Business Organization (CorporateLaw)

Federation of Law Societies of Canada
National Committee on Accreditation
Syllabus
Business Organizations
(Revised December 14, 2011)
Candidates are advised that the syllabus may be updated from

time-to-time without prior notice.
Candidates are responsible for obtaining the
most current syllabus available.
World Exchange Plaza 1810 - 45 O'Connor Street Ottawa Ontario

Tel: 613.236.1700 Fax: 613.236.7233 www.flsc.ca
K1P 1A4
Business Organizations
BASIC REQUIREMENTS:
To succeed in this examination students must demonstrate that they are acquainted with the three most
common forms of organization used to carry on business: the sole proprietorship, the partnership and the
corporation. Students must be able to explain the nature of the interests at stake in a business enterprise,
including those of owners, managers, employees, creditors and the public, and the ways in which the law
governing sole proprietorships, partnerships and corporations mediates among the interests of these
stakeholders. In particular, the examination will focus on the corporation and the rights and responsibilities of
three stakeholder groups: shareholders, directors and officers.
METHOD OF EVALUATION:
3 hour examination worth 100%
REQUIRED MATERIALS:
P. Puri, A. I. Anand, R. J. Daniels, A. A. Dhir, E. M. Iacobucci, I. B. Lee, J. G. MacIntosh, E. J. Waitzer,
and J. S. Zeigel, CASES, MATERIALS AND NOTES ON PARTNERSHIPS AND CANADIAN BUSINESS
CORPORATIONS, 5th ed. (Toronto: Carswell, 2011) (referred to as "Casebook" in syllabus)*
J. A. VanDuzer, THE LAW OF PARTNERSHIPS AND CORPORATIONS 3d ed. (Toronto: Irwin Law,
2009) (referred to as "VanDuzer" in syllabus)*
Consolidated Canada Business Corporations Act and Regulations (Toronto: Carswell, latest edition)
(referred to as "CBCA" in syllabus)
Consolidated Ontario Business Corporations Act, Related Statutes and Regulations (Toronto: Carswell,
latest edition)[contains Ontario partnerships legislation] (referred to as "OBCA" in syllabus)**
* Please note that the corporate and partnership legislation has been amended in some ways
since the publication of VanDuzer. Students must review the relevant current provisions of
the statutes for each section of the course. Where a statute has been amended, the
provisions of the amended statute prevail over any description of the law in the Casebook or
VanDuzer that is inconsistent with the amendment.
** Students taking this examination for qualification in provinces other than Ontario should refer
to the corresponding provisions of the local provincial legislation wherever provisions of
Ontario legislation are referred to. A table of concordance showing the provisions of each
provincial corporate statute that correspond to the provisions of the Canada Business
Corporations Act is provided in Consolidated Canada Business Corporations Act and
Regulations.
OTHER RESOURCES:
W. Gray, CANADA BUSINESS CORPORATIONS ACT (Toronto: Carswell, first published 1994, now
looseleaf)
W. Gray & C.W. Halladay, GUIDE TO CBCA REFORM: ANALYSIS AND PRECEDENTS (Toronto:
Carswell, 2003)
C. C. Nicholls, CORPORATE LAW (Toronto, Emond Montgomery, 2005)
B. Welling, CORPORATE LAW IN CANADA, 3d ed. (Toronto: Carswell, 2006)
K. P. McGuinness, THE LAW AND PRACTICE OF CANADIAN BUSINESS CORPORATIONS, 2d ed.
(Toronto: Butterworths, 2007)
COURSE SYLLABUS
I - INTRODUCTION
What is a Business?
Basic Forms of Business Organization
Sole Proprietorships
Partnerships
Corporations
Other Methods of Carrying on Business
Required Reading:
Casebook pp. 1-3

VanDuzer pp. 1-24
II - PARTNERSHIP
(a) What is a Partnership?
Required Reading:
Statutory References:
Casebook pp. 3-21

VanDuzer pp. 28-49
Partnerships Act, R.S.O. 1990, c. P.5 (P.A.), ss. 1-5, 45
Business Names Act, R.S.O. 1990, c. B.17, ss. 1, 2, 6, 7, 10
(b) How Does a Partnership Carry on Business?

