RSM225H1 Chapter Notes - Chapter 4: Financial Statement
Document Summary
Corpn. not real person, so acts through real persons (its agents: e. g. directors, officers, employees, and others given authority to make contracts on corpn"s behalf. Indoor management rule: corp. can be liable for contracts made on its behalf by its agents gives them: even if agents act outside of the actual authority the corpn. Written contract(s) signed on behalf of a corporation not yet incorporated. Protection of creditors: (1) maintenance of capital test: Applies re: declaring and paying dividends ( dividends ) Directors become personally if pay dividends where reasonable grounds to believe that either: Corp. is (or after payment would be) unable to pay debts as they become due, or. Applies re: corporation re-purchasing any of its previously issued shares. If either of the above tests are violated, directors personally liable to corpn for repayment of dividends, and in the case of dividends the corpn can require recipients of dividends to repay them (4) winding up:
