Corporate Finance for Lawyers - Assignment Example

LATROBE UNIVERSITY SCHOOL OF LAW LL.M. Global Business Law LAW5UCF – Corporate Finance for Lawyers Prof. Jennifer A. Quaid Student Name Legal Perspectives on Corporate Finance Q1. a). Advise Sara on the different ways that her friends and family can provide her the capital they promised. Explain the consequences of each way of providing capital, both from the perspective of PP Inc and its shareholders and those who provide the capital. What do you recommend in light of her circumstances? Raising capital Money from friends and family; There are several ways for a corporation to raise funds to finance its business operations. If there are friends and relatives who have the money and who are willing to invest in the venture that Sara has started, the cash may be brought to the company coffers either as equity or as debt. If via equity, the funds will become part of the capital of the company. If via the incurring of a debt, the funds will create a counterpart liability. This means that there will be recorded in the books of the corporation the cash received from Sara’s friends and family on the debit side and the liability to them on the credit side. Money from friends and family in the form of capital: If it is in the form of equity, it will mean that the investors become shareholders or members of Poop Power, Inc. or PPI. Another way of looking at it is that they are actually part owners of the corporation together with Sara, Bob and Ami although the three are not only members of the corporation.1 They are also the directors of the entity, that is, they comprise the board of directors of PPI. That is an important distinction because the management of the affairs of the company is vested in the directors albeit it was agreed that Sara would be the president of the corporation or its chief executive officer. The shareholders, even if they are considered as owners of corporation because in fact they are, have no say regarding the day-to-day activities of the company. The shareholders can only have their voice over policy and decision making processes during the general meetings of the members where they are entitled to vote on all matters concerning the corporation. Ordinarily, general shareholders meetings are conducted annually although there are a few instances when a general meeting is held more than once in a given year such as in the case of a special general meeting. Shareholders are entitled to whatever profits realized by the corporation and these are distributed in the form of dividends. Dividends are commonly paid in cash albeit there are times when these are settled in stocks. On the other hand, if the corporation incurs losses during a certain period, the shareholders are not affected except maybe that it can decrease the market value of the shares. Upon dissolution or liquidation, the shareholders will have a right to the remaining corporate assets or properties only after all the creditors are paid and all other legal obligations are satisfied.2 It has to be further importantly noted that if nothing remains of the corporation when it is dissolved or liquidated, the stockholders in the persons of Sara’s friends and relatives cannot run after her (Sara’s) own properties except in a situation where she is in bad faith like when she abuses her authority as officer of the company. This corporate law principle finds support in statutes stipulating that the officers are separate and distinct from the entity.3 Money from friends and family in the form of debt or indebtedness: Funds for the new corporation which Sara has incorporated may also be sourced in the form of debts which can either be bonds or debentures. These are actually documents or instruments showing liability or indebtedness. The obligations earn interest at such rates as may be agreed upon by the parties. There are times when these credits are secured by the assets of the corporation which means that in case of failure to pay, the creditors will have direct and preferred liens over the properties so encumbered. The advice for Sara’s friends and family: It is proposed and opined that if the friends and relatives of Sara are amenable, the funds to be invested by them be taken in as shareholdings. This will give Sara the encouragement and drive to work hard for the success of the corporation not only for herself and the corporation but to please the investing shareholders. On another note, the scheme will free Sara from anxiety and apprehension as the shares will be paid for dividends only in the event that profits are realized by PPI. To the contrary, bonds and debentures accrue interests or yields on a periodic basis whether the corporation gains or not. At this juncture, it is to be observed that there are two kinds of shares, the preferred and the common. Preferred shares, while normally are not entitled to vote, have special privileges like a fixed rate of return paid on an annual basis. Common shares do not have those features. Also, preferred shares have priority or preferred rights in dividends declarations and payments and in assets liquidation and distribution when the corporation is dissolved. It is therefore suggested that PPI issues only common shares in the meantime for the friends and relatives of Sara. (b) Sara is discouraged but she does not want to give up yet. After consulting with Bob and Ami, they all agree that there is no choice but for PP Inc to approach an arm’s length