Corporation Page 125

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CorporationPage 125
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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.

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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.

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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.

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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.

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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.

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Investor

• In corporations, the investors are the
  shareholders.
• They dont personally have to assume
  responsibility for the corporation on a day to
  day basis.

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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.

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How They Gain Capital

• Corporations gain capital by selling stocks,
  bonds shares, as well as making investments.

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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.

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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.

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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

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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.