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CBL - CH7- Forms of Carrying on Business - Coggle Diagram

- - - - They are easy to set up, easy to run, do not involve a great deal of interaction with the government.
      - examples: a local variety store, car repair shop, a restaurant
      - If the owner wants a business name, it has to be registered under the Business Names Act in Ontario (or other province), this helps clients to be able to search for the business name and link it to the owner, and sue them in case they want to. (costs less than 100)
      - failure to register a business name in Ontario may result in a fine up to 2000, and also limits the business's ability to maintain a court action until the name is registered.
      - if a person wants to prevent any competing business from using the name, it has to be registered as a trademark under the Trade-marks Act.
      - There is no legal separation between the owner and the business, the owner is the business, and the business is the owner.
    - - a sole proprietorship has no legal existence apart from its owner
      - it cannot sue another individual or business, nor can it be sued on its own, the person is the legal entity and must sue on behalf of the business or that will be sued for the misdeeds of the business.
      - it cannot enter into contracts, is the person who enters the contract and its the person who is responsible for fulfilling the contractual obligations related to the business
      - the person has to declare the revenues as income, and pay the taxes accordingly.
      - the owner can hire people, hire other companies, etc.
    - - its very simple to open and to make decisions, it does not need to consult with anyone regarding any direction that the business might take
      - Can be set up almost immediately
    - - the owner reaps all financial benefits and losses.
      - none else will be able to participate in the profits generated by the business
    - - a sole proprietorship is treated as a source of income for the owner, so any profit (minus legitimate expenses) the business earns are going to be taxed.
    - - The owner is liable for injury that the business might cause to others, the owner is subject to Unlimited Liability, which means full responsibility for any debt incurred or loss caused by a business
      - A creditor can force the owner to sell personal assets in order to meet the obligations of the business.
    - - it can only raise capital through debt
      - if the business expands, or it requires a significant amount of money to continue to operate or to expand, a different business form would be necessary to convert the sole proprietorship into either a partnership or a corporation
  - - - used by consultants, lawyers, accountants, etc.
      - partners have the right to organize their affairs and to determine their rights and obligations within the partnership by way of a Partnership Agreement, which is a document (contract) signed by all partners that sets out how the partnership will operate and how it will end.
      - These agreements can be very complex, or very simple.
      - Partnerships are not legally independent from the people who compose them.
      - Partners might be liable for the conduct of other partners, depending on the liability set forth in the document
      - Partnerships are governed primarily by the Partnerships Act, and Limited Parterships Act, which lay out the general requirements of this form of business.
      - Partners can be individuals, corporations, or other partnerships.
    - - Pool their capital for a common purpose, (running the business)
      - share in the profit or loss of business
      - make decisions and manage the business together
      - exercise authority to bind the partnership to contracts with third parties
      - share liability
    - - General Partnership, is a partnership that is not registered with the government as a limited or limited liability partnership.
        
        Creation
        
        created when two or more individuals come together to run an unincorporated business, the law assumes that if no agreement has been registered with appropriate government office specifying either a limited partnership or limited liability partnership, the law assumes it is a general partnership
        
        if the partners want to use a specific brand name, they should register it under the Business Names Act, if not, the company name is going to be a combination of the names of the partners
        
        Legal characteristics
        
        it is not an independent legal entity, so it cannot enter into legally binding contracts or protect its owners from legal liabilities or injury caused by the firm
        
        they have Joint and several liability, meaning that the financial responsibility requiring all parties to contribute equally, but also making each party responsible for the entire amount owed.
        
        each partner is liable for the other's partners conduct as well.
        
        all partners are liable to the full extent of their personal assets for all debts and other obligations of the partnership.
        
        Conducting business
        
        each partner has equal power and equal responsibility, they can reach decisions formally or informally.
        
        business income is first used to pay the expenses of the partnership, then it is allocated to any long-term planning projects the partnership may have, and the rest can be divided among the partners. Profits are also divided equally.
        
        day to day operations and decisions can be made by all the partners or by a small group of partners specifically chosen to make these decisions.
        
