Glossary
Author | J. Anthony VanDuzer |
Profession | Faculty of Law University of Ottawa |
Pages | 591-606 |
591
GLOSSARY
Affiliated corporations: corporations where one is the subsidiary of
the other, both are subsidi aries of the same corporation, or both are
controlled by the same person. One corporation is the subsidiary of an-
other if it is controlled by the other. These are the basic and most com-
mon type s of affiliated corporations. If two corporations are affiliated
with the same corporation, they are deemed to be affili ated. “Control”
for the purpose of t he definition of “affiliate” is legal control: holding
voting securities of t he corporation that carry more than 50 percent of
the votes that may be cast for the election of directors, where such votes
are sufficient to elect a majorit y of the board of directors. See “Parent,”
“Subsidiary,” CBCA, ss. 2(2)–(5), and Chapters 8, 9, and 10.
Agenc y costs: costs ari sing as a result of someone other than the share-
holders being responsible for managing the corporation’s business.
They include the direct costs associated with directors and officers
acting to further their personal interests, in an opportunistic way, at
the expense of t he corporation, and the related costs that shareholders
incur to monitor their agents, the directors and officers, for the purpose
of guarding against such opportunistic behaviour and to hold them ac-
countable. See Chapter 12.
Amalgamation: a statutory procedure by which two or more corpora-
tions are combined into one. The rights and liabilities of the amalgamat-
ing corporations continue as rights and obligations of the amalgamated
corporation. See “Short-form amalgamation,” and Chapter 8.
THE LAW OF PARTNERSHIPS AND COR PORATIONS592
Annual meetings: meetings of sh areholders that must be held at least
every fifteen months or six month s after the end of the corporation’s
financial year. Annual meetings are identified and defined by t he hap-
pening of three items of business:
on such statements; and
agreement of shareholders in certain circumstances).
All other meetings are called “special meetings.” To the extent any busi-
ness other th an the three items above is carried on at an annual meet-
ing, it is called an “annual and special meeting.” See “special meeting”
CBCA, s. 133, and Chapter 7.
Articles or Articles of Incorporation: the document filed with the d ir-
ector appointed under the CBCA and the statutes modelled after it to
create a corporation. They must be filed in the form established by t he
director (Form 1), along with an Initial Registered Office Address and
First Board of Directors (Form 2). They set out the fundamental char-
acteristics of the cor poration — for example, its name, the class and
number of shares authorize d to be issued, any restrictions on transfer-
ring shares, and any restrictions on t he business t he corporation may
carry on. Once the director issues a certificate to which the articles are
attached, a corporation with the characteri stics set out in the articles
comes into existence. See “Constating documents,” and Chapters 3 and
4.
Articles of Association: See “Memorandum and Articles of Associ a-
tion” and Chapter 2
Auditor: the chartered accountant or firm of chartered accountant s ap-
pointed by the shareholders at each annual meeting to audit the finan-
cial statements of the corporation. An auditor must examine and report
to shareholders on the fin ancial statements. See CBCA, ss. 161–71, and
Chapters 7 and 12.
Authorized capital: the classes and number of shares of each class th at
a corporation is per mitted to issue as st ated in its articles. The articles
also set out the rights, privileges, restrictions, and conditions attached
to each class of shares (e.g., Class A preferred shares that are entitled to
an annual dividend of $5 per share). The CBCA and the other corporate
statutes contain certain default provisions that apply if the art icles are
silent. See CBCA, s. 24, and Chapters 4 and 6.
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