If you are in business, it is useful to know how a corporation works. Corporations are created by Government Laws called statutes. In Alberta the main corporate statutes are the Alberta Business Corporations Act and the Canada Business Corporations Act. Corporations have many of the the same legal abilities as individuals: they can enter contracts and they can sue or be sued. Corporations are a useful structure for protecting assets. Below are some of the different roles within a corporation (practically in a small corporation, one person may fill more than one or all three roles).
Shareholders
Shareholders are the owners of the corporation. Their liability is generally restricted to the value of their investment. Shareholders can vote for directors, they can receive dividends and they receive assets of the company left after winding it up. They can examine corporate records, among other rights.
Directors
Directors are elected by the Shareholders. Directors are the visionaries within the Corporation. They set the strategic plan, and the goals for the corporation. They have certain liability (some environmental liability, tax liability, and a very minor liability for wages).
Officers
Officers run the day to day corporation. They are basically employees. The CEO is generally selected by and responsible to the board. The other officers (CFO, General Counsel, Chief People Officer, Chief Risk Officer etc.) tend to report to the CEO.
If you require assistance with a corporation, please feel free to contact us.
The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.