        Cost, Complexity and Control
        
        the default provisions in the general partnership act almost always will be structured in a way that it reflects how the partners wish to operate, and this will add up to the cost and complexity of the structure.
        
        it can be set up in a way that it reflects different interests, power, liabilities etc. it can also be set up in a way that the decision making can be simplified as well.
        
        it is advantageous when it is a small group of people, since they are easy to set up, easy to run, as long as it remains small, its operations can be quite flexible.
        
        Participation in profits
        
        if no additional set up is done, everyone shares equally on profits., if it is set up differently, it can reflect other conditions.
        
        Tax implications
        
        the business profits of the partnership become part of the personal income of its owners, the partners, for purpose of tax income, such as the case with the sole proprietorship
        
        If a partner has income from other ventures, the person can benefit from the expenses and loss from a new business (partnership) to offset his tax burden.
        
        Liability
        
        Unlimited liability, all partners share the same liability and can be depleted of their personal assets too.
        
        Considerations considering the pooling of resources
        
        the biggest advantage is that the partners can work together, draw from each other's expertise, share expenses, and pool their individual capital.
        
        this means bigger projects, bigger clients, better economies of scale and potentially better profits.
        
        a partner with several partners can feel safer that they can provide better services and also to share the cost of mistakes.
        
        It can also allow more partners to join in as long as all partners are in agreement with it.
      - Limited Partnership, is a partnership composed of a minimum of one general partner and one limited partner who provides money or property to the firm and shares in the profits, but who does not participate in the business affairs of the firm and whose liability is limited to exclude any personal assets.
        
        General characteristics
        
        the main purpose of a limited partnership is to provide a method for the partnership to raise capital. (capital, assets, but not services)
        
        it provides the limited partner a way to avoid unlimited liability, and is liable only for the capital provided, and profits or potential profits.
        
        the general partners carry the same equalness of conditions that the general partners have in a general partnership.
        
        Creation
        
        for this to be formed, it requires a partnership declaration formed under a provincial limited partnership statute, the Limited Partnerships Act
        
        Legal characteristics
        
        a limited partnership is not a separate legal entity,
        
        the law views all general partners as agents of the firm with legal authority behind the firm.
        
        if a limited partner takes on a managerial role with respect to the partnership's business, the limited partner might lose the "limited" status and be open to the unlimited liability (advice and direction on the management and development of the business can make the person to lose the limitedness)
        
        Conducting Business
        
        a limited partnership usually conducts its business as a general partnership, with the difference of the limited partners involvement, which should be only on providing assets or capital.
        
        A limited partner may require the return of their investment in the firm under certain circumstances, (they are set out in the governing statute or in the partnership agreement). If the firm is unwilling to provide the Limited Partner's investment as required, the limited partner could force the firm to dissolve and distribute its assets.
        
        Cost, Complexity and Control
        
        It is more complex, since it requires more documentation, and it requires the Limited Partnerships Act to have a current record of the limited partners to be kept on the premises and be made available for inspection by the public
        
        this record includes names and contact information of al limited partners and the amount of money or value of property contributed to the partnership by each limited partner.
        
        a carefully written Partnership agreement is particularly important in outlining the obligations and rights of both types of partners, and it carries a big business expense when drafted by a lawyer.
        
        General Partners must abide by the General Partnership Rules and Obligations, and Limited Partners must abide by the Limited Partnership Rules.
        
        Participation in profits
        
        each general and limited partner will have the right to participate in the profits of the business in accordance with the limited partnership agreement.
        
        Tax implications
        
        these are basically the same as general partnership, each partner's share of profits is combined with the partner's other income in calculating taxes
        
        Liability
        
        general partners are unlimited in liability
        
        limited partners are limited in their liability only to the assets provided.
        
