AFM101 Chapter Notes - Chapter 9: Legal Personality, Share Capital, Retained Earnings

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Sasan Saiy

Document Summary

A corporation is a business entity formed under federal or provincial law. Federal or provincial government grants articles of incorporations, documents giving the governing body to form a corporation. Distinct entity that exists apart from its owners, the shareholders. Corporation has many rights as a person, such as the right to buy and sell property, sue and be sued. Assets and liabilities belong to the corporation, not the owners o. Legal names include limited, corporation, or incorporated (ltd. , corp. , inc. ) Continuous life and transferability of ownership o o o. Corporations have continuous life regardless of changes in ownership. Shareholders may transfer, sell, trade, give, or dispose shares. Transfer of shares does not affect continuity of the corporation. Shareholders do not have personal obligation to repay the company"s liabilities. The most that shareholders can lose is the cost of investment. More attractive features of a corporation, allows for more capital to be raised from a wider group of investors.