(i) Relations Between Partners
Required Reading:
Casebook pp. 29-31

VanDuzer pp. 49-54
P.A. ss. 20-31
(ii) Relations With Third Parties

Required Reading:
Casebook pp. 32-33

VanDuzer pp. 54-63
P.A. ss. 6-19
(c) Dissolution of the Partnership

Required Reading:
VanDuzer pp. 66-68
P.A. ss. 26, 32-44
(d) Partnership Agreements

Required Reading:
VanDuzer pp. 68-76
(e) Other Relationships

(i) Joint Ventures
Required Reading:
Casebook pp. 46
VanDuzer pp. 76-79
P.A. ss. 2, 3, 32(b)
(ii) Limited Partnerships

Required Reading:
Casebook pp. 34-44

VanDuzer pp. 79-86
Limited Partnerships Act, R.S.O. 1990, c. L.16, ss. 2-18, 21, 22,
24-6, 32
(iii) Limited Liability Partnerships

Required Reading:
Casebook pp. 44-46

VanDuzer pp. 63-66
P.A. ss. 10, 44.1-44.4
III- THE CORPORATION

(a)
Introduction
(i) General
Required Reading:
VanDuzer pp. 90-98
(ii) Constitutional Matters

Division of Powers
The Charter
Required Reading:
Casebook pp. 53-55

VanDuzer pp. 98-112
(iii) Incorporation Process

Required Reading:
VanDuzer pp. 112-116
CBCA ss. 5-9, 15, 19(2), 20, 21, 106(1)

Forms 1, 2
OBCA ss. 4-7, 15, 140, 145, 146
Forms 1, 2
(iv) Function of Corporate Law

Required Reading:
(v) Corporate Law and Securities Law

Required Reading:
(b)
Nature of the Corporation

(i) Separate Existence and Limited Liability
Required Reading:
Casebook pp. 55-75

CBCA ss. 6, 10, 15, 45(1)

OBCA ss. 5, 10, 15, 92(1)
(ii) Disregard of Corporate Legal Personality

Required Reading:
Casebook pp. 87-113, 117-123, 131-133

CBCA ss. 45(1)

OBCA ss. 92(1)
(c) Incorporation
(i) Considerations and Process
Required Reading:
Casebook pp. 149-154, 155-158

VanDuzer pp. 146-147; 161-185
CBCA ss. 2(1)(definition of distributing corporation), 2(6), 2(7),

5-9, 15, 16, 19, 20, 21, 22, 28, 45, 49(8)-(11), 102(2), 103-106,
109, 113-115, 126, 130, 132, 139, 140, 141, 149, 155, 160, 162,
163, 171, 173(1)(b), 174(1), 187, 188, 250, 251, 254, 263
Forms 1, 2, 22
CBCA Reg. s. 2, Schedule 5
OBCA ss. 1(1)(definition of offering corporation), 1(6), 4-7,
14-17, 26, 42, 54, 56(8), 92(1), 93, 101, 103, 104, 111, 115-119,
122, 126, 127, 129, 138, 139, 140, 141, 143-146, 148, 149,
153, 154, 156, 158, 160, 168, 180, 181, 256-258, 263
Forms 1, 2
Business Names Act, ss. 2(1), (6), 7
Corporations Information Act, R.S.O. 1990, c. C.39, ss. 1.1, 2,
2.1, 3, 3.1, 4, 13, 14, 18
(ii) Corporate Names

Required Reading:
Casebook pp. 158-159

CBCA ss. 6(1)(a), 10-13

CBCA Reg. ss. 17-32
OBCA ss. 8-12;
OBCA Reg. ss.1-22
Business Names Act, s. 6
(iii) Pre-incorporation Contracts
(d)
Required Reading:
Casebook pp. 166-167, 176-184

CBCA s. 14
OBCA s. 21
The Corporation in Action

(i) Liability of Corporation for Crimes and Torts
Required Reading:

None
(ii) Corporate Agency (Liability of Corporation in Contract)

Required Readings:

CBCA ss. 16-8

OBCA ss. 17-9
(e)
Shares and Shareholders

(i) Introduction to Shares
Required Reading:

CBCA ss. 20, 21, 24, 48, 49, 50, 140, 257
OBCA ss. 22, 53-57, 102, 140-144, 266
(ii) Characteristics of Shares

A. General
Required Reading:
CBCA ss. 24, 42, 43, 107, 115, 118, 134, 176, 183(4), 188(4),
189(7), 211(3), 241
OBCA ss. 22, 38, 95, 120, 127, 130, 170, 176(3), 181(3), 184(5),
(6), 193(1), 248
B. No Par Value
CBCA s. 24(1), (2)

OBCA s. 22(1), (2)
C. Series
CBCA ss. 24(4), 27

OBCA ss. 22(4)-(7), 25
D. Pre-emptive Rights
Required Reading:
CBCA s. 28
OBCA s. 26
(iii) Issuing and Paying for Shares and the Stated Capital Account
Required Reading:
CBCA ss. 25, 26, 30, 38, 41, 115(3), 118, 123(4)
OBCA ss. 23, 24, 28, 34, 37, 127(3), 130, 135(4)
(iv) Redemption and Repurchase of Shares

