The flashcards below were created by user spazzle on FreezingBlue Flashcards.

  1. Corporate changes:
    • - mergers
    • - amalgamations
    • - take overs
    • - change of name
  2. Relevant legislation:
    • - Business Names Act
    • - Partnership Act
    • - Limited Partnership Act
    • - etc.
  3. Specific forms of doing business:
    • •Sole Proprietorship
    • •Partnership and Limited Partnership
  4. Introduction to corporations and incorporation legislation:
    • - Business Corporations Act (Ontario) – OBCA
    • - Canada Business Corporations Act - CBCA
    • - Etc.

    Incorporation, organization, administration and maintenance of an Ontario Corporation
  5. Financing personal property and corporate assets
    Personal Property Security Act (PPSA)
    The carrying on of a business for profit by an individual without other owners
  7. Sole Proprietorship Issues:
    • -Sole owner
    • -Taxed as personal income
    • -Unlimited personal liability
    • -Sued personally
    • -Register name and receive Master Business Licence and business identification number
    • -Must be registered to maintain a legal action
    The relation that exists between persons carrying on a business in common with a view to profit
    A partnership in which each partner is liable for the debts and other obligations of all partners to an unlimited degree
    A partnership in which there are one or more general partners who are liable for the debts and other obligations of the other partners to an unlimited degree and one or more limited partners whose liability is limited to the amount that such limited partner has contributed to the partnership business
    An entity with a separate legal identity from that of its principals (shareholders/ owners), which is brought into existence by filing a document under the appropriate statute or special statute of the jurisdiction in which the corporation carries on business
  12. Share Capital Corporations:
    • -Closely held (eg. family owned) with less than 50 shareholders
    • -Public/offering with shares listed on a stock exchange
  13. Not For Profit Corporations:
    • -No shares issued, membership in corporation, normally formed for community/ research purposes
    • -May be charitable
    An arrangement formed by a written agreement whereby one person (the FRANCHISOR) grants a right to another person (the FRANCHISEE) to use a trademark or trade name in connection with the supply of goods or services by the franchisee and requires the franchisee to conduct its business in accordance with operating methods and procedures developed and controlled by the franchisor
  15. Limited Liability Corporation (LLC)
    • •Is used as an alternative to a corporation, general partnership or a limited partnership for doing business. •Has the advantage of flow-through taxation (profits and losses flow through to the individual LLC members) along with flexibility in management, etc.
    • •Has limited liability for its investing members or shareholders
    • •Must register company name to carry on business in Ontario
  16. Joint Venture
    • •A commercial business activity carried on by two or more parties for a common purpose in compliance with established terms and conditions
    • •Joint Venture Agreement sets out parties’ rights
  17. Two forms Joint Venture
    • a.Equity Joint Ventures
    • – separate legal entity with parties contributing capital and ownership interest entitles parties to participate in control of business and share of profits
    • - Legal form determines type of agreement
    • – shareholder or partnership. Contractual Joint Ventures – strategic alliance, co-ownership, teaming arrangements – joint venture described in contract
  18. Some basic provisions of Joint Venture Agreement:
    • •The objectives of the joint venture activity – including scope of activity and consequences if fail to meet objectives
    • •The relationship between the parties, including a statement that parties do not intend to form a partnership
    • • capital contributions and financing
    • •Allocations and distributions of profit and loss among participants
    • •Dispute resolution procedures to be used
    • •Transfer of ownership interest
  19. Licence
    • •A contractual arrangement whereby the owner of certain property such as a trademark, copyright, or patent (Licensor) grants the right to use such property to another person (Licensee) for a royalty fee
    • •Licensee is independent from Licensor and not an employee
  20. Co-Ownership
    •A number of persons holding title to some property (usually real property) where the parties’ interests remain separate and they are free to dispose of their interest without the consent of the other co-owners, subject to any agreement the parties may have entered into
  21. Unincorporated Association
    • •An association of persons carrying on a not-for-profit activity without the protection of incorporation
    • •May have charitable or non-charitable objects
    • •Usually members formulate a constitution or memorandum of association setting out
    • objects of association
    • •No registration requirements unless apply for charitable status
    •An individual carrying on business by himself/herself and for the individual’s own account
    • •Inexpensive to set up and simple to maintain
    • •Ability to set off operational losses against other income of sole proprietor
    • •Limited ability to involve other people in ownership
    • •Personal liability for all actions and debts of sole proprietorship
  25. Sole Proprietorship
    Applicable Statute:
    • •Business Names Act (RSO)
    • •Requirement to register (s.2) – on public record
    • •Requirement to register for corporations, partnerships and sole proprietorships
    • •Registration is valid for 5 years and can be renewed before expiry – (s.4 and s.5)
    • •If details of registration change amendment to be filed s.4
    • •Failure to register effects the right to litigate and the enforceability of contracts
    • •Liability for individuals who register a name that is deceptively similar or the same as another person’s registered name (s.6)
  26. Exceptions to Registration Requirement:
    • •Where sole proprietorship operating under individual’s name
    • •Where involves a limited partnership – limited partnerships are governed by the Limited Partnership Act
    • •Partnerships carrying on business under the names of the individual partners
  27. General Partnership
    • •The relationship that exists between 2 or more people carrying on a business in common with a view to profit
    • •Not considered a separate legal entity – individual partners are carrying on business in their own right
    • •NOTE: the Rules of Civil Procedure allow a registered partnership to sue or be sued in the firm name
  28. Three types of Partnerships:
    • •General Partnerships
    • •Limited Liability Partnerships (LLP)
    • •Limited Partnerships
  29. Partnerships
    Applicable Statute:
    • •Partnerships Act, R.S.O. 1990, c.P.5
    • •Formation of the partnership – s.2 and s.3
    • •Requires “carrying on of a business”
    • •Requires a “view to making a profit”
    • •Requires an agreement among the partners – oral or written – to carry on a business together (“carrying on business in common”) and to share profits
  30. Principal Characteristics of a Partnership:
    • •Governed by s.6, 7, 10 and 11 of the Partnerships Act
    • •Each partner has the power to bind the partnership
    • •Partners are bound by the acts of another partner
    • •Each partner is considered an agent of the other
    • •Partners are jointly and severally liable for the actions and debts of the partnership
    • •A notice can have the effect of limiting liability – s.9
    • •Income of the partnership is taxed at the level of the individual partners
  31. Methods of Carrying on Business: Corporations (references are to the Business Corporations Act (Ontario) “OBCA”
    A corporation is a legal entity created by statute which is separate by law from the individuals or organizations that created it
  32. Some Methods of Incorporation
    • Special Act
    • Articles of Incorporation
    • Letters Patent
  33. Articles of Incorporation
    •a document filed with the appropriate government authority that provides for incorporation as of right, provided that the required steps are followed
  34. Letters Patent
    • – used to be used in Ontario generally, but now only issued for not-for-profit corporations incorporated under the Corporations Act (Ontario) or federally under the Canada Corporations Act
    • – now only PEI issues Letters Patent for share capital corporations
  35. Special Act
    • – a corporation formed by a special statute passed by Parliament for a particular purpose
    • – eg. Air Canada, Bell Telephone, Canadian Pacific Railway
  36. Advantages Corporation:
    • •Perpetual existence
    • •Limited liability
    • •Estate planning
    • •Tax advantages
  37. Disadvantages:
    • •More expensive to set up compared to sole proprietorship/ partnership
    • •Separate tax returns to be filed
    • •Complicated structure - can be cumbersome
  38. Key Hallmarks of Corporations:
    Separate legal entity

