Class notes
Corporate Law - Incorporation of a Company
- Course
- Corporate Law (LG206)
- Institution
- Sprott Shaw College (SSC )
The structures and features of a company. Management roles, and Shares
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Features of a CompanyLimited Liability - Key concept for companies
Managements - Board of directors manage a company ex. President, treasurer
Profit Sharing - Profits distributed through dividends when directors say
Finance- Companies can get capital through debt (loans) or equity (ownership)
Tax - Companies taxed as separate entities. Officers who are paid salaries pay tax on that
income. Dividends and sales of shares receive special tax treatment.
Transferability - Shares can be bought and sold
Perpetual Existence - Death of a shareholder does not affect the existence of the business.
Shares pass through estate or under the Articles or a shareholders agreement.
Government Regulations - Companies are highly regulated. Creation by the government,
certain steps must be followed.
Corporate Structure
Shareholders - Own the company, Get shares through capital or other contributions, Have no
particular obligations
Directors - Elected by shareholders, Mange the company overall
Officers - Appointed by directors, Have day-to-day management responsibility
Incorporation Overview
BC or Canada Company?
Most business incorporate provincially
Provincial Companies can register to do business in other provinces
After more than 2, it might vw better to incorporate Federally.
Starting a Company
Incorporation happens online
Reserve a name
- Or use a number, like 556788 B.C.
Number companies are called Shelf Companies
Corporate names have 3 elements
● Distinctive element
● Descriptive element
● Corporate element
Incorporation Agreement - Document signed by the initial shareholders whereby they agree to
start the company and appoint directors.
Corporate Designator - One of these 6 :
● Incorporated, Inc.
● Limited, Ltd.
● Corporation, Corp.
, How a Corporation Runs
Articles (By-Laws) of the company
Rules for how the company will run
Established and changed by the shareholders
BC government has a standard set called Table 1 articles
Deals with things like
How shares are issued and recorded
Books and records for the company
Signing authority for the the company
Requirements for directors’ and shareholders’ meetings
Appointing and removing directors, officers, and employees
Basic Forms of a Business Organization
Sole Proprietorship - No coverage or protection, one manager, operates under a business name.
● Simplest way to start a business
● Low start up costs
● All profits to the owner
● Unlimited Liability
● Debt collectors can access your savings,property, cars (assets)
Partnership - Owned by two or more, joint profit, both liable, can go after each other, governed
by Partnership Act
Corporation - Corporation is a distinct legal entity, capable of assuming its own obligations
Being a Director
Directors must be 18, have power and responsibility
They owe fiduciary duty to the company
● A duty to put the company’s interests ahead of their own
● Often there is no conflict
● No self-dealing
● No competing
Board of directors
● May be shareholders but not necessarily
● Make all of the management decisions
● Hire officers
● Have overall management responsibility for the company
● Elected annually by shareholders at the Annual General Meeting, or AGM
● Number of them set by the Articles or by law
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