sources of funds. They are apprehensive about what is involved. Advise Sara, Bob and Ami as to what types of information potential investors will expect from PP Inc before providing any capital Business plan: In view of PPI’s requirement for more funds to facilitate a larger production volume as envisioned by Sara, additional money can be sourced through arms’ length deals like availing of loans. Along this line, information and pertinent data have to be out for potential investors to see and be convinced. All these can be presented and contained in a business plan with a dynamic characteristic which means that the schemes and programs may be modified as the need arises and as changes become imperative. In a nutshell, creating the plan will showcase not only the product but the whole idea itself.4 It will include the projected directions of the company, the effective and efficient structure of its organization, the acceptability and saleability of the products by the consuming public, the prospects of attaining a bright future and such other variables embodying an intelligent marketing package with valid and verifiable claims. Owing to global awareness on alternative forms of energy, Sara’s project is highly defensible and logically feasible. The literature has to emphasize the fact that Sara’s creation is fully protected by intellectual property statutes via patent rights. It may also give the perception that an equivalent product may not be in the offing in the next ten to twenty years. That manifestation will convey stability in market dominance for the merchandise and will therefore be conceived as a long-term undertaking. Since the objective will be more on money talk, the business plan shall outline the cash flow projections of PPI which must demonstrate liquidity and sustainability even if the desired funds are to be allocated with reasonable yields. In the process, the target investors-creditors will look at themselves not only as lending accommodators but as no-nonsense business partners as well. Other data and information: The prospective creditors, particularly the banks, must also be furnished with data and information contained in its historical and projected cash flow statements as well as those referring to its assets and liabilities ratio and other management accounting details. The latter may include the factors showing the capabilities of PPI to pay the intended loans, both as to principal and interests. Likewise, the fair market value of the product and its life cycle must be incorporated as among such data and information. (c) CO is willing to be a passive investor in the business and leave the scientific and strategic decisions to management and the board. However they want the ability to increase their investment if things go well. Sara, Bob and Ami are uneasy about this. They ask you to explain how this could be done what the consequences would be for PP Inc. Explain all possible approaches for structuring Confederation Oil’s passive investment. (20 points) The offer of Commonwealth Oil (CO) to put ample amount of money in PPI as a passive investor is very tempting. It will literally eliminate the company’s fund shortage predicaments. Furthermore, in spite of its investments, CO has committed that will not be minding Sara in her free hand management of the overall affairs and activities of PPI. In the long-term, however, CO’s presence in the corporate set-up of PPI as a significantly substantial shareholder can have adverse repercussions in the future especially in the policy and decision making processes of the corporation. With its vast financial capability, CO is in a position to infuse more capital as a common shareholder using its right of first refusal under Subsection (1) of Section 28 of the Canada Business Corporations Act. In the end, it can become the biggest owner of PPI’s shares and will have the most of the voting powers. Resultant of that, CO will have majority control of PPI and can manoeuvre or manipulate the latter company according to whatever business route its (CO’s) manager’s desire. That will strip Sara, Bob and Ami of whatever influence they have over the corporate goals and objectives which they might have originally thought of for PPI. It must be noted that in the exchanges of their negotiations, CO has made it clear that if circumstances and prospects turn bright, it will be allowed to increment its holdings. White it may be said that the working capital stability of PPI will be greatly enhanced by the money contribution of CO once it becomes a pillar of the new company, the stakes are great and the risks are high. However, Sara and company, in their capacities as directors, may instead offer an alternative scheme via the issuance of non-voting preferred shares or of low-interest bearing bonds or certificates of indebtedness. Under this investment structure, the authority and might of CO in PPI can be practically neutralized. (d) Sara, Bob and Ami are intrigued by this expression of interest from GES Inc and want to know more. Explain to Sara, Bob and Ami the different methods by which PP Inc and GES Inc might be combined. Be sure to outline for them the advantages and disadvantages of each method. What method do you recommend them to pursue with GES Inc? (10 points) There are several ways by which PPI can pool its interests and resources with Green Earth Solutions, Inc. (GES for brevity). The business combination can either be a merger, consolidation or