In early times, ordinary citizens were still precluded from incorporating companies for general business activities. Instead, they created their own unofficial companies through contracts called “deeds of settlement”. When Parliament decided to permit incorporation on a general scale, a considerable number of these contractual associations had to be accommodated. The resulting legislation gave these companies legal status and the advantages of incorporation by allowing them to simply register at an appropriate governmental office and pay a fee.

Canada adopted many British approaches to incorporation. Both federal and provincial governments have created many corporations through their power to pass special statutes. For example, the Canadian Broadcasting Corporation and the Canadian Pacific Railroad were made by special acts of the Parliament. Some Canadian jurisdictions adopted the British practise of incorporation through registration, while others used royal charter approach and created incorporated bodies through granting of letters patent. A third approach, based on filing of articles of incorporation, was borrowed from the U.S.

Preliminary analysis of the best-positioned stocks that may be the most powerful in 2008 shows that three companies, namely, Best Buy (NYSE: BBY), Ctrip.com (Nasdaq: CTRP), and Apple (Nasdaq: AAPL), look especially promising.

• Best Buy Co. Inc. (NYSE: BBY) is the largest national corporative retailer dealing with consumer electronics. Its current profits show a tendency to rise 8.7 percent, which is well ahead of the most daring expectations of the leading stock analysts. In the second quarter of this year, Best Buy’s profits rose $250 million (in comparison with $230 million increase observed in the second quarter of 2006), or 55 cents per share (in comparison with last year’s 47 cents per share). Circuit City (NYSE: CC), the closest rival of Best Buy, is doing worse in comparison, as it has recently lost its three senior executives and experienced other corporate troubles.
• Ctrip.com International, Ltd. (Nasdaq: CTRP) is one of the biggest China-based companies dealing with air tickets, travel packages, and hotel accommodations. According to International Herald Tribune, Ctrip.com had a 70 percent rise in profits in the third quarter of 2007, with its net income having climbed to $15 million. The company is expected to get the most immediate benefit from the Olympic Games that are coming to Beijing next year.
• Apple (Nasdaq: AAPL) is a leading international corporation that designs, assembles, and sells computers, digital music devices, and mobile phones, as well as provides related services, software, and networking solutions. Every quarter for already five years, the company’s profits have been well exceeding Wall Street expectations. Apple, together with its main competitors Hewlett-Packard (NYSE: HPQ) and Dell (Nasdaq: DELL) , literally owns the international music and computer markets and sells advanced iPod models, such as the hit of this summer – famous Apple’s iPhone.

Cargill Corporation is one of the biggest U.S. processor and seller of fresh meats, such as beef, pork, and turkey, as well as marinated, cooked, and otherwise processed meat products. It represents over a dozen well-known brands, among which are Excel, Angus Pride, and Sterling Silver, which are distributed in numerous retail outlets and foodservice channels. About a month ago, on October, 6, the corporation already had to recall almost 850,000 pounds of frozen ground beef patties due to their contamination with the same strain of e.coli – O157:H7.

Statistics show that about 76 million Americans annually get some sort of illness from substandard foods sold in our supermarkets, with more than 5,000 people dying every year from food poisoning. Unfortunately, U.S. major food corporations are more focused on profit than on safety of their customers.

In a partnership, partners are responsible for each other’s actions and equally participate in a complex process of the partnerships management – meaning that any serious business decision requires the involvement and consent of all partners. In a corporation, shareholders do not have similar responsibilities and the shares can be transferred at will without reference to other shareholders. This free transferability is a very attractive feature of corporations, however, some non-distributing corporations now put restrictions on share transfers as a measure of control, which may be written in the provisions or shareholders’ agreements.

Although the death of a shareholder does not lead to the death of a corporation, the latter still can be dissolved due to a number of causes. When a corporation goes through the process of bankruptcy and cannot repay its debts, it will be terminated by operation of law. Similarly, the court decision can dissolve a corporation where it deems it proper to do so. The shareholders themselves can vote to bring the corporation to an end when they feel it is appropriate. But the more common way is for the corporation simply to fail to file the required annual reports – in such a case, it will eventually be considered inactive and removed from the registry. It still can be restored if the missing reports are filled and submitted post-factum.

- Name of your business: should contain one of the following words (or their abbreviations): “Incorporated“, “Corporation,” “Limited” , or “Company”, and should clearly indicate, or hint on, the purpose outlined in the articles of incorporation. It may not be either the same, or closely resembling, the name of any other foreign or domestic corporation, nor can in contain the word “Lottery”. Interestingly enough, Texas is famous as one of the toughest U.S. states in relation to corporate names.

- Directors and officers: Directors should be physical entities 18 years of age or older, and their names must be listed in the provisions. Names of the offices are not required to be mentioned in the articles of incorporation. However, officers have to be officially elected by the board of corporate directors. Generally, each officer may hold a number of offices.

- Minimum number of members and their residence status: Corporations in Texas may have one of more persons involved, with no particular residence requirements.

- Stocks: Transfer records in relation to stocks should be kept in the official corporate headquarters. Initial filing fees are not affected by any increase in shares.

- Taxes: Annual statements, that ought to be submitted every year before May 16th, should contain filled-in forms for so-called “franchise tax” return, which is calculated at 25% of the corporate taxable capital plus 4.5% of the taxable earned surplus. The state of Texas is free from both corporate income tax and personal income tax.

- Corporation with S status: not recognized in Texas.

