Even so it is not the best form for all purposes It has significantly different

Even so it is not the best form for all purposes it

  • Seneca College
  • ACF ALW380
  • Notes
  • jakejshin
  • 115
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Even so, it is not the best form for all purposes. It has significantly different operating mechanisms and you must properly manage its responsibilities toward its owners, managers, customers and regulators. 36
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CHAPTER COMMENTARY The corporation, as the text points out, is a very different type of legal entity when compared to the partnership. The various forms of incorporation (General Act, Special Act, Letters Patent, and Royal Charter) are worthwhile topics to review. In addition, the separate legal existence of the corporation and its powers should be examined, perhaps by way of comparison to the partnership. Since a partnership is a relationship subject to the "utmost good faith" duty for partners, an approach to the rights and duties of shareholders and directors might be to chart each as a part of classroom discussion. For example : ACTIVITY DUTY Partner Director Shareholder (public company) Personal interest in contract with firm full disclosure full disclosure refrain from discussion and vote on matter no duty to disclose Interest in competing business entity full disclosure and consent required full disclosure no duty to disclose The duties which might be charted in this manner are found in this and the next chapter for directors, and for partners in Chapter 16 - (Law of Sole Proprietorship and Partnership). Corporation law includes a number of doctrines, principles, and rules which should also be reviewed. In particular, the doctrine of corporate ultra vires, constructive notice, corporate opportunity, and the indoor management rule should be covered in classroom discussion. The Court Decisions included in the chapter represent two important aspects of corporation law. The Salomon case established the nature of the corporation at law, and its existence as an entity separate and apart from its shareholders. The case is interesting in that the court dealt with the corporation-shareholder relationship from the "agency" point of view, the "trustee" point of view, and the corporation as an "instrument of fraud on creditors". It rejected all of these views in favour of the separate legal existence of the corporation, and the consequences which flow from it. 37
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The Gluckstein v. Barnes Court Decision provides an analysis of the duty of disclosure on the part of promoters and directors of a corporation, and the consequences of a failure to make a complete disclosure. An analysis of this case and the Salomon case should provide students with a relatively clear idea of some of the most important fundamental concepts of corporation law. Chapter 18 Securities Regulation Chapter 18 -- Securities Regulation 334 Introduction 334 Historical Development of Securities Regulation 334 What is a Security? 336 Purpose and Administration of Securities Regulation 336 Mechanics of Regulation 337 Registration 338 Disclosure 338 Conduct of Trading 343 Insider Trading 345 Proxy Voting and Proxy Solicitation 346 Takeover Bids 347 Investigation and Enforcement 348 Summary 349 Key Terms 349 Review Questions 349 Mini-Case Problems 349
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