joint venture. Merger: In merger, either PPI absorbs GES or GES absorbs PPI. No new entity will be created under this framework. If PPI absorbs GES, the presumption is that PPI acquires the controlling interest and GES is dissolved. Under this set-up, PPI takes over the management of the merged company. In the same manner, if GES absorbs PPI, it is presumed that GES becomes the controlling entity and PPI disappears from the picture. Hence, GES becomes the managing entity. Consolidation: In consolidation, both PPI and GES are dissolved and a new corporation or entity arises. The question as to which between PPI and GES obtains the power to manage and control the new company will depend on who has the majority or more substantial shares. Let it be presumed that the new company is ABC, Inc. which has an authorized and paid-up capital of one million dollars for the initial 100,000 shares. GES has 60,000 shares while PPI has 40,000 shares. Naturally, GES has the controlling interests and may decide to manage the affairs and operations of ABC, Inc. However, nothing can stop the GES group to hand over the management to PPI. Joint venture: If the two companies opt for a joint venture arrangement, there will be no changes in the capital and corporate structures of both PPI and GES. They will simply agree on what specific project or undertaking to join or put together. Thereafter, they can arrange for the setting up of a management committee to supervise and oversee the activities of the joint venture. Under this set-up, a separate written contract or covenant setting forth the terms and conditions appurtenant to the project or undertaking has to be executed or entered into by and between PPI and GES. In both merger and consolidation, it will be advantageous to PPI if it has the control and management of the merged or consolidated entity. The disadvantage is that if the combination does not prosper, PPI has to start all over again. In joint venture, the disadvantage is that the synergies and cost efficiency measures cannot be completely attained because not all expense centres are integrated into one and the earnings generating strategies are not focused to attain maximum results because not all profit centres are joined into a single force with better impact. The advantage is that if the project or undertaking does not succeed, PPI can simply pull out of the arrangement and design and decide on new strategies on its own initiatives. The advice: Considering that the tie-up between PPI and GES is more on the technical and technological aspects and not on capital or equity concerns, it is best that they arrange for a joint venture combination. (e) Assuming that PP Inc is not in default of any of its obligations under the loan agreement, explain to Uncle Bob, Sara and Ami how this clause affects the deal with GES, Inc. Can the deal still go forward? (5 points) Regarding the new offers of GES to buy the remaining shares of PPI and to hire Sara as its Chief Research Officer, there can be certain implications. As to whether the deal may be pursued considering the loan of PPI with the Ontario Business Innovation Bank (OBIB), and presuming that PPI is not in default with its said obligation, GES has to agree to assume the loan liability in order that PPI will not be in breach of the loan contract. Without the assumption of the loan account, there can be another alternative and that is that PPI must continue to be the controlling company in the combination. However, this seems impossible because GES will acquire the remaining shares of PPI which means that the former will have the majority stake in the new integration. Naturally, GES will also have management authority over the novel set-up. The deal cannot go forward. (f) Explain to Sara the differences between a publicly held company and a privately held company. Identify any particular things that Sara should be aware of as a potential member of the management team of GES, Inc. (5 points) GES being a publicly traded company in the stock exchange of Toronto has more disclosure responsibilities and accountabilities. These include compliance with tighter reporting requirements and full disclosure obligations. It has to be explained to Sara that a publicly traded company must have its shares available to the public. On the other hand, a privately held company is not under that kind of mandated duty and its shares are subject to the preferred and priority rights of the individual shareholders. The stock options being offered to Sara are actually incentives or additional fringe benefits to her. These options are valuable to her because she may accumulate the shares and her voting privileges in GES will gradually increase in view of the fact that the said options are in the form of common stocks which are generally voting shares. (g) Explain to Sara what an option is and why GES has offered options to her in connection with her employment (5 points). An option is the right to buy or sell an agreed stock at a specified price by the seller over a given period of time. The seller has the right to sell the given stock and has the put option while the buyer’s option is known as the call option5. In the above case, the seller of the stock is GES Inc selling its common shares to its employees one of which is Sara. The price of the common shares is set at $7 for Sara although the current trading price is $5. Sara is the buyer and can exercise this option until 30th, December, 2012. The