        Considerations concerning finance
        
        it is an inexpensive and low-risk method to opening up to attract capital investment.
        
        if business fails, with limited partners providing capital, everyone shares the risk, thus the general partners will not be personally liable for the shortfall of losing their limited partners investment, which if fails, then the limited partners will get a return of their investment only to the extent that the assets of the business can cover it.
      - Limited Liability Partnership
        
        General characteristics
        
        is the newest partnership type in Canada
        
        It is only available to certain professionals (chartered accountants and lawyers), whose governing body allows them to use the LLP form.
        
        it is a midway between a general partnership and a corporation
        
        it has the flexibility of a general partnership and avoids the unlimited liability component.
        
        Creation
        
        an LLP is created when two or more people enter into a written partnership that designates the partnership as a LLP and states that the partnerships act governs the agreement
        
        the LLP must also register the name under the Business Names Act before it may legally conduct business.
        
        Legal characteristics
        
        similar to general partnership, but the LLP are not subject to professional negligence of the other partners.
        
        so if a lawyer provides negligent advise to a client, the other partners will not be liable for the lawyers misdeeds.
        
        A partner is liable for the following: 1) general debts and obligations of the firm that do not arise from negligent acts or omissions (unpaid loans, etc.) and 2) its debts and obligations that arise from the partner's own negligent acts or omissions or the negligent acts or omission of any person (employee, agent, or representative) who is in direct partner's control and supervision
        
        Conducting Business
        
        the initials LLP must be included in the business name
        
        Cost, Complexity and Control
        
        greater simplicity than the corporation
        
        offers some sort of protection form personal liability
        
        in order to create the LLP, there must be a written limited liability partnership agreement and its name must be registered.
        
        Tax implications
        
        they are the same as the general and limited partnership
        
        Liability
        
        each partner is liable for the general debts and obligations of the firm and for their own professional negligence.
        
        each partner is protected from the liability for the negligence of the other parties in the firm.
      - The Partnership Agreement
        
        is the contact on which a partnership is founded.
        
        it is enforcable through the courts by any of the parties who sign it.
        
        is is generally unwise to rely on the acts, because they are not comprehensive and the partners are in a better position than the government to tailor their agreement ot their circumstances and the needs of their business.
        
        it allows the memebrs of a partnership, at the beginning of their business relationship, when goodwill is strong among them, to come to an agreement on all issues that are relevant to their business.Including day to day management and more potentially contentious issues that may cause problems for the business in the future.
        
        A business lawyer usually drafts the partnership's agreement, and in many cases each partner gets legal advise before entering the agreement.
        
        The following are matters that a comprehensive patnership agreement usually covers
        
        Financial Matters, such as bank accounts, signing authority for cheques and other documents, accountants and auditors, and borrowing privileges and limits.
        
        Compensation matters, such as division of profits, vacation time, provisions governing illnesses
        
        business matters, including scope and limits on the firm's areas of business
        
        management matters, such as responsibility for hiring and managing employees, property management, or management of inventory and receivables.
        
        membership, such as adding new partners and removing existing ones
        
        dissolution of the partnership, with or without the consent of all partners.
        
        Amendments can come from time to time, depending on the needs of the partnership changing. An amendment process can be included in the agreement itself.
        
        choosing a partnership as a business form always means there is going to be a partner that will take unlimited personal liability for the obligations of the business.
  - - - involves the birth of a distinct legal entity
      - if the if people who created the corp die, the corp continues to live on.
      - numerous voluminous statutes and regulations govern corporations, in both provincial and federal level.
      - a corporation can be either small or big, corporations can create corporations
      - they can own property, enter into contracts, buy or sell other businesses, etc.
      - they are very useful, but their complexity can make them too expensive and too difficult to be useful for extremely small businesses.
      - there are many roles played in a company, but it can be done either by a group of people or by a single person.
    - - Incorporator, the creators of the company, it can be a company or a person, who completes and files the required documents, assembles the initial capital (money), and causes a corporation to come into existence and begin operations.
        
