MGTA36H3 Study Guide - Midterm Guide: Fiduciary, Derivative Suit, Res Ipsa Loquitur
Document Summary
About corporation law: pre-incorporation contract: a has signed the contract/lease on behalf of the company before the company"s incorporation. As long as the new party adopts the contract, a will be released from obligations and liability under it and the new party will assume those obligations and liability. Indoor management rule: a is only a shareholder instead of an owner or a director of the company. Thus, a has no authority to bind the corporation. The indoor management rule, however, may permit b to argue that the company is bound by the contract. Issue about shares issuing: 1) a is a shareholder, no a director, and therefore does not have the authority to issue company"s shares. 2) z as director can indeed appoint y. Z cannot, however, issue shares unilaterally- the board of directors must agree. 3) once the dividends are declared, they should be paid the same on all shares of a class.
