Topic Canadian
Corporate Canada Business Corporations Act –
Legislation Federal – states how corporations should
be structured, share and governance
rights
Business Corporations Act – Provincial
• Corporations can choose whether
to incorporate across Canada or
their own province, where the
business address is located
Corporate • Articles of Incorporation
Governance • By-Laws
Corporate • Shareholders
Structure • Directors
• Officers – President, Secretary,
etc.
• Board of Directors are elected by
members (as above) to represent
shareholders
Director & • At least 1 director required
Officer • must be at least 18 years old
Requirements • not have been declared incapable
under the laws of a Canadian
province or territory
• be an individual (a corporation
itself cannot be a director)
• must not be in bankrupt status
• 3 year term
Duties of • Supervise or oversee business
Directors affairs of corporation,
management of the corporation is
carried out by the officers
• Duties and liabilities of directors
are set out under the Canada
Business Corporations Act, or
provincial statutes
• Must avoid conflict of interest
• Duty of care and loyalty to
corporation they oversee
• Annual meeting of directors is
required
US
Securities Act of 1933 and the Securities and
Exchange Act of 1934 – Federal – sets minimum
standards for share and governance rights
Model Business Corporations Act – each state and
territory has their own basic corporate code, many
based on Delaware Corporate Code
• Corporations can incorporate in the state
of their choice, regardless of where the
headquarters is located
• Articles of Incorporation
• By-Laws
• Shareholders
• Directors
• Board of Directors elect officers - CEO,
president, officers, secretary, treasurer and
vice-presidents
• At least 1 director and 2 officers required
• must be at least 18 years old
• state corporate law does not pose
residency requirements, depending on
industry
• at least 1-3 female director(s) in certain
states
• must be elected by shareholders of
corporation
• be an individual (a corporation itself
cannot be a director)
• 2-3 year term
• Supervise or oversee business affairs of
corporation, management of the
corporation is carried out by the officers
• Power to direct, manage and represent
corporation is delegated by state law or
articles of incorporation
• Must avoid conflict of interest
• Duty of care and loyalty to corporation
they oversee
• Annual meeting of directors is required
Director • directors are not personally
Liabilities responsible for the debts incurred
by their corporation
• can be held liable if personal
guarantee was given for bank
loans or fraud, or
misrepresentation
Shareholder • common shareholders are granted
Rights 3 rights – voting rights, rights with
respect to meetings, and rights
pertaining to access to
information
• when rights are breached,
remedies are available to them
through both provincial and
federal statutes
Shareholder • shareholders and corporation are
Liabilities separate legal entities and are not
personally liable for commercial
debts of the company – courts
piercing the corporate veil is used
in limited circumstances
Shareholder • Derivative action – s.239 CBCA &
remedies s.245 OBCA
• Oppression remedy – s.241 CBCA
& s.248 OBCA
• Arbitration, mediation, litigation
• may be subject to liability for violations of
the extensive anti-fraud and disclosure
requirements of the federal securities laws
under the Securities Act of 1933 and the
Securities Exchange Act of 1934.
•
• Common shareholders are granted six
rights: voting power, ownership, the right
to transfer ownership, dividends, the right
to inspect corporate documents, and the
right to sue for wrongful acts
• Shareholder rights vary from state to state
• Often governed by internal “Shareholder
Rights Plan”
• shareholders and corporation are separate
legal entities and are not personally liable
for commercial debts of the company –
courts piercing the corporate veil is used in
limited circumstances – tests and laws vary
from state to state
• Shareholders’ liability for corporate actions
is generally limited to the amount of their
equity investment – as owners of Limited
Liability Entity
• Controlling shareholders - Oppression
claim – varies by state
• Controlling shareholders - Derivative action
– varies by state
• Applying to the court for investigation of
the corporation’s affairs
• Non-controlling shareholders have no
rights that can be enforced against other
shareholders