        The incorporators may remain a part of the corporate structure throughout the life of the corporation or part ways at some point during its existence
        
        incorporators are not legally liable for the debts and obligations of the corporation unless they are also directors of the corporation and, even then, in only limited circumstances.
      - Shareholders, the owners of the corporation, it might be an individual or a company.
        
        the vehicle of ownership is a share, by owning shares in a corporation, a shareholder owns an interest in the assets of the corporation and may have a voice in how the corporation operates.
        
        the rights of share ownership vary according to type (class) of shares
        
        the rights of a shareholder may include the following
        
        the right to vote in the election of the directors of the corporation
        
        the right to share in the profits of the corporation in the form of dividends
        
        the right to sell some or all of their shares to others
        
        the right to share in the assets of the corporation if it is wound up
        
        Where there is only a class of shares, the rights attached to those shares must, at a minimum, include the equal right to vote in the election of the directors of the corporation and the equal right to the remaining assets of the corporation if it is wound up.
        
        shareholders are guaranteed the following rights, by statute
        
        the right to be protected from oppressive acts of the directors or other shareholders
        
        in respect of certain fundamental changes, the right to vote
        
        the right to review the corporations records
        
        shareholders are generally not liable for the corporation's debts and obligations.
      - Directors, are responsible for making major decisions regarding the affairs of the corporation, they are the mind of the corporation
        
        because of the special relationship between corporations and their directors, directors owe a duty, called a fiduciary duty, to act honestly and in good faith with a view to the best interests of the corporation
        
        the above mentioned duty requires directors to put the corporation's interest before their own personal financial interests.
        
        They are required to exercise care, diligence, and skill when carrying out their duties.
      - Officers, the person responsible for the day to day operation of a corporation
        
        the officer is appointed by the board of directors
        
        officers are members of senior management and may have titles such as Chief Executive Officer, President, Chief Financial Officer, and Chief Operation's Officer.
        
        They also owe a fiduciary duty to the corporation and have the duty to act with reasonable care and competence.
        
        They are also generally protected against liability for the debts and obligations of the corporation, with a few execptions
    - - the incorporator or incorporators submit the application to the government office
      - each application must include a draft of the articles of incorporation and the NUANS name search report if a non-numbered name will be used for the corporation
        
        Name of the corporation
        
        location of its head office
        
        name and address of the incorporators
        
        number, name, addresses of the corporation's first directors
        
        number (which may be unlimited) of the types of shares that are to be sold
        
        statement of any restrictions placed ont he rights associated with each type of share
        
        statement of the corporation's business purpose (optional),
        
        the signature of the incorporator(s)
      - once everything is done a certificate of incorporation is issued and the corp is born
      - the directors named are responsible for "organizing" the corporation through a series of directors and shareholder's meetings
        
        issue shares to those who want to be shareholders
        
        opt for "non-voting" preferred shares that provide a preferential higher return
        
        elect directors who will manage the business going forward
        
        voting shareholders may elect the directors based on the votes allocated to their shares or they may enter into a shareholder's agreement in which they agree among themselves on how they will vote their shares, effectively agreeing on how the directors will be chosen.
        
        the voting shareholders will also likely appoint an accountant or auditor for the business
        
        hold a meeting to complete the organization
        
        appointing officers
        
        making bylaws
        
        making banking arrangements
        
        establish signing authorities
        
        approving a corporate seal and form of share certificate
        
        authorizing significant business transactions,
        
        authorizing a business plan
      - directors are required to call annual meetings of shareholders at which the shareholders will consider minutes of earlier meetings, the financial statements, and auditor's report (if any); elect directors; appoint the auditor or accountant, etc.
      - Directors may hold "special" meetings of shareholders at any time to consider special business, which essentially any business other than the covered by the annual meeting
      - the Canada Business Corporations Act and the Ontario Business Corporations Act require corporations to keep corporate records, including a corporate minute book that keeps track of all the corporation's important papers, such as the articles of incorporation and amendments, the names and contact information for directors, and shareholders, details of share transactions (issued, bought, sold), minutes of directors and shareholder's meeting, copies of any resolutions passed at these meetings, bylaws and amendments, copies of unanimous shareholder's agreements,
        
