

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Corporation
Corporation
- a type of legal entity created by the state
- Existence in law is separate from those who form it (limited liability)
- A creature of statute
- A person in the eyes of the law with similar rights and responsibilities Th. That of an individual
Limited Liability
If company goes bankrupt the shareholders only loise investments in corporation and not personal
assets
Incorporate Federally b/c
- operate in other places
Nature of a Corporation
Characteristic
- Not an individual nor a partnership
- Separate legal entity from its owners
- Existence at law, but not material existence
- Rights and duties set forth by law
- Agents can bind corporations
- Corporations aren’t alive and can’t sign a contract for themselves
- Get a director (agent) to sign it
- shareholders have limited liability
Shareholder
- a person who holds a share of interest in a corp.
E.g. We don;t have much say in way Ontario is run
Director
- under corporation law, a person elected by shareholders to manage its affairs
Officer
- a person elected or appointed by the directors to fill a particular office (president, secretary, etc.)
- Shareholders elect directors and directors appoint officers
Company has to have an ending with:
- Incorporation / inc.
- Limited / ltd.
- Corporation/corp.

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Control
- management lies with directors
- Subject to limitations in the articles or shareholders agreement
- shareholders cannot bind the corporation in contract (only officers and directors)
CASE EXAMPLE
CASE
Josepgh solomon sole protritoryship, has a successful shoe business
-scared of getting sued, so decides to incorporate
-makes a company, joseph solomon INC
-has conversaqtion with himself
“hey joeself Solomon, this is joseph solom inc, want to buy your shoe business. Joe
asks how much? Inc says, 10 grand. Joe says your ripping me off. Inc says take it or
leave it. Joe asks for the 10 grand and INC said you just incorporated me, don’t
have 10 grand. Inc asks to have the money loaned. Joe says yes, but says if don’t pay
me, I’m going to take your assets, put in place a lean or debenture. They do all the
paper work. Inc wasn’t paying its bills to the creditors, and creditors sued and won
and got a judgement against the corporation. When you get a judgment against cor-
porations, (a 1000 dollars), whats next step? Next step is go and get assets from the
corporation, whatever it is. When they go to take that stuff, there is a lean or deben-
ture, see the lean is from joe (primary shareholder of corporation) they say can’t but
a lean on your own business, Joe said im not taking my lean off. Creditors take it to
court to try and get the lean taken off.
Legal reason for answer
-can’t make them take it back
We learned that a corporation is a separate legal entity (different from owners and share-
holders)
There was a legal lean, it was legitimate, and the creditors were defeated, they wouldn’t be
able to get the lean taken off.
Another one
- ABC industries INC
Per: John Adams (sign here)
If there is a deault, the bank cant sue john Adams

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Another Question!!
Do We need to give our company a name?
Can give company name if we want to
-if we dont the company is numbered
-Can register a business name and then carry it on afterword
If we do - can’t choose any name we want
-need to to a NUANS search - search of all companies in Ontario to make sure no oth-
er company has that name
If names are similar (Delicious Cupcake inc. And Delicious Cupcakes inc.)
-can get the name passed but will probably be sued
Transfer of Interests
- Freedom of shareholders to transfer shares
- Freely in a public or private company
- Subject to restriction in articles or shareholders agreement
- partners can’t easily transfer interests among each other
If a partner dies - the partnership is over
If a partner quits - its partnership is over
Term of Operation of the business
- corporation has perpetual existence
- Continues even if shareholders die
Operation
- governed by Statute and internal agreements
Separate Existence
- assets belongs to corporation not to shareholders
Methods of Incororpartion
Special act
- A corporation created by an act of parliament or a legislature for a specific purpose
- Only powers specifically granted to it by the Act
For public or quasi-public purposes i.e. Canada Post
Ultra vires – if corporation attempts to perform something outside its powers
- Only powers specifically granted to it by the Act
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