Corporate Law: Understanding Corporations

A corporation is treated as a separate legal entity, responsible for its own debts and liabilities, independent of its shareholders.

Shareholders are not liable for the corporation's debts beyond the amount of their investment in the company's shares.

A landmark case establishing the principle of limited liability for shareholders, holding that a one-person corporation isn't inherently problematic.

A person or group with an interest in a corporation, including shareholders, directors, and officers.

Individuals or groups directly involved in governing and operating a corporation, like shareholders, directors, and officers.

High-level management employees responsible for daily operations of the corporation, appointed by the directors.

Different levels of government regulate corporation creation and operation.

The way ownership of a corporation is divided, with shares representing ownership percentage.

External stakeholders include individuals and groups who interact with a corporation, but who are not part of its governance. Examples include customers who buy products, employees who work for the company, creditors who lend money to the corporation, and government entities who oversee and regulate the corporation.

Before formally establishing a corporation, key choices need to be made, including the type of incorporation (federal or provincial), the type of shares to be issued, and the name of the corporation.

A corporation formed and regulated under the laws of a specific province, with the right to operate only within that province. It can seek licenses to operate in other provinces.

A corporation established according to federal law, granting it the right to conduct business in all Canadian provinces.

Basic rights enjoyed by shareholders in a corporation, including voting for directors, receiving dividends, and sharing in proceeds upon dissolution.

Different types of shares within a corporation with varying rights and privileges, such as voting, financial, preference, or redemption rights.

A corporation with shares publicly traded on a stock exchange, subject to securities regulations and usually available to the public.

A corporation that does not sell shares publicly, often referred to as a private corporation, not subject to securities regulations, and may have a lower tax rate.

The right of a shareholder to sell or transfer their shares to another person.

A provision in a corporation's articles that limits the ability of shareholders to transfer their shares, often requiring consent from directors or other shareholders.

A provision that allows existing shareholders or directors to purchase shares before they are offered to outsiders.

A right of first refusal helps existing investors maintain control of a company and protect their interests by preventing unwanted newcomers from gaining ownership.

A set of rules governing the day-to-day operations of a corporation, outlining processes and procedures.

Documents issued by a corporation that formally represent ownership of shares held by individuals.

Once incorporated, corporations hold an initial meeting to establish key operating procedures, including creating bylaws, issuing shares, appointing officers, and setting up banking arrangements.

Raising capital by borrowing money, creating a debt obligation for the corporation.

Raising capital by selling ownership shares, giving investors a stake in the company.

A document representing a debt owed by a corporation, typically secured with assets.

A document representing a debt owed by a corporation, typically unsecured (not backed by specific assets).

Options for investors to exchange one type of security for another, such as turning bonds into shares.

A method for raising funds from a large number of individuals, typically through online platforms, to support business ventures or projects.

A group of provincial and territorial securities regulators in Canada that work together to harmonize and regulate the securities market.

Securities legislation aims to ensure a fair, transparent, and efficient market for the trading of securities, protecting investors and maintaining public confidence.

A federal initiative to create a single set of rules and regulations for the Canadian securities market, aimed at harmonizing provincial and federal rules.

A requirement for any company selling securities to the public to register with the relevant provincial securities commission.

A requirement for companies selling securities to provide full and accurate information about their financial status and operations to investors.

A document that companies must issue when offering securities to the public, providing detailed information about their business, finances, and risks.

Laws prohibiting individuals with confidential information about a company from trading on that information for personal gain.

A legal right for investors to sue a company for losses due to misrepresentations or omissions in company information.

A set of rules requiring publicly traded companies to disclose important information to investors on a regular basis.

Buying or selling securities of a company by someone with inside knowledge not available to the public.

A person who receives inside information from an insider.

Information that could affect an investor's decision to buy or sell securities.

Indirect evidence suggesting guilt or innocence, often used in insider trading cases.

Requiring someone to give back profits gained illegally, like from insider trading.

A restriction prohibiting a person from buying or selling securities for a specific period.