reason why Sara has been offered the option in connection to an employment is because of the compensation plans of the company (GES Inc.). Companies normally use stock options as part of their compensation plans. Employees are always granted a specific number of stocks for a specific period of time as a form of compensation6. (h) Based on the information above and the financial statement of GES, Inc. (see pages 7-9), give Sara both an assessment of the Company from an equity holder’s perspective and an indication of how valuable the options offered to her might be now and in the future. Support your analysis with appropriate financial calculations. An assessment of the company will give Sara and other shareholders the information needed to make a decision about investing in GES Inc. An equity holder’s perspective means determination of what the company has to offer to an equity holder. An equity holder is a shareholder or a stockholder of a company. Sara and other employees are shareholders of GES based on the option that GES offered them of buying common shares. Their interest will therefore be on the return on their equity. GES Inc’s Return on Equity Return on equity is given by Net Income/Shareholders Equity. This is a formula derived from ROE= ROA x Financial Leverage. ROA = net margins x asset turnover and Financial leverage = Assets/Shareholder Equity (A/E) Net Margins = Net Income/Sales and Asset TurnOver = Sales/Total Assets, this gives an ROA of = (NI/Sales) x (Sales/Total Assets), which is = NI/A The Financial leverage = Assets/Shareholder Equity (A/E), therefore ROE = NI/A x A/E. ROE = Net Income (NI)/Equity (E) (Lecture Notes on Financial Analysis). ROE for the year ended 2007 = ROA x Financial leverage ROA= Net margins x Asset turn Over Net Margins = Net Income/Sales GES Inc. Net Income = 2, 000 GES Sales= 80,000 Net Margins = 2,000/80,000= 0.025 Asset Turn Over = Sales/Total Assets GES Sales = 80,000 Total Assets = 231,500 = 80,000/ 231,500 = 0.346 ROA = 0.025 x 0.346 = 0.00865 Financial Leverage = Assets/Shareholder Equity (A/E) GES Inc’s Total Assets = 231,500 Share holder’s equity = 19,500 = 231,500/19,500 = 11.872 ROE for the year 2007 = 0.00865 x 11.872 = 0.103 = 10.3% OR ROE = Net Income (NI)/Equity (E) Net Income = 2,000 Shareholder’s Equity = 19, 500 = 2,000/19,500 = 0.103 = 10.3 % ROE for the year ended 2008 = ROA x Financial leverage ROA= Net margins x Asset turn Over Net Margins = Net Income/Sales GES Inc. Net Income = 6,500 GES Sales= 100,000 Net Margins = 6,500/100,000= 0.065 Asset Turn Over = Sales/Total Assets GES Sales = 100,000 Total Assets = 270,000 = 100,000/ 270,000 = 0.370 ROA = 0.065 x 0.370 = 0.02405 Financial Leverage = Assets/Shareholder Equity (A/E) GES Inc’s Total Assets = 270,000 Share holder’s equity = 26,000 = 270,000/26,000 = 10.385 ROE for the year 2008 = 0.02405 x 10.385 = 0.249759 = 0.25 = 25% OR ROE = (Net Income/Equity) = 6,500/26,000 = 0.25 = 25% ROA for the year ended 2009 Asset Turn Over = Sales/Total Assets GES Sales =120,000 Total Assets = 274,000 = 120,000/274,000 = 0.43795= 0.438 ROA = 0.0511146 ROA = Net Income/Total Assets = 14,000/274,000 = 0.051 Financial Leverage for the year ended 2009 274,000/ 40,000 = 6.85 2009 ROE = 0.051x 6.85 = 0.34935 OR = 14,000/40,000 = 0.35 (Net Income/Equity) = 35% From the year 2007 to the year 2009, the ROE of the Company has been increasing. As established from the calculations above, the ROE of the Company in 2007 was 10.3%, this improved to 25% in 2008 and 35% in 2009. Return on equity measures the profitability of the company as well as it potential to grow. With this kind of information, it is easy for investors to select GES because of the trend on its return on equity. The common shares offered to Sara are very valuable considering how the assets of the company are effectively being invested. This is evident in the return on equity. There is also evidence of future growth showing how important the shares offered to Sara are. The assessment shows that as time goes the value of the GES Inc’s shares increase. Advise the Board. Can it proceed with the transaction? Explain why or why not. The proposal of Swivels to GES for it to acquire the outstanding shares of the latter can legitimately proceed. However, the relevant processes have to be undertaken with great diligence and care taking into serious consideration the best interests of the corporation, primarily, without disregarding the welfare of the shareholders and the creditors and the other stakeholders, as well, to avoid any dispute or controversy. The Board of Directors must be advised to take the necessary legal steps which will be discussed later here to ensure that it discharges its duties under the prevailing circumstances with utmost transparency and badges of good faith and upon the full consent or approval of the stakeholders. Each and every transaction must be fair and just to all concerned. More importantly, it is strongly suggested that the equity restructuring, together with the resultant debt transfers, must follow the pronouncements in the decision laid down by the Supreme Court of Canada involving BCE, Inc. and Bell Canada as appellants-respondents and several parties in different capacities.7 In the afore-mentioned BCE cases, the Supreme Court stressed the duty of the directors based on trust to act in the best interests of the corporation. Citing the ruling in Peoples Department Stores Inc. (Trustee of) v. Wise, [2004] 3 S.C.R. 461, 2004 SCC 68, it was mentioned though that, depending on the circumstances of every case at hand, it is also appropriate for the Board of Directors to take into consideration the side of the other stakeholders. These include the shareholders, personnel, suppliers, creditors, clients and customers, government and the environment. While the latter proposition was deemed not mandatory, it will do more good than harm for the decision makers of the corporation to think, as ancillary measures, about the welfare of those parties. Recommended steps In connection with the offer of Swivels, the Board of Directors of GES must take the following steps. 