Nature of a Corporation
Corporation is a legal entity that has an independent existence, separate
and distinct from its members. The corporation owns property in its own
name, acquires rights, obligations and liabilities, enters into contracts
and agreements and has the capacity to sue and be sued as would a natural
person.
For example, a corporation may be insolvent while its individual members
may be wealthy. As a separate legal entity a corporation is not affected
by changes in its membership and its existence continues in perpetuity
unless its members or the Government take steps to dissolve it.
A corporation is managed or governed by a board of directors which is
elected by the members. Usually the board of directors, in turn, either
elects or appoints officers such as secretary, treasurer, president.
These officers are responsible for the actual operation of the corporation.
Neither the directors, officers nor members "own" the corporation
nor do they have any right of ownership to any particular asset of the
corporation and the corporation may not be operated for the financial
gain of its members, directors or officers.
In certain circumstance, a not-for-profit corporation may engage in activities
that are revenue producing and that produce a "profit". Such
activities must be incidental to the principal objects of the corporation
and in furtherance of the principal objects. For example, a boys’
hockey club may hold a dance to raise funds for new uniforms for the
team. If, after paying the expenses, the dance produces a "profit",
the monies belong to the club and are to be used for the benefit of the
club i.e. to purchase new uniforms for its team.
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