MGTA05H3 Study Guide - Midterm Guide: Sole Proprietorship, Legal Personality, Fiduciary
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MGTA05H3 Full Course Notes
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Document Summary
A corporation is a separate legal person; carries own business, borrows and repays debts, responsible for obligations. Directors are legally responsible; elected by shareholder majority vote; elected usually yearly in annual meetings. Directors have full power; they can hire, fire, issue shares, declare dividends, etc. They are expected to function by putting the corporation above all personal interests. In small business, directors and shareholders are often the same people, while large public corporations have disinterested shareholders. Although directors are legally responsible, corporations are often run by hired managers (i. e. ceo, coo, etc. ) Shareholder rights=# of shareholdings (i. e. 100 shares = 100 votes) Three basic shareholder rights: right to vote to elect directors, right to receive and dividends declared, right to receive what remains after the corporation is wound up and all debts/obligations have been paid. Shareholders have limited liability their potential loss is limited to the amount they have invested in the corporation.
