Legal Aspects of Business: Corporations, Liabilities, and Duties

This assignment delves into various aspects of business management and law, starting with the concept of a corporation's separate legal identity and the limited liability of shareholders. It examines how personal guarantees can reduce this limited liability and discusses the disadvantages of the corporate business model, including double taxation and regulatory oversight. The assignment further differentiates between preferred and common shares, highlighting the misleading nature of the term 'preferred shares.' It contrasts bondholders with preferred shareholders and outlines the duties of a corporation's director, addressing why prominent individuals are hesitant to serve as directors. The termination of a corporation and the distinction between employees and independent contractors are also covered, along with the proper procedures for terminating employment contracts and the circumstances for dismissal without notice. Constructive dismissal, the duty to accommodate, workers’ compensation legislation, union types, strikes, lockouts, and intellectual property law are also discussed, providing a comprehensive overview of key legal and management principles. Desklib offers resources for students seeking further understanding and assistance with similar assignments.

Running head: BUSINESS MANAGEMENT
Business Management
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1. What is meant by a corporation’s having a separate legal identity?
A corporation having a separate legal identity means it owns a business that is detached from its
operations with respect to management and accountability. Hence, a separate legal entity can be
set up by a limited liability company or corporation to separate the core actions of the mother
entity from those of other individual companies.
2. Explain how the liability of a shareholder is limited.
In limited liability corporations, the liability of a shareholder is limited to the set amount unpaid,
if there is any, on his/her shares. But in contrast, the overall liability of a shareholder in a no
liability corporation only applies to the total amount they’ve paid on the shares they hold.
3. Explain how a personal guarantee reduces the limited liability of the principals of a
closely held corporation.
When you are a limited liability owner, it means you’re legally responsible for the credit of a
company only to the extent of the relevant nominal value of your shares. Personal guarantee,
however, is your individual legal promise to settle the debts of the business you serve as a
partner or executive partner. This means you won’t be able to choose what to repay, but rather,
you’ll be obliged to settle the credit.
3. Set out and explain some of the disadvantages associated with the corporate method of
carrying on business.
Double taxation of the corporation profit
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Both the state and federal government demands tax from the corporation. The dividends are
treated as income when being dispensed to shareholders hence making them eligible for taxation,
again.
More federal and state regulations and oversight
Filing tax returns for corporate is complicated. Filing of annual reports, Articles of corporation
and corporate bylaws is mandatory
5. What is meant by a “preferred” share? Contrast this with the “common” share. Explain why
the term preferred shares are misleading.
Preferred share is a class of specific ownership in a corporation with a much high claim on its
earnings and assets than a common stock. Preferred stocks don’t carry voting rights. “Common”
share, on another hand, is a security that serves to represent ownership in a company. Owners of
this class of stock have voting rights.
While Preferred stock earns a dividend, they aren’t as attractive as they seem. In fact what makes
the “preferred stock” term look misleading is that the owner has no right to participate in the
decision making processes of the company because s/he doesn’t not have voting rights
(Clairmont, 2016).
6. What is the significant difference between a bondholder and a preferred shareholder, both of
whom are entitled to a specified payment each year?
As an investors, you’ve two choices for investing is a company; you can buy the company’s
stock or you can opt for its bonds.
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As a bondholder, you’re described as being a lender to the company who’ve been given a given
amount of interest in exchange. Hence, you can only make money by selling the bonds or
keeping them and collecting the interest. A shareholder, on another hand, can be described as a
part owner of the company by possessing a piece of the company in form of shares. You make
money by receiving the dividends or selling the stocks altogether.
7. Set out the nature of the duties owed by a director of a corporation. To whom are these?
Each country’s Companies Act spells out various duties given to the director of the corporation.
They include;
i. Promoting the success of the corporation by acting in good faith for the benefit of the
company and the members
ii. Acting in his/her power for the given purpose. It can be in line with the company’s
constitution, resolutions, articles of association etc.
iii. Avoiding conflicts of interest in relation but not limited to exploitation of property,
opportunity of information
8. Explain why it is becoming increasingly difficult to get prominent individuals to serve as
directors of Canadian corporations.