        the minute book must be kept up to date and available for review by directors, shareholders, and other interested parties.
      - The Corporate seal, an imprint made on corporate contracts and other documents that communicates the intention to bind the corporation, The use of a corp seal is no longer required by many corporate statutes, such as the Canada Business Corporations Act and the Ontario Business Corporations Act, but some corps choose to use it anyway
      - The share certificate is a document that represents the ownership of shares in the corporation. It is signed by the officers or directors of the corporation and is given to shareholders to represent their rights within the corporation.
        
        it is signed by the officers or directors of the corporation and is given to shareholders to represent their rights within the corporation.
        
        the Ontario Business Corporations Act severely restricts the advertisement and sale of shares in a private corporation
      - a single person can create a corporation and run it, it would need to maintain a corporate book, and pay corporate taxes, and be subject to all corporate statutes.
      - the company can be incorporated in a province or in Canada as a federal company, and be able to carry business nationwide.
      - Naming the corporation
        
        non-numbered name
        
        the articles of incorporation must be accompanied by proof that the incorporators have searched the appropriate government databases to ensure that the name they propose to give the corporation is currently not being used by any other corp in the province or in Canada.
        
        The NUANS system, Newly Updated Automated Name Search
        
        If the name is too similar or the same as an existing name, you will get your articles of incorporation not accepted.
        
        Names must be renewed every five years
        
        the name must have Corporation or Incorporated in the name, or Limited, ot their french equivalents.
    - - A corp exists independent of its shareholders and other members.
      - it is responsible for its own debt and obligations
      - corporate structure protects shareholders, employees, officers, and directors from personal liability of any kind for the debts and obligations of the corporation.
      - if the company is forced to bankruptcy, generally no asset of its shareholders, directors, officers or employees can be used to pay the debts of the corporation, the corporation fails on its own.
      - But a bank might need collateral, if the corporation has no assets, this means that the business people involved in the corporation must provide the financial institution with personal guarantees.
    - - the freedom of expression right has been interpreted as extending to corporations
      - the right to equality and freedom of religion has been restricted to humans only.
      - a corporation cannot be sent to jail for criminal acts, but governments are willing to create ofences for which corporations can be found guilty and punished through substantial fines.
      - where an individual who is acting as an agent or employee of the corporation commits an act that constitutes an offence, the corporation may be found guilt of the offence if the individual was a "directing mind" of the corporation. The individual having sufficient authority in the corporation to be considered its "alter ego"if a directing mind of the corporation commits an offence, the corporation is deemed to have committed the offence
      - In some cases the directors or officers of a corporation may be jailed for serious criminal offence perpetrated by the corporation where they direct the corporation to commit the offence or are personally involved in the commission of the offence.
    - - Officers and directors owe fiduciary duty.
      - of a director possesses special skills (being a lawyer) they will be expected to apply those special skills in carrying out this duty.
      - directors and officers must ensure they gather the information that they need in order to make an informed decision, they must carefully assess this information and they must critically probe management's recommendations.
      - it is not enough for a director or officer to simply say that they tried their best.
      - a director who relies in good faith on a report by a professional, such as incorrect financial statements prepared by an auditor, is not usually held liable for a breach of duty.
      - a director is also entitled to rely on reports by officers or employees if it is reasonable to do si in the circumstances.
      - directors and officers have obligations, and are subject to liability, under legistlation inteded to protect the public, such as environmental protection statutes, and work place statutes that protect employees
      - the above can be substantial, hundreds of thousand of dollars in fines, and can even result in prision terms.
      - regulatory offences are strict liability offences, the Crown need not prove intent or even negligence.
      - this defence of due diligence can be supported by evidence of corporate policies and procedures in place to prevent these events. Where a director or officer is charged personally, the director or officer will have to prove that they personally did everything reasonable in the circumstances to prevent the prohibited act from occurring.
      - some statutes impose absolute liability on corporations, directors, and officers. In an absolute liability offence, there is no defence - once the prohibited act is proven by the crown, guilt is established.
    - - oppresion remedy
        