- License: Certain types of businesses in Taxes require that you should obtain the license before incorporating.

- Initial Capital: $1,000 is the minimum requirement value for the issuance of corporate shares in Texas.

Thompson Corp., which operates from both Canada and USA, has its main office in Toronto and a headquarters in Stamford, Connecticut, and renders services to 37 countries. It supplies professionals with software tools and a whole range of information in the domains of scientific research and healthcare, as well as accounting, tax, law, and financial services. Currently, Thomson Corp. employs more than 32,000 workers.

By acquiring Prous Sciences, Thompson Corp. will be able to add this well-established and internationally-accepted brand to its own creativity, financial stability, and informational and technological base, in order to accelerate innovations and facilitate development in the sphere of pharmaceutics. It is expected that the strength of the two companies will be united to add value to drug research and healthcare, and to further benefit the global scientific community.

Spherion Corporation is the biggest recruiting company providing modern staffing solutions to meet the demands of both job candidates and companies seeking employees. Its positions include temporary and full-time types of employment and range from industrial and administrative jobs to professional opportunities in human resources, marketing, information technologies, accounting, and other high demand areas. Spherion Corporation is the largest employer in the United States and Canada. It works from 650 locations in North America and annually helps about 300,000 workers to find a satisfying job. To learn more about Spherion Corporation, visit Spherion website. To get updated information on career opportunities, employment trends, and job-searching methods, check Spherion Career Blog.

Canadian companies and associations are subject to Canadian corporate income taxes, which may include federal and/or provincial business taxes. The amount is determined on the basis of general business income. Since 2001, the corporate tax in Canada has been reduced to 27%, with the subsequent annual reduction down to 21% during the five year period. To encourage small businesses, some types of Canadian corporations, such as CCPC (Canadian controlled private corporations) were granted even a lower tax rate.

Therefore, a great care should be exercised in the process of corporate tax planning and a prudent business person must seek an expert advice about financial and tax legislation in relation to corporate business in her state (if in U.S.) or a province (if in Canada).

There are a number of advantages associated with incorporation, most of which are based on the fact that the corporation is a separate legal personality. Today, let us have a look at the topic of limited liability – one of the most prominent pros of incorporation, at least at the first look.

As the corporation represents a separate legal entity, its shareholders are not liable for corporate debts and obligations – in other words, the corporation is fully responsible for its own wrong conduct. The shareholders’ liability is limited only to the amount they have paid for their shares. If the corporate assets are not sufficient to satisfy the obligations, the debt cannot be derived from the shareholders.

In view of the above, there is no doubt that limited liability is one of the most attractive qualities of the corporation – sometimes to a degree that it becomes the main reason for choosing to incorporate. However, such an advantage can often be seen as an illusion, because funders and creditors of a small, not-distributing corporation will always look for the ways to protect their investments. Any fund-providing institution will insist that certain principals of the firm (the president, the major shareholder, etc.) should give some guarantees to ensure indebtedness of the corporation. This effectively eliminates any advantage of limited liability for those asked to sign such a guarantee, as limited liability is lost when personal guarantee is given.

At the same time, the concept of limited liability seems very attractive in case of unexpected liability – for example, if a corporation employee causes another injury due to neglect. In accordance with the law, in such cases of unexpected liability the injured party does not have a right to either derive any financial advantage from the shareholders or sue them. Similarly, if the corporation fails to honour its contractual obligations, the shareholders do not have to provide compensation. Also, the principle of limited liability is usually applied to the relationship between suppliers of materials and the corporation: the suppliers cannot legally obtain any personal commitment from shareholders, nor can suppliers turn to shareholders for payment if the business becomes insolvent.

Sometimes even this amount of limited liability could be in question, because now the courts are more willing to look behind the corporate veil and hold the principals liable for the obligations of their corporations. In many cases, the court decision will largely depend on the reputation of the corporation – on its any taint of wrong actions or avoidance of honourable obligations.

“An ounce of prevention is worth a pound of cure”

When you enter in a business with another person, you do not expect that your business will break down because of a dispute. However, in a corporate environment which involves shareholders and more than one partner, just like in a marriage, everything is possible – your partner(s) might get injured, divorced, or may die. This is why, in order to reduce the negative outcome of a possible business break-up in a future, it is crucially important to be legally prepared for any stressful situation that can arise between you and your business partner(s).

First of all, surround yourself with a team of professionals, such as accountants, financial advisors, marketing experts, and, of course, good lawyers. Before starting incorporating your business, get the lawyer’s help in drafting an agreement between yourself and your partners and other shareholders to establish a model on how you want to work together. The agreement should also stipulate the situation when an additional partner or party enters the business. When you have such a contract that structures all sides of your corporate business, foresees any possible changes and provides ready mechanisms of dispute solving, your business is safe and insured from any risks.

In many States of the United States and some Provinces of Canada the majority of companies are incorporated under the Business Corporations Act, or BCA, which sets minimum obligations for the officers and shareholders. Unfortunately, in many dispute cases BCA does not provide a substantial legal base.

A good example of a solid agreement is the Unanimous Shareholder Agreement (U.S.A.), which is directed towards incorporated companies. The U.S.A. is very helpful in instances involving such disputes as the death or disability of your partner. Also, it can restrict the power of the directors to ensure that the shareholders exercise their control over the business. There is virtually no limit to what can be included in U.S.A. You can customise the agreement and set the parameters of how you will deal with different legal situations so that there are no “unforeseen circumstances” to hamper your corporate business.