Prominent individuals shun the idea of taking up director roles in corporations because it is
considered to be a junior position in the organization (below CEO and an array of other
posts). Prominent people dislike working as juniors.
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9. How can a corporation be terminated?
The process of dissolving a corporation takes several steps although this may vary from one
country to another
i. Calling a board of meeting
ii. Filing the certification of dissolution with the government
iii. Notifying the revenue authority
iv. Closing credit lines and accounts
v. Canceling Licenses etc.
10. Distinguish among an employee or an independent contractor. Explain how a court will
determine whether a person is an employee rather than an independent contractor.
An employee has a long term relationship with the company and the company is permitted by the
law to withhold his/her income tax and submits it to the revenues authorities. Independent
contractors have short tern relationships with the company and submit the taxes on their own
without the intervention of the company.
In a court of law, a Judge will examine how an individual pays the income tax. If it is submitted
via a third-party, that person qualified to be an employee and vice versa.
11. 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?
A contract meant to last for an indefinite period of time can be terminated one of the involved
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parties by giving a notice in advance with a reasonable time period. The notice is determined by
consulting the provisions from the constitution.
12. Under what circumstances can an employee are dismissed without notice? When can an
employee leave employment without giving notice?
An employee is allowed to dismiss the employee without notice under the following
circumstances;
i. Gross misconduct that amounts to serious violation of the company rules
ii. In case the company has already settled the employee’s wages beforehand and wishes to
retrench part of the staff
As an employee, you can leave employment without notice in the following circumstances;
i. If you believe you won’t be allowed to work for the employer through the legal 2 week
notice period
ii. If you have found a better job and you are required to begin right away but your manager
isn’t willing to make the necessary arrangements that may facilitate your departure
iii. If the company is laying off people
iv. If your manager is involved in a major conflict with you
13. What is “constructive dismissal”? Be sure to explain it using a contractual perspective. What
factors will a court take into consideration when determining compensation in a wrongful
dismissal action? Indicate the various types of remedies that may be available to the plaintiff.
In the employment law, constructive discharge occurs when an employee terminates the contract
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or resigns due to the hostile environment created by the employer (Weiner, 2011).
The court will consider the following when determining compensation for wrongful dismissal;
i. Whether reasonable notice was given to the plaintiff (the employee)
ii. Whether reasonable pay was given to the plaintiff (employee)
The remedies available to the plaintiff includes claiming damages for the wrongful dismissal or
payment in lieu of the reasonable notice.
14. Explain what is meant by a “duty to accommodate” in the field of human rights and how that
can affect employers.
“Duty to accommodate” refers to the obligation of service providers and employers to adjust
rules, practices and policies to enable you as an employee to participate fully. It helps employers
understand their rights, the rights of the employees and their responsibilities under Alberta
human rights law (Trotter, 2011).
15. Explain the object and purpose of workers’ compensation legislation and how those
objectives are accomplished. If a worker is injured on the job and is not covered by workers’
compensation, what course of action need she take to secure a remedy?
Workers’ compensation is an insurance that seeks to provide medical care and/or cash benefits
for workers injured or become Ill as a result of their respective jobs given by the employer. In no
way shall an employer require the employees to make contributions to the cost of compensation.
In case the employer fails to compensate the injured employee accordingly, the employee may
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seek alternative forms of statutory compensation or compel the employer to do so through the
courts.
16. Distinguish among a union shop, a closed shop, and an agency shop.
A union shop is a security clause in which the employer agrees to only hire members from a
specific labor union or require employees yet to join the labor union to join it. In a Closed Shop,
the employer employs members of a specific union and requires them to remain in the union lest
they lose they lose their jobs. In Agency Shop, the employer is allowed to hire workers inside or
outside the union but the current workers to remain employed, they must join the union(Ponak &
Gottlieb, 2001).
