COR POR A T E L A W S TU D Y G U ID E
TH E C H A R TE R E D GO VERNA NCE I NSTI TU TE O F CA NA DA
IN TE R N A TI O NA L Q U A L I F Y I NG P RO GRA M
SYLLABUS
CORPORATE LAW
CO R POR A T E L A W S TU D Y G U ID E
Level Six, Part One Programme
Total Hours Study Time – 200
Introduction:
The aim of this module is to provide a thorough grounding in, and knowledge and understanding
of, the legal framework governing certain business organizations, with particular focus on the
corporation. Where appropriate, the module will also cover relevant corporate governance topics,
and the relationship between corporate law and corporate governance.
Learning Outcomes:
After successful completion of this module you should:
1. Understand the legal framework within which commercial organizations operate, their
business structures and corporate personality.
2. Be able to understand the roles and duties of directors, as well as the composition and
structure of the board.
3. Understand the internal rules and external legal and regulatory environment to which
corporations are subject regarding members and shareholders.
4. Be able to apply relevant legislation, some case law and best practice recommendations to
legal and governance issues arising in complex scenarios, relating to shares, capital and loans.
5. Be able to exercise appropriate judgment when presenting guidance on structural and legal
questions related to restructuring.
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CORPORATE LAW
Part I: Sources of Law, Business Structures and Formation of the Corporation
20% - 40 Learning Hours
Learning Outcome 1: Understand the legal framework within which commercial organiza-
tions operate, their business structures and corporate personality.
TOPIC AREA EXEMPLIFICATION
Sources of Corporate law and Canada’s constitution
Corporate Law
and Governance The importance of legislation as a source of corporate law:
• The Canada Business Corporations Act
• The Canada Not-For-Profit Corporations Act
• Provincial legislation
The role of subordinate legislation, including:
• Regulations
• Legislative amendments
• Royal Assent and bringing into force
The importance of case law as a source of corporate law
The importance of the constating documents as a source of corporate
regulation
The relationship between legislation/regulation and the corporation’s
constating documents
Corporate contracts as private law
Human rights law:
• Federal human rights law
• Provincial human rights law
Privacy law:
• Federal privacy law
• Provincial privacy law
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
Business Sole proprietorships
Structures
• Formation and operation
Partnerships
• Ordinary partnerships
• The relationship among partners
• The relationship between partners and third parties
• Limited liability partnerships
• Comparison to ordinary partnerships and corporate liability
Corporations
• Public and private corporations
• For-profit and not-for-profit corporations
• Share capital
• Limited liability
Incorporation Promotion and pre-incorporation contracts
and Corporate
Personality • Promotion of the corporation
• Duties of a promoter
• Pre-incorporation contracts
• Agreements to the contrary
• Binding the corporation
Incorporation
• Articles of incorporation and other statutory requirements
Corporate personality
• Distinguishing between legal and natural persons
• The corporation as a person
• Salomon v. A. Salomon & Co. Ltd.
Consequences of corporate personality
• Disregarding corporate personality under statute
• Disregarding corporate personality under the common law
• When courts can disregard corporate personality
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
Legally How corporations enter into contracts
Binding the
Corporation • Use of the common seal
• Execution of documents
The constitution of a corporation
• The articles of incorporation
• Bylaws
• Shareholders’ agreements
Corporate capacity
• The ultra vires doctrine
Board authority
• Persons dealing with the corporation
• Dealing in good faith
• The power of directors
• The “indoor management rule”
Agency and the authority of agents
• The ratification of an agent’s acts
• The authority of an agent
• Express or implied actual authority
• Ostensible authority (representation, reliance and alteration of
position)
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CORPORATE LAW
Part II: The Board of Directors
25% - 50 Learning Hours
Learning Outcome 2: Be able to understand the roles and duties of directors, as well as the
composition and structure of the board.
TOPIC AREA EXEMPLIFICATION
The Board of Defining a “director”
Directors
The legal status of a director
• Executive and non-executive directors
• Alternate directors
• Nominee directors
Specific board roles
The election of directors
• The nominations process
• The role of shareholders or members
Directors remuneration
• The entitlement to remuneration
• The establishment of directors’ remuneration
• Disclosure of remuneration
Board structure and composition
• Board structure and size
• The role of board committees
• The audit committee
• Other possible committees
• Board composition and board diversity
Vacation of office
• Resignation
• Retirement by rotation
• Removal under legislative authority
• Removal under the bylaws
• Disqualification pursuant to legislative dictates or the bylaws
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
The Role of the The general functions of the board
Board
The managerial powers of the board
• Conventional division of powers
• Delegation of powers
The rules related to board meetings
• Calling a meeting and notice
• Establishing a quorum
• Board decisions
• Private corporations
• Public corporations
• Minutes of meetings
The corporate secretary
• Legal status of the corporate secretary
• Appointment and qualifications
• Role, powers and authority
Directors’ General duties
Duties
• Scope of general duties
• Duty to act within powers
• Duty to act in accordance with the constating documents
• Duty to exercise powers for the purposes for which they are
conferred
• Duty to exercise independent judgment
• Duty to exercise reasonable care, skill and diligence
• Duty to avoid conflicts of interest
• Duty not to accept benefits from third parties
• Duty to declare interest in transactions
Remedies for breach of duty
Codification of directors’ duties
Ratification of transactions by members
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CORPORATE LAW
Part III: Members and Shareholders of a Corporation
10% - 20 Learning Hours
Learning Outcome 3: Understand the internal rules and external legal and regulatory envi-
ronment to which corporations are subject regarding members and shareholders.
