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Corporation Page 125

Corporation Page 125. What is a Corporation. A corporation is a business firm, legally recognized as a separate entity in its own right. Corporations can either be publicly owned, or privately owned. Ownership. Corporations are classified into two categories, Public & Private.

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Corporation Page 125

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  1. CorporationPage 125

  2. What is a Corporation • A corporation is a business firm, legally recognized as a separate entity in its own right. • Corporations can either be publicly owned, or privately owned.

  3. Ownership • Corporations are classified into two categories, Public & Private. • Private: Stocks can be privately traded, has to go through the board of directors if up for sale. • While public stocks can be freely traded.

  4. Ownership Shares • Corporations can offer two types of ownership shares to investors. Common Shares and Preferred Shares. • Common Shares: Provide the owner with voting rights • Preferred Shares: Give a share holder a preferential position in regard to profits and assets, however it does not give one voting rights.

  5. Size • Sizes can vary, corporations can be provincial, national, or internationally based. • For example Coke employs approximately 139 600 employees world wide. • While Sobeys in 2009 had 85 000 employees in ten provinces.

  6. Decision Making • When making decisions there is a process that must be followed. • First you need to decide what needs to be accomplished. • After you know this you must decide how you will get this done. • Finally you make the decision.

  7. Investor • In corporations, the investors are the shareholders. • They don’t personally have to assume responsibility for the corporation on a day to day basis.

  8. Liability • Corporate shareholders have the advantage of limited personal liability. • The risk that owners are restricted to the amount they have invested in the business. • When a corporation is legally established it can sue or be sued.

  9. How They Gain Capital • Corporations gain capital by selling stocks, bonds & shares, as well as making investments. $$$

  10. Profit Distribution • Profits are distributed through stocks and shares. Profits that are not distributed back into the company are paid out through the form of dividends, and are paid on a per-share basis. • First preferred shareholders collect their dividends, then the rest are divided up amongst the rest of the common shareholders.

  11. Advantages • Once legally established, it can sue, enter into contracts, own property, and incur debts and other obligations as any adult human. • Attract wide pools of investors, as you are most likely to make more money investing in corporations rather than partnerships or proprietorships.

  12. Disadvantages • Legal and government fees are substantially higher than partnerships or proprietorships. • Conversely of being able to sue, they can also be sued themselves. • Most likely to be regulated by the government. • Must keep a set of books and records and list their shareholders, directors, assets, and business dealings. • Annual financial statements

  13. Examples of Corporations • Coca-Cola, Pepsi, Loblaws, Empire Ltd, BP (British Petroleum), Exxon Mobile, and CTV. • Many other corporations around the world, the list goes on, and on.

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