2750achapter14notes - Chapter 14 Corporations The Process...

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Chapter 14: Corporations The Process of Incorporation: The concept of an incorporated company was developed in response to the need to finance large economic projects without the limitations associated with sole proprietorships and partnerships Corporation is a spate legal entity Special-act companies were corporations Ordinary citizens could not incorporate, and so they created their own unofficial companies through contracts called deeds of settlement Some Canadian jurisdictions adopted the British practice of incorporation through registration Incorporation process from the royal charter approach and created incorporated bodies through the granting of letters patent Borrowed from the United States is based on the filing of articles of corporation Registration: o Registration accomplished by filling memorandum and articles o Memorandum is like a constitution o The internal procedural regulations for governing the ordinary operation of the company are contained in the articles of association Letters Patent: o Based on the practice of the monarch’s granting a royal charter o Involves an applicant petitioning the appropriate government body for the granting of the letters patent o The government representative, grants a charter of incorporation to applicants who meter certain qualifications Articles of Incorporation: o Developed in the United Sates, based on the filing of articles of incorporation and the granting of both and alters and the registration methods o Incorporation accomplished through granting certificates of incorporation o Articles of incorporation method borrows features from each o It is not necessary to file these bylaws when applying for incorporation Other Incorporated Bodies: o Cities, universities, and other public institutions are incorporated legal entities that can sue or be sued in their own rights o Societies also incorporated o These bodies are primarily cultural, social, charitable, and religious organizations, such as the BC society for the Prevention of Cruelty and Animals (SPCA) o Corporation a separate legal entity o When the incorporation process is completed, there are two legal persons: the shareholder and an incorporated company o The large corporation, just like the small one, is a legal fiction, which is often referred to as the Corporate Myth o Courts will sometimes ignore separate legal entities www.timetocram.com
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o In a fraud, the courts will ignore the separate legal entity aspect of the corporation and “lift the corporate veil” to get tat the directors, shareholders, or officers committing the fraud o Creditors can protect themselves by requiring directors or shareholders to sign a personal guarantee and become liable for the debt along with the corporation, therefore the limited liability is thereby lost Capacity: o It was only in provinces using the registration system of incorporation where the capacity to enter into a contract was limited o It is stated that a corporation has the capacity and the rights, powers, and privileges of a natural
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2750achapter14notes - Chapter 14 Corporations The Process...

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