TOPIC AREA EXEMPLIFICATION
Shareholders Defining shareholders
• Becoming a shareholder under federal legislation
• Distinguishing between members and shareholders
• Restrictions on shareholders
The register of shareholders
• Legal status and content
Transparency and shareholdings
Termination of status of shareholder
• Death of a shareholder
• Transfer, transmission, forfeiture, and surrendering of shares
• Other provisions of the articles or bylaw
Members Defining members
• Becoming a member under federal legislation
• Distinguishing between members and shareholders
• Restrictions on membership
The register of members
Legal status and content
Transparency and membership
Termination of membership
Death of a member
Relinquishment of membership status
Where termination occurs pursuant to a provision in the constating
documents
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
Corporate How public and private corporations make decisions
Meetings
and Decision- Resolutions
Making
Rules relating to general meetings
• Calling a meeting
• Notice and electronic communication
• Quorum
• Voting, in person and by proxy
• Annual general meetings
• Adjourning a meeting
• Meeting records
• Class meetings
• Members engagement and electronic meetings
Shareholders’ The derivative action
Remedies
• The
e rule in Foss v. Harbottle
• The derivative action
• Causes of action
• Procedures in the derivative action
Pro
The statutory oppression remedy
• Who may take action as complainant
• The conduct complained of
• Possible remedial orders
The application for winding up
• Who can apply
• The “just and equitable” rule
• Consequences of a successful petition
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CORPORATE LAW
Part IV: Capital and Corporate Transparency
25% - 50 Learning Hours
Learning Outcome 4: Be able to apply relevant legislation, some case law and best practice
recommendations to legal and governance issues arising in complex scenarios, relating to
shares, capital and loans.
TOPIC AREA EXEMPLIFICATION
Shares and What is a share?
Share Capital
• The legal definition of a share
• The nature of a share
• Authorized and allotted share capital
• Issued and unissued share capital
• Authority to allot shares, and share warrants
• Minimum share capital
• Pre-emption rights
• Payment for shares
• Share certificates
Equity financing and offering shares to the public
• The regulatory framework
• Stock exchanges
• The listing process and continuing obligations
• The prospectus
• Obligation to publish a prospectus
• Content of a prospectus
• Approval and publication of a prospectus
• Liability for untrue or misleading statements and omissions
Classes of share
• Ordinary and preference shares
• Variation of class rights
• How to vary class rights
• Rights of objection
Transfer and transmission of shares
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
Guidance on Maintaining capital generally
Maintaining
Capital Alteration of share capital
• Reduction of share capital
• Special resolution and court confirmation
Acquisition of own shares
• Redeemable and retractable shares
• Purchase of own shares
• Authorization, payment and cancellation
• Acquisition of shares out of capital
Distributions
• Rules relating to distributions – dividends
• Profits available for distribution
• Payment of a dividend
• Consequences of an unlawful distribution
Debt Financing The corporate record and transparency
The annual report, and financial reporting
• The obligation to keep accounts
• Annual accounts
• Annual reports
• Management discussion and analysis
• Statement of corporate governance
• Auditor’s report
The auditor
• Appointment
• Eligibility requirements and prohibitions
• Appointing and re-appointing an auditor of a private corporation
• Appointing an auditor of a public corporation
• Remuneration
• Duties and rights
• Powers of investigation
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
Debt Financing • Auditor liability
(continued) • Contractual liability
• Tortious liability
• Criminal liability
• Vacation of office
• Resignation
• Removal
• Replacement
• Rotation
Periodic financial reporting
Insider Trading Insider trading
• Insiders and publicly traded corporations
• CBCA and OSA requirements
• Civil liability
• Short sales
• Tipping
• Penalties
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CORPORATE LAW
Part V: Corporate Restructuring and Liquidation
20% - 40 Learning Hours
Learning Outcome 5: Be able to exercise appropriate judgment when presenting guidance
on structural and legal questions related to restructuring.
TOPIC AREA EXEMPLIFICATION
Corporate Take-over bids
Restructuring
and Takeovers • Relevant provisions of the CBCA
• Regulation under provincial legislation
Amalgamation
• Under the CBCA
Acquisitions and divestitures
• By way of acquiring or selling shares
• By way of acquiring or selling assets
Insolvency and Receiverships
Related Matters
• Appointment of receiver by a secured creditor
• Appointment by court order
• Consequences of receivership
• Powers of the receiver
• Duties of the receiver
• Discharge of the receiver
The Companies’ Creditors Arrangement Act
• Compromises and arrangements under the CCAA
• Court oversight of CCAA proceedings
The Bankruptcy and insolvency Act
• Acts of bankruptcy
• Assignments in bankruptcy
• Appointment of the trustee in bankruptcy
• Duties of the trustee
• Discharge of the trustee
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CORPORATE LAW
TOPIC AREA EXEMPLIFICATION
Dissolution Involuntary dissolution
• By the Director under the CBCA
Voluntary dissolution
• Director and shareholder approval
• Winding up, liquidation and distribution of proceeds
• Court-supervised winding up
Court-ordered terminations
Rights and duties of the liquidator
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