BU231 Chapter Notes - Chapter 27: Share Capital, Capital Account, Legal Personality
Document Summary
Chapter 27 nature of a corporation & its formation. Nature of a corporation: a legal person" formed by incorporating according to a prescribed legal procedure, a legal person is an entity recognized by law as having its own rights and duties of its own, Man owned every share of his company, but six when the business went bankrupt creditors claimed that corporation was a sham. Court upheld salomon"s claim as a corporation and recognized the separate legal personality of the one-man company : limitations on the principle of separate corporate existence, exceptions to limited liability. Shareholders of small private companies are often required to provide security or personal guarantees for loans made to their corporations. Cbca provides further exception as shareholders are liable for corporations debt if they"ve received improper distribution of assets (dividends paid out even when no profits made)
