Business Organizations Summary

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Chapter 16 – Law of Sole Proprietorship and Partnership
* Sole proprietorship – A business where the sole owner is responsible for the management and debts of the business. * Registration/licensing issues; Flexibility

* Partnership – Partnership Act (Ontario) defines partnership as a relationship that subsists between two or more persons carrying on business in common with a view to profit. * Differences between partnership and co-ownership

* Joint and several liability
* Partnership agreement – checklist of issues
* Liability of partner for acts of employees
* Rights and duties of partners to one another as set out in the Partnership Act (Ontario) * Dissolution of a partnership
* Possible tax advantages of a partnership

* Limited Partnership – Consists of a general partner and limited partner(s). A limited partner may not actively participate in the management of the firm, but has limited liability. A general partner is a full partner with unlimited liability for the debts of the partnership.

* Limited Liability Partnership – A partnership that is particularly suited to professional practices. The unlimited liability of each partner is maintained for the general debts of the partnership and for the partner’s personal negligence. Individual partners are not responsible for claims arising from the negligent acts or omissions of other partners. * Registration

* Joint venture – A business relationship between corporations

Chapter 17 – Corporation Law
* Corporation – A fictitious legal person with its own separate existence * Governing legislation e.g. CBCA, OBCA
* Shareholder – Part owner of a corporation; a person who holds a share interest in a corporation * Director –Managing mind of corporation; a person elected by the shareholders of a corporation to manage its affairs * Outside directors

* Officer – A person elected or appointed by the directors of a corporation to fill a particular office e.g. president, chief operating officer, corporate secretary, chief compliance officer * Limited liability

* Transferability of shares
* Corporate name – NUANS name search
* Methods of incorporation: royal charter, letters patent, special act, general act: memorandum of association/articles of incorporation * Incorporation process: filing application for incorporation together with fees; by-laws and resolutions; shareholders meetings; directors meeting * Indoor management rule: A party dealing with a corporation may assume that the officers have the valid and express authority to bind the corporation * Shareholders’ Agreements: An agreement between shareholders of a private corporation concerning management and/or future reorganization of the corporation such as buy-out of interests. Shareholders agreements are important especially for the protection of minority shareholders and to set up the ground rules for investors. * Checklist of issues arising in shareholders’ agreements * Share: Ownership of a fraction equity interest in a corporation * Floating charge: A commercial law concept; It refers to a debt security issued by a corporation in which assets of the corporation such as stock in trade are pledged as security. Until such time as default occurs, the corporation is free to dispose of its assets. The floating charge is intended to facilitate commercial transactions. * Debenture: A debt security issued by a corporation that may or may not have specific assets of the corporation pledged as security for payment.

* Directors’ Duties and Responsibilities - Every corporation must have at least one director. Certain directors may be officers of the corporation. Directors are responsible for the operation of the business. * A director is a fiduciary: he has a duty of utmost good faith. As a result, in dealing with property he must act in the best...
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