Format
Assignment files should be prepared using MS Word to allow your tutor to insert comments and feedback. If you do not have this software, contact your tutor to discuss whether other arrangements can be accommodated.
Background
The corporation is an attractive form of organization for carrying on business with its own risks and rewards. Knowledge of the legal nature and operation of a corporation will help to manage the risks. This assignment builds on your knowledge of the formation and governance of Canadian corporations and the roles of those involved in its operations.
Instructions
Assume that a friend, who has recently left a position as a senior executive of an international waste management company, has approached you to invest in and become a director of a corporation to be formed. The company will carry on the business of disposing of hazardous waste for its customers in several provinces. Your friend will be the President and CEO and their spouse, a partner in an accounting firm, the Treasurer and CFO. Your friend is seeking a bank loan to finance the purchase of trucks and other equipment. They expect the business to grow rapidly, acquiring customers across the country, and eventually become listed on a major stock exchange.
Read this article on Liability of Directors and then answer the following questions.
List the required steps to form a corporation under the legislation most applicable to this scenario up to and including the business of the first meeting of directors.
If you were relatively risk averse, discuss whether you would purchase shares in the new corporation and give your reasoning. There are other methods of investing which may be less risky. Explain and discuss them.
If you were tolerant of some risk and wanted a steady return on your investment, how would you propose to invest in the new corporation and why?
If you were a risk taker and wanted to maximize the potential for capital gains from your investment, how would you propose to invest in the new corporation and why? Why would this type of investment be riskier?
What are some risks of becoming a director in this new company?
If you agreed to become a director, how could you minimize or manage the risks associated with that role?
If you decided to become a shareholder, list and explain two issues you would want to be dealt with in a shareholders’ agreement and explain why.
Use the marking rubric below to structure your submission.