        where a corporation acts in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, a shareholder, creditor, director, or officer of the corporation, that person might be able to apply to the court for an oppression remedy to rectify the matter.
      - appraisal rights given to minority shareholders
        
        when majority shareholder's decisions affect the minority shareholders, such as decisions that involve certain fundamental changes to the corporation like selling of all assets, corporate statutes provide minority shareholders who voted against the resolution with the right to require the corporation to buy back their shares for fair value, allowing minority shareholders to escape with their investment when the fundamental nature of the corporation changes.
      - derivative actions
        
        an action where a shareholder, director, officer or other person may bring or defend an action in the corporation's name. where the board of directors declines to do so.
        
        a shareholder to launch the action against the director and obtain compensation for the corporation for the breach of duty.
    - - because ownership of a corporation is represented by the ownership of shares, a corporation is never really sold, its assets can be sold, and some or all of its shares, but the corporation remains intact.
      - having more than 50 percent gives controlling interest of a corporation
    - - a corporation's existence ends (it is dissolved) through its liquidation or winding up, which is generally governed by the same statute that created the corporation.
      - if a corporation begins bankruptcy proceedings, the provisions of the federal bankruptcy and insolvency act dictate how he corporation's affairs must be terminated.
      - A corporation is required by statute to maintain its corporate records for a fixed period after dissolution.
      - any legal proceedings by or against the corporation that were begun before the corporation's dissolution are allowed to continue as though the corporation still exists.
    - - large companies with many employees have very complex corporate structures because so many people are involved in the corporation's day-to-day affairs
      - officers, managers, supervisors, and other employees of a corporation carry out a corporation's day to day business
    - - they are more complex than non-corporate behicles.
      - a corporation generates income on its own, pay its own expenses, assumes its own liabilities, and ends up with its own profit or loss in each fiscal year.
      - the government taxes a corporation on its own income in much the same way that it taxes an individual, it needs to prepare and file its tax returns each year.
      - the corp may also be required to pay business taxes to the local minicipality and to collect and pay GST or HST on the goods and services that it uses and provides.
      - these other taxes are expenses of the corporation for the purpose of calculating its federal income tax.
      - shareholders must include dividends (representing a share of the profits) as income in their personal income tax returns. Thus, the government taxes the profits of corporations twice, once as corporatee income and then again as personal income of the shareholders,
      - A dividend tax credit available to shareholders partially offsets this double taxation
    - - once all tax is paid, the corporation can use the remainder of its profit as its board of directors sees fit: to expand and replace existing equipment and buildings, pay bonuses to directors, and officers, raises or bonuses to employees, etc.
      - the law requires the board of directors to act fairly and reasonably in deciding what to do with any profits the corporation earns.
      - shareholders who elect the directors will have a voice in how the profits are used.
    - - unanimous shareholder's agreements, when all shareholders who are entitled to vote on the affairs of the corporation vote, but the rest of the shareholders do not have vote, commonly happening in big corporations
      - unanimous shareholder's agreements can be comprehensive, covering most or all matters concerning how the corporation is run. may be limited to one or a few issues related to the relationship among the shareholders or between the shareholders and the corporation.
      - these limited scope agreements often involve issues around the ownership of shares rather than the operation of the corporation. (such as not being used as security for a debt, protected from division of property in the event of a marriage breakdown, etc.)
      - a comprehensive unanimous shareholder's agreement has a different use, it can detail how shareholders wish the corporation to be managed and operated. These agreement is usually kept in the minute book. limiting how the directors run the business.
        