    Limited Liability of Shareholder

    Created by statute and comes into existence after file articles of incorporation and receive certificate of incorporation

    Perpetual existence

    Separate management
  39. Separate legal entity
    • – separate in law from its owners the shareholders
    • – shareholders own shares, corporation owns the business
    • – its assets and liabilities
    • – capacity of natural person
  40. Limited Liability of Shareholder
    shareholder’s risk is limited to the investment in the corporation
  41. Perpetual existence
    • – created by statute and dissolved under statute
    • – death of shareholder has no impact on existence of corporation
  42. Separate management
    • – centralized management structure
    • - directors of corporation have responsibility for managing or supervising the management of the corporation’s business
  43. Types of Corporations:
    • •Public offering corporations
    • •Private non-offering corporations
    • •Corporations for profit and not-for-profit
    • •Canadian controlled private corporations
    • •Corporations created by special act – Banks, Insurance Companies
  44. Regulation of Corporations:
    • •Federal and Provincial statutes set out rules for creating, maintaining and dissolving corporations
    • - Regulations expand on rules in statutes and set out forms and fees
  45. Corporations Canada – branch of Industry
    Provides forms, information, fee schedules, searches of federal corporations, etc.
  46. CorpCan
    • – online computer system for producing and filing documents under the CBCA through the Online Filing Centre
    • - organizations register as a “Registered Intermediary” and able to accomplish a number of activities including filing of articles and various forms
  47. Ontario
    • •Ministry of Government Services (MGS)Administers
    • • Service Ontario set up to provide online access to government information
  48. Service Ontario
    • - Central Production and Verification Services Branch
    • – is responsible for database for registering, storing and managing public documents filed under various corporate/business related statutes
    • - Database: Ontario Business Information System
    • – accessed only by using one of the contracted service companies (eg.Teranet Inc.)
  49. Share
    • – is evidence of an investment made by a shareholder in a corporation
    • - A share grants the holder certain rights which are set out in the share structure provided in the articles of incorporation for example: the right to vote at meeting of shareholders the right to receive dividends, etc.
    • - There is usually a physical Share Certificate; but not required
  50. Share continued
    • - Every share issued by Corporation must be fully paid for when issued
    • - There must always be at least ONE class of shares that carry the right to vote
    • - Share structure can include “Special” or “Preferred” shares that have special conditions attached to them for the benefit of their shareholders
    • - e.g. 7% annual return, dividends paid first before paid on common shares, etc.
  51. Authorized Capital– the type and amount of shares a corporation is entitle to issue under it’s share structure
    • Common Shares (voting)
    • Preferred Shares (voting or non-voting)
    • Par value or no par value
    • Unlimited or set number of shares to be issued
  52. “Issued Capital”
    the type and amount of shares a corporation has issued
  53. Shareholder
    • – a person who holds shares in a corporation
    • – owner of corporation along with other shareholders
  54. Share Certificate
    physical evidence of shareholding/ownership of corporation
  55. Director
    a person who is elected by shareholders to be responsible for managing the affairs/business of the corporation
  56. Officer
    • – an individual who has the day to day responsibility for the corporation’s business operations
    • – manage the affairs of the business delegated to them by the directors
  57. Titles may be:
    • President; Chair of the Board; Vice-President of …; Treasurer; Secretary; etc.
    • – titles are fluid
  58. Under the OBCA directors and officers are obligated to manage the business and affairs of the corporation by
    • – acting honestly and in good faith;
    • - exercising the care, diligence and skill of the reasonably prudent person
    • s.134 OBCA
  59. Shareholders Agreement
    an agreement between any two or more shareholders
  60. Unanimous Shareholders Agreement
    an agreement between all of the shareholders of a corporation to restrict, in whole or in part, the powers of the directors to manage or supervise the management of the business of the corporation
  61. Articles of Incorporation
    the document that creates the corporation
Card Set:
2012-02-09 17:18:08

Show Answers: