Chapter 15 - Chapter 15: The Corporate Form: Organizational...

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Chapter 15: The Corporate Form: Organizational Matters Stakeholders in the Corporation A corporation not only comes into being through the actions of human, but also can make decisions, formulate policy, and enter contracts only through the actions of humans The individuals = internal stakeholders Stakeholders are those who have either a direct or indirect role in governing the corp and determining its mission and how it will be achieved Pre-Incorporation Issues Before preparing and filing incorporation documents, one must decide: Whether to incorporate federally or provincially What types of shares will be available and to whom What to name the corp These decisions will be influenced by a host of factors, such as the kind of business one intends to operate, where then intend to operate, how they intend to manage the corp and how they wish to accommodate future growth Provincial and Federal Incorporation Both levels of gov’t have passed legislation that provides for the incorporation of companies These acts embody different models or prototypes as to how the corp comes into existence Federally incorporated corporations have the right to carry on business in each province, whereas provincially incorporated corporations have the right to carry on business only in the province in which they are incorporated For corporations that intend to operate in more than 2 provinces = federal since it will result in lower administrative costs Shares and Shareholders Share structure: the shares that a corporation is permitted to issue by its constitution This entails deciding on the class or classes of shares that the corp will be authorized to issue, what rights and privileges attach to each class, and the number of each authorized for issuance Classes of Shares A corp may simply have one type or class of shares with all the basic shareholder rights attached to it. In this case, the share must include the right to: Vote for the election of directors Receive dividends declared by directors Share in the proceeds on dissolution of the corp, after credits are paid
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To ensure that the corp has the flexibility to meet future needs, it is prudent to establish different classes at the outset There are many possibilities for creating shares with diverse rights, s long as
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Chapter 15 - Chapter 15: The Corporate Form: Organizational...

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