Corporation Page 125

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. What is a Corporation

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.

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.

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

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.

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.

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.

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

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.

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.

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

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.