1. The Board of Directors has to call for a special general meeting of all common shareholders. The main agendum is the transfer of the business of GES to 123 Ontario, Ltd. The shareholders shall be informed that GES will continue to exist but its operations will be carried out under the name of 123 Ontario, Ltd. pursuant to the agreement between GES and Swivels whereby the latter will buy all the outstanding common shares of GES. The shareholders have to be also apprised that the scheme under the Swivels deal is necessary to raise more funds for the expansion of the business outside of Australia. The matter of the transfer of the business of GES to 123 Ontario, Ltd. must be brought to a vote for the approval of the common shareholders. If no majority vote is obtained, the Board of Directors must forget the Swivels proposal and the idea therefore stops here. If majority of the common shareholders approves of the plan, the other further steps may proceed. In order to avoid any objections in the future, an offer shall be made to the common shareholders who choose to surrender their shares. This will particularly be addressed to those shareholders who do not favour the business transfer although the surrender offer must be made available to all those who will opt for the same. The offer for the surrender of shares must be priced at $20 per share in cash which is $15 more than the current trading price per share of GES common shares at the moment which is $5 per share. The offer is the same as is offered by Swivels under the expectation that more than ninety per cent of the shareholders will approve of the Swivels deal who will most likely not opt to surrender their shares. The share surrender option must be made subject to the condition that the Swivels negotiation is realized. 2. The Board of Directors must declare cash dividends out of the retained earnings balance as of December 31, 2009 which amounts to $ 27,500,000, thus - Common shares - in the sum of ten million dollars ($ 10,000,000) which is twice the amount of the book value of the common shares as of December 31, 2009 which is $ 5,000,000, and Preferred shares: in the sum of seven million five hundred thousand dollars ($ 7,500,000) which is equivalent to the book value of the preferred shares as of December 31, 2009 which is $ 7,500.000. It must be explained to all and sundry, especially to the preferred shareholders, that the declaration of cash dividends is at two hundred per cent of the book value for the common shares while it is only one hundred per cent of the book value for the preferred shares in view of the commitment that preferred shares are likewise entitled to cumulative dividend rights. 3. The Board of Directors must also call for a special general meeting of all preferred shareholders separately from the meeting with the common shareholders. The agendum will be the same, that is, the business transfer to 123 Ontario Ltd. The matter must also be brought to a vote only for the purpose of consensus and consultation. The preferred shareholders must also be offered share surrender options upon a price or consideration equivalent to the book value of each preferred share. 4. The Board of Directors must schedule a conference with all the bond holders. They must be informed about the Swivels proposal and that the Board of Directors has decided to accept it. The bond holders must be told that the move is in connection with the plan to expand the business outside of Canada and, therefore, will redound to the benefit of the corporation. Any gains of GES will likewise be to the advantage of the bond holders as their yields will become more secured and the market values of their bonds will likely increase. Notwithstanding those prospects, the bond holders must also be given the option to retire or pre-terminate their certificates. This will be particularly addressed to those bond holders who are apprehensive about the Swivels negotiation. Likewise for purposes of consensus and consultation, they must be asked who favour and who are against the Swivels scheme. The bond holders must also be informed that the Board of Directors has already secured an expert opinion from a reputable financial company which declared that the transaction with Swivels is fair to the common shareholders. In the case of the creditor banks, they must also be given the same information in another conference. In particular, a consultation meeting with the Ontario Business Innovation Bank seems imperative since GES has assumed the loan account of PPI when the two corporations decided to pool expertise, interests and resources. 