COMMERCE 1AA3 Lecture Notes - Lecture 7: Issued Shares, Preferred Stock, Legal Personality
5 Apr 2016
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Limited liability of shareholders to the amount of their investment. Transferable ownership rights by buying and selling shares. Ability to acquire capital by issuing shares. Corporations management: shareholders manage through an elected board of directors, board of directors selects corporation management. Income tax: taxed as a separate entity. Done by filling articles of incorporation, providing info such as: name and purpose of company, amounts and kinds of share capital (common stock, preferred stock, names and address of incorporations, location of corporation"s head office. Organizational cost: cost of forming a corporation, normally expensed. Ownership rights are in the form of shares, can be divided into different classes: as stated in articles of incorporations, each class has rights and privileges, usually referred to as common and preferred shares. Shareholders have right to: to rate on certain matters, to dividends: the distribution of income, to remaining assets in a liquidation.