Required Reading:
CBCA ss. 30-40

OBCA ss. 28-36
IV - MANAGEMENT AND CONTROL OF THE CORPORATION: THE BASIC LEGAL FRAMEWORK

(a) Introduction - Shareholders, Directors and Officers
(b)
Required Reading:
CBCA ss. 102, 115, 121

OBCA ss. 115, 127, 133
How Shareholders Exercise Power- Shareholder Meetings and Resolutions

- Annual and Special Meetings
- Calling Meetings
- Notice of Meetings
- Proxies and Proxy Solicitation
- Shareholder Proposals
- Quorum
- Voting
- Access to Information - Auditors and Financial Disclosure
- Signed Resolutions
(c)
Required Reading:
Casebook pp. 592-593, 599-612, 614-622, 637-642

CBCA ss. 20-22, 103(5), 132-44, 147-159, 163, 173, 175, 183,
189, 247, 252.1-253.5, 252.7
CBCA Reg. ss. 43-57, 63, 64, 66-69
OBCA ss. 93-106, 109-114, 116, 139, 140-146.1, 148, 154-7,
159, 168, 169, 176, 181, 184, 253
OBCA Reg. ss. 23.4-24, 27-37
Directors and How They Exercise Power

(i) Introduction - The Power to Manage
Readings:
CBCA s. 102
OBCA s. 115
(ii) Qualifications
Readings:
CBCA ss. 2(1) (definition of director and definition of resident

Canadian), 105, 108(1)(c), 116
CBCA Reg. ss. 13, 16
OBCA ss. 1(1) (definition of director and definition of resident
Canadian), 118, 121(1)(c), 128
OBCA Reg. s. 26
(iii) Election and Appointment of Directors

Readings:
CBCA ss. 106, 108(2), 109, 111, 113, 116

OBCA ss. 115, 119, 121, 122, 124, 128
(iv) Number of Directors

Readings:
VanDuzer pp. 277
CBCA ss. 6(1)(e), 102(2)

OBCA ss. 115(2)
(d)
(e)
Directors' Meetings
Required Reading:
CBCA ss. 114, 115(3)

OBCA ss. 126, 127(3)
Officers
(i) General
Required Reading:
CBCA ss. 102(1), 104(1)(d), 115, 116, 121, 122

OBCA ss. 115(1), 117(1)(d), 127, 128, 133, 134
(ii) Delegation
(f)
(g)
Required Reading:

CBCA s. 115
OBCA s. 127
Remuneration and Indemnification

Required Reading:

CBCA ss. 120(5)(b), 124, 125

OBCA ss. 132(5)(b), 136, 137
Shareholders Agreements and Unanimous Shareholders Agreements

Required Reading:

CBCA s. 49(8), 146, 247

OBCA s. 56(8), 108, 253
V - CORPORATE CHANGES
(a)
(b)
(c)
Amendment of Articles, By-laws and Changes to Stated Capital

Required Reading:

CBCA ss. 38, 39, 43, 103, 173-80, 190, 241

OBCA ss. 34, 35, 38, 116, 168-173, 185, 248
Continuation under the Law of Another Jurisdiction

Required Reading:

CBCA ss. 187-8,

Form 11
OBCA ss. 180-1
Forms 6, 7
Amalgamation
Required Reading:
CBCA ss. 181-186

Form 9
OBCA ss. 174-179
Form 4
(d)
Arrangements and Reorganizations

Required Reading:
CBCA ss. 191-192

Forms 14, 14.1
OBCA ss. 182, 183, 186
Forms 8, 9
(e) Sales of Assets or Shares
(f)
Required Reading:
VanDuzer p. 324-325
CBCA s. 189(3)-(9)
OBCA s. 184(3)-(9)
Going Private Transactions

Required Reading:
CBCA ss. 2(1) (definition of squeeze-out), 193-194

OBCA s. 190
(g) Termination of the Corporations Existence

Required Reading:
CBCA ss. 207-228

OBCA ss. 191-244
VI - DIRECTORS AND OFFICERS DUTIES

(a) Fiduciary Duties
(i) Introduction
Required Reading:
Casebook pp. 341-352, 393-401

CBCA ss. 122(1)(a), (2) and (3), 123(4), (5)

OBCA ss. 134(1)(a), (2) and (3), 135(4)
(ii) Conflicts of Interest - Transactions with the Corporation

Required Reading:

CBCA ss. 120, 122(3)

OBCA ss. 132, 134(3)
(iii) Corporate Opportunities

Required Reading:

CBCA s. 122(1)(a)
OBCA s. 134(1)(a)
(iv) Competition
Required Reading:

CBCA s. 122(1)(a)
OBCA s. 134(1)(a)
(v) Takeover Bids

Required Reading:
Casebook pp. 401-406, 419-421, 422-435, 450-466

VanDuzer 363-371
Statutory References: CBCA s. 122(1)(a)