        it is similar in its scope to the partnership agreement discussed above. it would include clauses that address such issues as:
        
        creation, issuance and transfer of shares by the corp or the shareholders
        
        the business of the corporation
        
        the day-to-day operation of the corporation
        
        payment of dividends to shareholders
        
        compensation for directors
        
        scheduling and running of shareholder's meetings
        
        financial matters, banking, accountants, auditors, reports to shareholders and borrowing limits.
    - - private corporation's shares are not offered for sale to the general public. they are sometimes referred to as closely held corporation or non-offering corporation.
      - a private corporation is simpler to create and to operate than a public corporation, but its ability to raise capital for operations and growth is more limited. At any point in its existence, a private corporation can "go public" if it follows the steps set out in the applicable legislation.
      - Creation
        
        They are created the same way, but the difference is that before shares in a public corporation are offered for sale to the public, the incorporators mustt prepare and distribute a document called a prospectus.
        
        is a document about the corporation that includes information about the directors and officers, the type and number of shares that have been or will be sold, the financial history, the current and past audited financial statements, assessments of the corporation's future financial situation, reasons for issuing the shares, and lists of assets, debts, and or liabilities.
        
        Its a very complex, detailed and highly regulated document, to ensure that any member of the public has the sufficient reliable information to contemplate spending their money to purchase shares in the corporation.
        
        government require that potential investors have access to reliable information before investing.
        
        corporate status obligate corporations to prepare and circulate a prospectus to potential investors before offering any of their shares to the public.
        
        the corporation and the individuals who create and distribute its prospectus are legally responsible for the accuracy of the information contained in the prospectus. If it contains false or misleading information, whoever shared the prospectus may be sued by anyone who suffers a loss as a result of relying on it.
      - Raising Capital
        
        this is the major advantage of the Public Corporation, it is best suited for large enterprises.
      - share ownership and control
        
        disadvantage, the loss of control, the more voting shares owned by different members of the public, the less control any one shareholder or group of shareholdders has.
        
        it is easier to convince members of the public to invest in a corporation that they will have a say in the operations
        
        Ownership is also very volatile, any member of the public may buy shares, and sell, and can become a controlling shareholder. In some cases a takeover of ownership of a public corporation is "hostile" that is, the person buying shares in an effort to gain control is doing so contrary to the wishes of the directors, officers, and perhaps some of the corporation's existing shareholders.
      - Costs and Complexity
        
        It is the most complex and costly of all forms of business.
        
        the potential involvement of members of the public as shareholders creates a whole new set of requirements with regard to financial record-keeping, auditing, and reporting, which contribute to the cost of running this type of corporation
      - Tax implications
        
        a corporation's share structure can be used to divert income to the lowest earners in the family business, thereby taking advantage of the low earner's low marginal income tax rate.
        
        the restructuring of income flow is an extremely complex subject.
      - Liability and Accountability
        
        public entities are protected as private entities
        
        their plans and actions are more closely scrutinized by the public and the securities commissions
        
        the law demands greater care with regard to reports of meetings and to audit and budgeting requirements.
        
        a director of a public corporation may be more likely to be called to task for their decisions than is a director of a private corporation, who is likely a major shareholder or the relative of a major shareholder.
        
