BU231 Chapter Notes - Chapter 25: Capital Account, Negotiable Instrument, Share Capital
Document Summary
Chapter 25 nature of a corporation and its formation. Corporation or limited company has become the dominant entity in the modern business world. Legal person: entity recognized at law as having its own legal rights, duties, and responsibilities cannot insist on those rights or carry its duties except through human agents. Corporation: a legal person formed by incorporation according to a prescribed legal procedure. Limited liability: corporation is liable for its own debts. Also, when shareholders become directors, they are subject to a increasing range of personal liability. Transfer of ownership: since a shareholder has no liability for corporate debts even while he retains his shares, creditors of the corporation have no interest/say in what he does with his shares. Shareholder can sever all connections with the corporation by transferring his shares to someone else. Management: shareholders have no authority to bind their corporation to contracts, only officers can do so.
