Textbook Notes (363,264)
Canada (158,281)
MGSC30H3 (57)
Jeff Rybak (14)

Legal Environment - Lecture 003

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University of Toronto Scarborough
Management (MGS)
Jeff Rybak

CORPORATIONS I NATUREAND CHARACTERISTICS 21 January 2014 (Chapter 21, p.546-555) Corporation is most common form of business organization. INCORPORATION PROCESS It is created when certain documents are filed with the appropriate government office under the federal Canada Business Corporations Act (CBCA) or similar legislation in each province or territory. Under CBCA requirements to incorporate are: • Articles of incorporation • Name search report on proposed name of corporation • Fee ARTICLES OF NCORPORATION set out the fundamental characteristics of the corporation (IE: Name, class and number of shares). A corporation cannot have a name that is confusingly similar to another business name. Once required documents are properly filed along with the fee, responsible official issues a certificate that certifies corporation was incorporated on the date of certificate. The directors’ name in article must have a meeting and pass a resolution to issue shares to shareholders. The directors decide: • Notice given for meetings of directors and shareholders • What constitutes a quorum for meetings • Who can sign contracts on behalf of corporation • What officers the corporation will have G ENERAL BY-LAW sets out the arrangements for carrying on the legal business of the corporation. HAREHOLDERS ’ AGREEMENT is contract between shareholders that customizes their relationshipINUTEB OOK is a book in which corporate records are kept. CHARACTERISTICS OF CORPORATIONS Separate legal existence, the corporation itself carries on business, owns property, possesses rights, and incurs liabilities: • Shareholder can be an employee or a creditor of the corporation. Shareholder and corporation are 2 distinct entities that can contract with each other • Because it is a distinct entity, corporation is unaffected if a shareholder dies or withdraws from business • Corporation is treated as a separate tax payer for income tax purpoIVIDENDis a payment of cash or property by the corporation to shareholders that is authorized by the directors Taxation of Income of Business Organizations • Sole Proprietorship o Income (or loss) from business added to (or deducted from) individual sole proprietor’s taxable income • Partnership o Income (or loss) from business calculated for partnership but added to (or deducted from) individual partner’s taxable income  In pr
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