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Chapter 15

MCS 3040 Chapter Notes - Chapter 15: Privately Held Company, Unsecured Debt, Crowdfunding

Marketing and Consumer Studies
Course Code
MCS 3040
Joseph Radocchia

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The Corporate Form: Organizational Matters
The Corporation
Predominant business vehicle in modern commerce because it is a separate legal
The corporation alone is responsible for its own debts and other liabilities
Should the corporation fail to make good on its obligations, the shareholders are not
Landmark Case: Salomon v Salomon Ltd, [1897] AC 22 (HL)
Do you think that the court went too far in giving independent existence to the corporation,
especially when the interests of Aron and his company were virtually identical?
Pre-Incorporation Issues
Whether to incorporate federally or provincially
What types of shares will be available and to whom?
What to name the corporation
Federally or Provincial Corporation?
Federally incorporated corporations have the right to carry on business in each province
Provincially incorporated corporations have the right to carry on business only in the province in
which they are incorporated (with some exceptions).
Deciding on Share Structure
Share: represents an ownership interest in the issuing corporation
A corporation may simply have one type or class of shares with all the basic shareholder
rights attached to it
Classes of shares may include a combination of various rights and privileges, including:
Voting rights
Financial rights
Preference rights
Cumulative rights
Redemption rights
Widely Held Corporation
Widely Held Corporation: shares are normally traded on the stock exchange (available to the
general public)
Securities legislation corporations are subject to regulations in those provinces in
which the securities are issued or traded
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