MGAB02H3 Lecture Notes - Lecture 7: Stock Split, Dividend Policy, Retained Earnings
9 Aug 2016
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Document Summary
Corporation is the only business form that the law recognizes as a separate entity: corporations as a separate entity enjoy. To protect everyone"s rights, both the creation and governance of corporations are tightly regulated by law. The canadian business corporations act (cbca) outlines all of the legal requirements of federal incorporation. Upon approval of the application, the government issues a charter, sometimes called the articles of incorporation. Each corporation is governed by a board of directors. A shareholder receives shares that can be subsequently sold on established stock exchanges without affecting the corporation. Owners of common shares receive the following benefits: a voice in management. Have the ability to vote on major issues: dividends. Receive a proportionate share of the distribution of the corporations" net earnings: residual claim. Receive a proportionate share of the distribution of remaining assets upon the liquidation of the company. Owners, unlike creditors, are able to vote at the annual shareholders" meeting.
