Principles of Agency Law in Corporations

Law assignment
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1. Why are the principles of agency law relevant to corporations?
Through the agency law, principals and agents of the organization become defined and the
rules to manage the relationship between principal and agents is provided (Latimer, 2012).
With this law, the business entity gains a legal perspective regarding how to operate, how to
handle contracts and business transactions and ensure responsibility towards their
stakeholders (Yates, Bereznicki-Korol and Clarke, 2017)
2. Explain the advantages of free transferability of shares and how and why this right is
often modified by shareholder agreement.
Through the means of this feature a shareholder can restrict or manage their relationship with
the corporation, thus allowing the shareholder a sense of security in their operations (Yates et
al., 2017).
3. Set out and explain some of the disadvantages associated with the corporate method
of carrying on business.
It is a process with extensive legal formalities that need to be carried in accordance with the
corporation act. It is also an expensive affair owing to the formalities and intrusive rigid
government control which raises the need for the management to improve their accountability
(Latimer, 2012). The process of decision making is often delayed in the corporation since the
board of director are collectively responsible for the administrative proceedings (Yates et al.,
2017).
4. Explain the significance of the memorandum of association in a registration
jurisdiction. Contrast it with the role of articles of incorporation and articles of
association.
A memorandum allows the shareholders of the company, investors and other stakeholders
regarding their relationship with the company, and their roles within the organization.
Through the memorandum of association, boundaries of actions for the company are also
established, and business objectives, as well as liabilities, are defined. On the other hand,
articles of incorporation or the corporate charter is a legal document that needs to be
completed while registering a company(Latimer, 2012). This document includes aspects such
as name of the corporation, address and name of the registered owner (agent) of the
corporation, the type of organizational structure, the names of the board of directors, the
number of authorized shares and the names and detail of the registered incorporator of the
corporation (Busch, Macgregor & Watts, 2016). The article of association, on the other hand,
is a legal document which specifies the company' objectives and the regulation for the
company’ operations (Yates et al., 2017).
5. What is the capacity of most corporations? What is the exception to this rule?

Law assignment
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The corporate capacity is the legal binding which defines whether the company is in capacity
and valid in entering any legal transaction. The certain exception to this rule includes legally
minor individual and mentally ill individuals (Yates et al., 2017).
6. Does a shareholder, whether preferred or common, have a right to a dividend?
Explain.
A dividend is a payment paid by the company to the shareholders in case the company makes
a profit. In the common stock, the company is liable to provide profit/dividend to the stock
owners, however, the final decision regarding the amount to pay and need to pay is defined
by the board of directors. In the preferred stock, the company gives regular and fixed
dividends to the shareholders (Yates et al., 2017).
7. Explain why it is becoming increasingly difficult to get prominent individuals to serve
as directors of Canadian corporations.
The Canadian government is establishing strict norms in their company acts, as a result of
which the perpetrators of the offence, will not only be provided with punishment but will also
be seen to be implied, irrespective of the level of affluence of the individual (Busch et al.
2016). Since in corporations, there are numerous liabilities and formalities, it becomes
challenging for the public figures and prominent individual to adopt a domineering role in the
agencies. Furthermore, the Canadian courts are open to public and press, unless an in camera
proceeding is taking place, which has a direct impact on the public image of the person
(Yates et al., 2017).
8. How can a corporation be terminated?
Termination of a corporation can be voluntary, where all the pending debts are cleared, assets
are distributed and filing of the dissolution is completed with the state government (Latimer,
2012). It can also be through the resolution of the shareholders if they feel that they are in a
deadlock and the owner is not acting in the interest of the society/stakeholders/ employees
and such (Yates et al., 2017).
9. Summarize the obligations of an employer to its employees and those of employees to
the employer under common law.
These are the main responsibilities of employees are to complete the task they have been
hired to do personally in a serious and standardized manner, without putting themselves or
others in the line of danger (Busch et al., 2016). Employers' responsibilities towards
employees are: to provide the employees with a safe place and resources to complete the task
they are assigned to do (Yates et al., 2017).
10. What is the proper way to terminate an employment contract that is for an
indefinite period of time? How is the appropriate notice period to terminate an
employment relationship determined?