        Statutory remedies exist in the same manner as in private companies
      - Responsiveness
        
        since the corporation in itself is already complex, and highly regulated, the public entity is even more complex. Considering the difficulty to control and manage.
        
        changes to corporation structure, mandate, business process, or operations cannot be made quickly and easily.
        
        meetings must be held, votes taken, everything discussed before a decision be taken, then properly recorded in the corporate minute book.
        
        the corporate form can accommodate the growth of a small business into a massive enterprise, even with the simplest of articles and the most conservative of share structures, a corporation can become both immense an immensely powerful.
  - - - signing agents, or signing authority, applying to an agent who has the authority to sign contracts or cheques on behalf of a principal.
    - - the agent has the authority (either actual or apparent) to represent and bind the principal to a contract with a third party
      - the agent has a duty to represent the principal fairly and to act in the best interests of the principal while representing him or her.
      - any third party with whom the agent deals has the right to rely on the agent's apparent authority and to hold the principal legally responsible for their dealings with the agent.
    - - the principal and the agent enter into a contract that expressly sets out the agent's powers and duties, including restrictions
      - the common law or statute law creates the agency relationship (partners are agents of each other)
      - principal appoints the agent to a position that carries with it the authority to act on behalf of the principal
      - the principal makes representations to a third party that suggest an individual is an agent of the principal. Apparent Authority
    - - pre-incorporation contract, is a contract entered between a third party and the incorporators of a soon-to-be-incorporated business, in which the agent acts in the principals behalf and when the corporation is incorporated it then ratifies or ackwnoledges the contract and takes it from the agent.
        
        if the corporation does not acknowledge the contract, the agent is to be responsible for the contract.
    - - Employees carrying out the business of their employer and acting within the scope of their authority are agents of the employer.
    - - all partners are agents of their partnership.
  - - - two or more businesses can enter into an agency agreement in order to provide services to and receive services from each other. A person may choose to become an agent as a method of earning money.
        
        the advantage is that it can assemble a devoted and enthusiastic sales force without assuming all the legal obligations of hiring full-time employees, offering flexibility of working hours to agents, and the approach they choose to clients, control their incomes and earn as much as they need or want in a particular year.
      - Joint ventures, is a temporary relationship between two or more people or businesses that come together for the purpose of completing one or a series of specific projects.
        
        the members can be corporations, partnerships, sole proprietors, etc.
        
        it need not be registered with the government, and it rarely has a name.
        
        it would happen through a written agreement between both parts, detailing everything from patents to costs, etc.
        
        it is advantageous for projects, its quick to put together, and it has a natural end, it does not impact on their individual operations or legal status.
        
        if not properly drafted or agreed upon, it will lead to members problem, regarding liability, profit sharing, etc.
      - Franchises, the right to operate a business using the name, products, business methods, and advertising of another business.
        
        a large corporation, enters in agreement with smaller business enterprises, for a fee, the large corporation allows the small enterprise (the franchisee) to operate in a particular location and sell the products of the franchisor.
        
        The franchise agreement is often very detailed, it governs almost all aspects of the business relationship and it usually favours the franchisor. A franchise agreement usually has the following
        
        sell only products supplied by the franchisor in the form in which they are supplied, and to the standards of the franchisor
        
        set up decorate the business premises exactly as required by the franchisor so thatt the outlet resembles all other franchises
        
        pay both an initial franchise fee and a periodic royalty to the franchisor, often a percentage of the profit of the franchise
        
        contribute a certain amount of money to the franchisors advertising fund.
        
        offer specials and sciounts only as directed by the franchisor
        
        limit their business to a given territory
        
        establush and maintain sufficient liability insurance on the business anf protect the franchisor from any legal liabilities that may arise.
        
        participatee in any group scheme or organization that the franchisor might sett up.
        
        an acknowledgement that the franchisor may, at any time, revoke the franchise agreement if the franchisee fails to live up to any of its obligations under the agreement,
      - Licences, are a contract that confers rights from one party to another in accordance with the terms of the licence.
        
        it is normally related to the rights of the use of intellectual property, such as patents, copyright, and trademarks
        
        a licence is limited in scope, can be time limited and include conditions of use.
        
        Software Licences are common
        
        trademarks are also commonyly licensed such as disney characters on toys and clothing
        
        trademark licences are a componen of franchise agreements, as the franchisee is paying a royalty to the franchisor for the use of the business and product names, as well as the other elements shared with the franchisee as outlines above.