OBCA s. 134(1)(a)
(vi) Other Breaches of Fiduciary Duty
Required Reading:
(vii) Reliance on Management and Others

Required Reading:
VanDuzer p. 373
Statutory References: CBCA s. 123(4), (5)

OBCA s. 135(4)
(viii) Sanction by Shareholders of Fiduciary Breach
Required Reading:

Statutory References: CBCA ss. 120(7.1), 122(3), 239, 241, 242(1)

OBCA ss. 132(5.2), (8), 134(3), 246, 248, 249(1)
(b)
Duty of Care
(i) Common Law
Required Reading:
Statutory References: None

(ii) Statutory Reform
Required Reading:
Casebook pp. 276-278, 284-290, 306-335

Statutory References: CBCA ss. 122(1)(b), 123(4), (5)

OBCA ss. 134(1)(b), 135(4)
(c)
Statutory Duties and Oppression

Required Reading:

Statutory References: CBCA ss. 118, 119, 122(2), 238, 241, 242
OBCA ss. 130, 131, 134(2), 245, 248, 249
(d)
Liability of Corporate Managers for Torts

Required Reading:
Statutory References: None
10
VII - SHAREHOLDERS' REMEDIES

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Introduction
Required Reading:

None
Personal Action
Required Reading:
Casebook pp. 729-736, 741-750

None
Derivative Actions on Behalf of the Corporation

Required Reading:
Casebook pp. 701-707, 725-728

CBCA ss. 238-240, 242

OBCA ss. 245-247, 249
Oppression
Required Reading:

CBCA ss. 238, 241-242

OBCA ss. 245, 248-249
Compliance and Restraining Orders

Required Reading:
Casebook p. 808-815
VanDuzer p. 451-452
CBCA s. 247
OBCA s. 253
Rectification Orders
Required Reading:

VanDuzer p. 452
CBCA ss. 243, 257

OBCA ss. 250, 266
Investigations
Required Reading:

CBCA ss. 229-37

OBCA ss. 161-67
Corporate Purchase of Shares of Dissenting Shareholder (dissent and appraisal)

Required Reading:

CBCA s. 190
OBCA s. 185
Winding Up and Dissolution

Required Reading:

Statutory References;
CBCA s. 211, 213, 214, 215

OBCA s. 192-205, 207, 208, 229
11
VIII CORPORATE GOVERNANCE IN THEORY AND PRACTICE

Required Reading:

None
12

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Federation of Law Societies of Canada

National Committee on Accreditation

Candidates are advised that the syllabus may be updated from

World Exchange Plaza 1810 - 45 O'Connor Street Ottawa Ontario

Federation of Law Societies of Canada

National Committee on Accreditation

Federation of Law Societies of Canada

National Committee on Accreditation

Casebook pp. 1-3

Casebook pp. 3-21

(b) How Does a Partnership Carry on Business?

Casebook pp. 29-31

P.A. ss. 20-31

(ii) Relations With Third Parties

Casebook pp. 32-33

P.A. ss. 6-19

(c) Dissolution of the Partnership

VanDuzer pp. 66-68

P.A. ss. 26, 32-44

(d) Partnership Agreements

VanDuzer pp. 68-76

(e) Other Relationships

P.A. ss. 2, 3, 32(b)

(ii) Limited Partnerships

Casebook pp. 34-44

Federation of Law Societies of Canada

National Committee on Accreditation

(iii) Limited Liability Partnerships

Casebook pp. 44-46

P.A. ss. 10, 44.1-44.4

III- THE CORPORATION

VanDuzer pp. 90-98

(ii) Constitutional Matters

Casebook pp. 53-55

(iii) Incorporation Process

VanDuzer pp. 112-116

CBCA ss. 5-9, 15, 19(2), 20, 21, 106(1)

(iv) Function of Corporate Law

VanDuzer pp. 116-125

(v) Corporate Law and Securities Law

VanDuzer pp. 464-473

Nature of the Corporation

Casebook pp. 55-75

CBCA ss. 6, 10, 15, 45(1)

(ii) Disregard of Corporate Legal Personality

Casebook pp. 87-113, 117-123, 131-133

CBCA ss. 45(1)

Federation of Law Societies of Canada

National Committee on Accreditation

Casebook pp. 149-154, 155-158

CBCA ss. 2(1)(definition of distributing corporation), 2(6), 2(7),

(ii) Corporate Names

Casebook pp. 158-159

CBCA ss. 6(1)(a), 10-13

(iii) Pre-incorporation Contracts

Casebook pp. 166-167, 176-184

The Corporation in Action

Casebook pp. 134-147