Midterm Notes

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Department
Management (MGS)
Course
MGSC30H3
Professor
H Laurence
Semester
Fall

Description
CORPORATION y basic types of shares o common shares o preferred shareshave some preference over common shares and sometimes over other classes of preferred shares such as a preferred dividend o some class must have a vote the right to receive dividends and the right to receive property on a winding up y corporate securitiespayments o shareholdersdividends paid out of profit onlydividends not deductible for tax purposes o bondholdersinterest paid regardless of profitsinterest paid is a deductible expenseusually secured so paid in preference to other creditors on bankruptcy or winding up y rights of shareholders o right to vote to elect directors o right to approve major changes o preferred shareholdersmay have a right to dividends if the corporation can paywill have preference to be paid dividends before the common shareholdersusually have a preference to return of capital y rights of bondholders o no right to vote o no right to manage business o but often has ability to exert considerable influence over business o right to appoint trustee if terms of bond not honoured y incorporated partnershipdirectors run the business and are usually the shareholders as well y public corporationdirectors run the business for the passive shareholder investors y directors are responsible in law for o businessthe commercial relations of the corporation as a legal person with other legal persons o affairsthe relations between the corporation and its shareholders y duties of directors to the corporation o must act honestly in good faith o with a view to the best interests of the corporation o must act as a reasonably prudent person o directors have a fiduciary duty to the corporationthey act as trustees y duties of the directors to the shareholders o specific duties to deliver financial statements and call annual meeting o submit bylaws for approval o submit other business to shareholders o no fiduciary duties to individual shareholders y fiduciary duties of directors o standard of highest good faith o no conflicts of interest y fiduciary duties and conflicts of interest o contractsdirectors must disclose conflict to corporation and refrain from voting to approve contractcorporate opportunities must be reserved for the corporation and directors act as agents for the corporationcorporate information cannot be acted on or usedno competition with the corporation y remedies for breach of fiduciary duty o damages in the amount of loss o recall the contracts if possible without affecting third parties o directors hold assets in trust for the corporation and must deliver them o accounting of profits o corporations should have full benefit and directors should be derived of any benefit
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