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July 9th, 2009 |

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Corporations

Corporations: Ontario and Federal

Please choose to consider thatt the advisement included here is not at all legal opinion and is offered for informational and developmental sakes only. make a post on Dynamic Lawyers). We team up with Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers who are listed on the website who can give feedback to your quests or assist you with your incorporation.Or you can contact Michael Carabash personally.
Incorporate Your Business

Meaning of incorporating your business What will you gain from thatt? What are the requirements to doing so? How does one maintain a corporation (through internal governance measures)? How do you go about dissolving your corporation? Note thatt: corporations are creatures of rules and regulations not likely to be the same from one jurisdiction (e.g. Ontario) to the next (e.g. British Columbia).

A corporation is a body of persons or an entity. Meaning the law allows it to act as persons: It can be responsible for properties, open up an account in the bank, participate in contracts, process a claim against an individual or an individual can process a claim against it, etc. As aforementioned, it is a creature of law: it is created, managed, and can be dissolved in accordance with the provisions of the laws thatt govern it.

Some particular acts or omissions can be referred to the corporation or those parties that make it up (e.g. shareholders, directors, officers, employees, agents). The corporation is able to own its own assets and pass it to and from its members. It can still contract with its own membership.

Limited Liability

Above all, the owners of a corporation have limited liability when it comes to the debts and obligations of the corporation. The chief viewpoint is that, if a corporation winds up owning money to creditors, then typically only its assets and not those of its members can be exposed to creditors. Taxes

The corporation must figure out and calculate its own taxes as per its own income and expenses. It may have to pay capital gains tax on the disposition of capital property (e.g. shares of another corporation). Corporations are taxed in a different way than human beings and can be used to postpone paying taxes at the individual level (i.e. if retained earnings are not paid out to shareholders as dividends). The big problem with having a corporation pay tax is the second layer of taxation that arises: one at the corporate level and the other at the individual level (when the retained earnings are finally distributed). Another holdup to using a corporation is that its expenses cannot be directly attributed or taken advantage of by the owners: the expenses are only able to offset corporate income; but if there is no income, then those expenses get held back (though they can be carried forward and implemented in future years according to particular Income Tax Act rules).

With all these things said, you’d think that a corporation can walk and talk and do everything a natural person can do too. But there’s one important warning: a corporation cannot exist without human involvement. They are empowered to attend and vote at meetings if they have voting shares. This actually happens every year, but can happen sooner than that if they request to change the board of directors they elected. Their duty is that of hands-off manager: they direct their decision-making powers to the board of directors they elect. Shareholders aren’t fully out of the decision-making idea, anyway. power-giving documents which authorize corporate action) and vote on important matters regarding the corporation’s Articles of Incorporation (e.g. issuance of shares, new share class, restrictions on share transfers, restrictions on business, changing the corporation’s name, etc.). In any case: there is no requirement that they be officers and/or directors.

Directors are appointed by the shareholders. by death, resignation, etc.). They themselves authorize decision-making on a daily or more routine basis to the officers of the corporation. Officers Duties

Officers are those people who manage the day to day business. of the corporation. Their title can be CEO, President, Treasurer, Vice-President, CFO, Secretary, etc. but these are just titles and there’s no formal demand that they have a distinct title. The duties and responsibilities of the officers are usually spelled out in the corporate by-laws and more certainly spelled out in an employment contract.

About the Author

Michael blogs about <a href=”http://dynamiclawyers.com/DL_blog/share-purchase-agreement-part-7general-terms/19/”>Share Purchase Agreements</a> on his website.