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Chapter 10

COMMERCE 1AA3 Chapter Notes - Chapter 10: Retained Earnings, Share Capital, Common Stock


Department
Commerce
Course Code
COMMERCE 1AA3
Professor
Emad Mohammad
Chapter
10

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Chapter 10- Shaeholde’s Euit
Main features of a corporation:
1. Are separate legal entities--- corporations is separate from its owners, who are called
shareholders
2. Granted articles of incorporation by federal or provincial government that authorizes
the organization of the corporation
3. Corporation is separate from its owners, who are called shareholders
4. Has many rights a person has
a. Right to buy, own and sell property
b. Right to sue and be sued
c. Right to enter into contracts
5. Have continuous lives regardless of changes in ownership
a. Ownership is easily transferable through selling, trading, or giving shares to
another person
6. Shareholder have limited liability for the corporation debts
7. Shareholders own the corporation, but Board of Directors, elected by shareholders,
appoints officers to manage the business
8. Pay income taxes separate from those born by their shareholders
9. To potet opoatios’ editos ad shaeholdes, fedeal ad poiial go’t
monitor corporations ensuring they disclose info in financial statements for investors
and creditors to make informed decisions
Advantages:
Corporate management
o Professional management
Separate legal existence
Limited liability of shareholders
Deferred or reduced taxes
Transferable ownership rights
Ability to acquire capital
Continuous life
Disadvantages:
Corporation management
o Ownership separated from management
Ieased osts ad opleit i ode to adhee to go’t egulatios
Additional taxes
Shareholders elect a board of directors, who elect a chairperson (the most powerful person in
the organization). Also appoints the CEO
find more resources at oneclass.com
find more resources at oneclass.com
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