Types of Businesses – Corporations and How to Set Up

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There are 2 types of corporations:

1. Public corporation:
A public corporation is a legal entity that has a distinct personality for tax and legal status. It generally is started by its original shareholders who provide the start-up cash or assets in exchange for their shares. The corporation may eventually be owned by a large number of shareholders.
The share holders invest in the corporation have certain rights:
a. Voting right.
b. The right to elect directors.
c. The right to receive dividends.
d. The right to buy and sell the corporation stocks.
e. The right to examine the corporation book.
f. The right to share any surplus on the wind-up of the corporation.
The shareholders' liability is only limited to the total sum of the investment, except in case of fraud and wrong doing.

2. Private corporation:
Operated similar to public corporation except the shares of the corporation are owned by very limited number of shareholders.

How to set up a corporation
Setting up a corporation requires the application for a Charter or Articles of Incorporation to be filed with the appropriate provincial or federal regulators. If approved a charter is granted. A Charter or Articles of Incorporation is a contract that exists between the legal jurisdiction, the incorporators and their shareholders.
The following information is required to set up a corporation:
a. Name of corporation.
b. Location of its Head Office.
c. Purpose.
d. Authorized capital, classes of shares holding the capital, number of shares of each class and their issue price.
e. Any restrictions to the sale of shares or classes of shares.
f. Description of shares, attributes, designation, preferences, rights and conditions.
g. List of incorporators, including addresses and number of shares held and price paid for shares.
h. List of first directors, including addresses.
i. Any additional information required by law.
To set the company in motion, the Board of Directors must present and choose the corporation by-laws at their first meeting.

All corporations are governed by corporation by-laws which is chosen at the corporation's first meeting. By-Laws are the code of regulations and instructions for operation, duties and obligation of the corporation and its officers. If you need more information of the above subject, please visit my home page at:
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