WEEK 3 Flashcards
(9 cards)
1
Q
Individuals behind a corporation
A
- Shareholders
- Directors (personal liability and fiduciary duty present) and must have at least one director to eh minimum required set out in the articles of incorporation
- Officers (day to day management appointed by directors) also has liability
2
Q
Rules governing a corporation
A
- Business corporation act
- Securities act
- Income tax act
- Articles of incorporation
- By-laws
- Shareholder agreements
3
Q
Characteristics of a corporation
A
- Distinct legal entity
- Limited liability of shareholders
- Separation of ownership and management
- shareholders dont hold fiduciary duty`
4
Q
Limited Liability in a corporation
A
- shareholders are not personally liable for obligations, debts, or torts of the corporation
- But a single shareholder corporation can be used to protect the shareholder from personal liability but the public must know that the corporation is a limited liability
5
Q
Exceptions to Limited Liability
A
- A person who committed the tort may be sued for their personal capacity in addition to the corporation being sued
- the corporation can be vicariously liable
- directors and officers are always gonna have a personal liability
- Lifting the corporate veil
6
Q
Conditions to lift the corporate veil
A
- Person must control the corporation
- Control must be exercised to commit fraud
- Misconduct must be the cause of the plaintiffs injury
7
Q
Indoor management rule
A
Outside parties are not liable if they did not know that the director you talked to was felling into negligence when you made the deal
8
Q
Pre-incorporation contracts
A
A person who executes a contracts on behalf corporation that does not exist yet is bound personally liable unless the corporation ratifies it upon existence
9
Q
Alternatives in the pre-incorporated contract
A
- Ratification
- Apportion liability
- Express term in the contract that states they are not personally liable and the other party agrees
