BU231 Lecture Notes - Lecture 1: Mens Rea, Natural Person, Strict Liability
Document Summary
Chapter 29 external responsibilities of a corporation. Protection under cbca: cbca solves the above with two kinds of rules: Prohibit payments to shareholders if it renders a corporations liquid assets insufficient to pay creditors. Restrict dividends even when the corporation might sill be left with sufficient liquid assets to pay creditors. Then the directors become personally liable to the corporation for the deficiency. Maintenance of capital test: goes beyond the solvency test, provided for by s. 42 of the cbca. Stipulates that dividends can only be paid if net assets will still exceed stated assets after the dividends are paid out ie. only pay dividends out of profit or if assets increase in value. Only buy back shares if your assets will still equal or exceed your liabilities and stated capital. Securities legislation (ontario securities act: objectives of securities legislation. Prevent and punish fraudulent practices in the securities industry.
