MCS15 - -business became insolvent and trustee was...

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MCS*3040- Business and Consumer Law CHAPTER 15- THE CORPORATE FORM: ORGANIZATIONAL MATTERS The Corporation Defined - because it is separate legal entity, it is able to remedy many shortcomings associated with separate legal entity - though being separate legal entity has own repercussions: means that should corporation fail to make good on its obligations, the shareholders are not responsible for default; most stand to lose is purchase price of shares - corporation alone is responsible for its own debts and other liabilities \ CASE(355): Salomon v. Salomon Ltd., (1897) A.C. 22 ( H.L) FACTS: - aron saloman carried on profitable shoe- manufacturing business for many years as sole proprietor - decided to form incorporated company - requirement for corporation is that must have 7 shareholders; he took one , and his family members took remaining 6 - aron was managing director ; one person company - funded sole proprietorship with corporation in which was managing director; became protected creditor over own company
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Unformatted text preview: -business became insolvent and trustee was appointed to deal with creditors and close down businesses THE LEGAL QUESTION; Was aron liable for the debts of aron salomon and company limited? Was aron legitimate creditor of company? RESOLUTION;-corporation large or small is still separate legal entity-court rejected argument that there was something essentially improper about an individual conducting business through one-person corporation to secure protection of limited liability-creditors chosed to deal with aron’s company, not aron CRITICAL ANALYSIS:-is independent existence too far ? Stakeholders in a the corporation Stakeholder: one who has an interest in a corporation Pre-incorporation issues -many decisions involved in being corporation-whether incorporate federally or provincially-what type of shares will be available and to whom-what to name the corporation-* all decisions influenced by factors Provincial and Federal incorporation...
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This note was uploaded on 02/13/2012 for the course BUS 3040 taught by Professor Lindachiasson during the Winter '11 term at University of Guelph.

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MCS15 - -business became insolvent and trustee was...

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