BU231 Chapter Notes - Chapter 25: Letters Patent, Royal Charter, Legal Personality
Document Summary
Chapter 25: the nature of a corporation & its formation. The corporation as a legal person: corporation: a legal person formed by incorporation according to a prescribed legal procedure, legal person: an entity recognized at law as having its own legal rights, duties, and responsibilities. It is a well established legal principle that once a corporation is created, it is a separate and distinct legal person apart from its members. Characteristics of corporations vs. partnerships: liability. Limited liability: the liability of shareholders is limited to the amount of their capital contributions. Regarded as the main advantage of incorporation. Disadvantages are personal guarantees and when shareholders: transfer of ownership. Partner must negotiate their release with both their partners and creditors. Shareholders may simply leave by transferring their shares to another person: management. Partnership requires unanimity on major business decisions vs. majority for shareholders.