17. Distinguish between a strike and a lockout. What kind of disputes are strikes and lockouts
limited to? Explain what steps must take place before a strike or lockout is legal.
In the Labor Law, a strike is the refusal to work, obstruction, or a work slowdown initiated by
employees often to resolve a given conflict between the employer and the striking employees. A
lock-out, on another hand, is refusal by an employer to allow the employees to access the place
of work. Some of the steps to be taken before such actions is to verify if there is existence of any
agreement that forbids the employees or employers from taking such action. Also, there should
be no court order barring the parties from undertaking the action.
18. What two principles does the law of intellectual property try to balance?
Intellectual property tries to balance 2 principles; investment and creativity should be recognized
and duly awarded and the burden of proof lies on the initial advocates of change
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19. Explain how a copyright is obtained and the qualifications that must be met in order to
obtain such protection. How long does copyright protection last?
You are assumed to be the owner of any original work if, under the Copyright Act, your
intellectual property is original; you can prove works of authorship; and the word is reduced to
material form. No other actions are needed for copyright protection i.e. you don’t need to file for
any application. A copyright protection on a material lasts for 70 years (Wayne, 2015).
20. What is the purpose of patent law and why is registration required for protection? How long
does patent protection last?
The main purpose of the patent law is incentivizing innovation. It also serves to balance the
interests of the public on one hand and those of investors on the other. Protection is necessary to
prevent unwarranted parties from abusing or benefiting from a given innovation which would be
a serious inconvenience to the innovative company. Patent protection lasts for a period of 20
years from the date of registration.
21. What kinds of things are protected by trademark legislation and how is that protection
obtained or lost? How long does trademark protection last?
A trademark may entail coined words (fanciful words such as Kodak), arbitrary marks and
suggestive marks. You obtain trademark ownership by registering it with the Trademark and
Intellectual property authority. You will lose ownership of a given trademark if you abandon or
fail to use it for 3 or more years. Ownership of a trademark lasts for 10 years but can be renewed
before the 6th year of that period.
22. What steps should an employer undertake to protect confidential information?
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An employer can protect confidential information by inserting non-disclosure provision in
employment agreements. The employer can also label appropriately on documents containing
confidential information entirely limit access to the said information.
23. How does the duty of confidentiality arise, and what protection or remedies are available to
the confider?
The duty of confidentiality arises when the organization is involved in production of innovative
products or when there is need to transfer huge volumes of critical information such as that
concerning disclosures to the potential investor, banker of a takeover. The remedies include
obligations of confidence spelled out in the equitable duties and common law of confidence as
well as statutory protection of all confidential information.
24. What steps should a company take to protect itself and its data from internal and external
threats?
Data is valuable asset for any organization. Here are steps to protect it from both external and
internal threats;
1. Find the location where your sensitive data files resides
2. Achieve visibility awareness into who has and can and access the data
3. Set appropriate access policies, Separation of Duties policy and compliance controls in
place
4. Automate the Access Requests, Eliminate Stale Objects, Perform Access Reviews,
Delegate authority, and enlighten everyone in the organization about data protection
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References
Clairmont, S. (2016). A Look into Protection of Preferred Stockholders' Rights under the
Context of State-Owned Enterprise Reform. Journal of Labour Market, 652-7351.
Ponak, A., & Gottlieb, D. (2001). Mandatory agency shop laws as an explanation of Canada-U.S.
union density divergence. Journal of Labor Research, 541-568.
Trotter, G. (2011). The Right to Decline Performance of Same-Sex Civil Marriages: The Duty to
Accommodate Public Servants - A Response to Professor Bruce MacDougall. Journal of
Commerce, 125-236.
Wayne, C. (2015). The Fantastic Failure: How Current Copyright Law Stacks the Deck against
the Original Authors of Justice. Journal of Labour Markets , 167-201.
Weiner, S. (2011). Constructive Dismissal and Repudiation of Contract: What Must Be Proved.
Journal of Labour Market, 354-433.
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