Midterm Lec & textbook - Corporate Law Limited...

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Corporate Law Limited Liability – can’t go over shareholders - Delivery van where the driver drives too fast and loses control running over somebody sue the driver for negligence (can sue him because it does not matter whether or not he is in a corporation or not) Duty of Good Faith : A shareholder holds no such duty to corporation: he may carry on any independent business himself and deal freely with the corporation as if he were a stranger. Case: Salomon v. Salomon & Co. Ltd. separate legal entity from corporation Lifting the Corporate Veil (in order to identify an individual within a corp) - (1) The individual must control the corporation (2) That control must have been exercised to commit a fraud, a wrong, or a breach of duty (3) The misconduct must be the cause of the plaintiff’s injury. Creditors secure : ? ? , ? ? ? ? ?   ex) car, house. Insecure : when you don’t pay back, take specific items from you Even a shareholder owns all the shares of a corporation, one does not own its assets, but still has an insurable interest in those assets. If they are destroyed, his shares will lose value Professional corporation : allows professionals the ability to enjoy tax advantages not available to sole proprietors and partnerships - Only shareholders can be professionals (not sons/daughters) - No limited liability (very important to have risk management and insurance protection) plaintiff can sue your shareholders - If you make a mistake then the patient can sue you as if you were not a corporation - PC is for the tax - Olson & Young they can sue all partners or shareholders - Big PC will be worse off, so only small firms have PC Due diligence defence : establishing that an acceptable standard of care and skill was exercised by a director or office. Directors and officers can defend themselves against claims of breach of the articles, by-laws, and the act. Classes of Offences - Mens rea offences , where the prosecution must demonstrate the existence of some positive state of mind such as intent, knowledge, or recklessness - Offences of strict liability , where the commission of the prohibited act raises a presumption that an offence has been committed, leaving it open to the accused to avoid liability by proving that he took all reasonable care (due diligence) - Offences of absolute liability , where it is not open to the accused to excuse himself by showing that he was free of fault. Simply doing the act makes one guilty of the offence Secure bonds > General Creditors > Preferred S/H > Common S/H Pre-incorporate Contract - Ex. Offer to lease – Investment Inc. (Oct 2) – after rent, he register for incorporation (Oct 27) – lawyers found it out Pre-incorporation Act - To prevent unfair manipulation by a corp and a contractor, the Act gives the court power to apportion liability between the corp and the contractor in any manner it thinks fit #21 (3) whether or not an oral or written contract made before the coming into existence of a corporation is adopted by the
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This note was uploaded on 10/17/2011 for the course MANAGEMENT mgt393 taught by Professor Schneider during the Spring '10 term at University of Toronto.

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Midterm Lec & textbook - Corporate Law Limited...

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