5. Considering that the interest of Swivels in the buy-out negotiations is more on investment profits, the Board of Directors must ask Swivels that all the members of the Board of Directors of GES must be given seats in the Board of Directors of 123 Ontario, Ltd. in order to maintain and retain the same sound, effective and efficient management over the operational, administrative and fiscal aspects of the business. The foregoing steps will be undertaken in order to avoid any accusations in the future that the acts of the Board of Directors have been unfair and or oppressive. The steps are also intended to deter court actions for possible oppression claims. Judicial litigations can suspend and delay corporate decisions that are otherwise beneficial to the corporation. Thus, measures have to be taken to prevent a dispute or controversy that can lead to court actions on the part of the stakeholders in the corporation as what happened in the BCE incidents. For instance, the meeting with the bond holders is not mandatory or imperatively necessary. However, it is always wise to get the consensus and opinions of all concerned. In the BCE cases, the antagonists were the creditors who believed that the corporate restructurings were against their interests as the market or trading values of their debentures went down after they were allegedly oppressed and not fairly treated. The meetings with the common shareholders, the preferred shareholders and the bond holders will also manifest that the Board of Directors is absolutely transparent regarding the proposal of Swivels, an indication of good faith and honesty. Furthermore, as enunciated in the above-mentioned Peoples Department Stores jurisprudence, it is advisable that the other stakeholders be informed or consulted as was the suggestion of Justices Major and Deschamps. They are the employees, suppliers, consumers, government and the environment. For the employees, the Board of Directors must update them of the developments in the new corporate directions with emphasis on the continuity and on-going concern status of GES despite the business transfer. Although some employees and management level personnel are among the common shareholders, it will be better to also meet the employees and management personnel in a separate conference to take up all issues in connection with the recent company restructuring. The suppliers and consumers must also be apprised by the Board of Directors that business with GES will be normal as usual and that they will not be adversely affected by the buy-out of Swivels. As a matter of fact, due to the expansion in operations, business with the suppliers will be enhanced while services to the consumers can be improved alongside current dimensions. These moves will avoid negative reactions from the public, especially the media. For the concerns of the government, in view of the fact that the business expansion will traverse outside of Canada, it is best that the Board of Directors issue a comprehensive backgrounder in writing giving the details of the Swivels negotiation. The paper may state the purpose of GES, through its Board of Directors, in entering into the agreement and the benefits that the negotiation can give to all stakeholders. The meetings with the common and preferred shareholders, the bond holders and the employees and personnel must be mentioned. The offered options for the surrender of shares and the early retirement or pre-termination of the bonds must also be stated to highlight the acts of the Board of Directors as being transparent and without any hidden agenda. The written position may be distributed to all governmental regulatory agencies which have jurisdiction over commercial, financial, corporate, tax, labour and employment, and stock exchange matters. Regarding concerns over the environment, the Board of Directors likewise needs to give complete information regarding the new corporate initiatives of GES. It has to convey the relevant data showing that the expansion will further benefit the environment owing to the waste recycling elements of the venture which will become more extensive as operations move to greater heights in undertakings to be carried out in foreign lands. All these data and information may be supplied not only to the appropriate government offices having charge over environmental activities but also to leading non-governmental organizations which work together or coordinate and cooperate with government processes on issues for the protection of the country’s natural resources. It is believed and opined that with all these determined actions, the Board of Directors of GES shall have fully accomplished its fiduciary duty and shall have totally exercised fairness and good faith appurtenant to its negotiations with Swivels in the intended business development designs, having in mind not only the best interests of the corporation but also those of the other stakeholders. Works Cited BCE Inc. 1976 Debentureholders, etc. Supreme Court of Canada. [2008] 3 S.C.R. 560, 2008 SCC 69. Date of Judgment: 20080620. Docket: 32647. Judgments of The Supreme Court of Canada. [internet] Accessed February 16, 2010. Available at: http://csc.lexum.umontreal.ca/en/2008/2008scc69/2008scc69.html Equity Shareholders. Share Market Basics. [internet] Accessed February 17, 2010. Available at: Ehrhardt, Michael C. And Brigham, Eugene F. Corporate Finance: A Focused Approach. 3rd Ed. Cengage Learning, Sydney, Australia. 2009. Lumby, Stephen & Jones, Chris. Corporate Finance: Theory & Practice. 7th Ed. London UK: Cengage Learning EMEA, 2003. Subsection (7) (d) of Section 211. Canada Business Corporations Act (R.S., 1985, c. C-44). Department of Justice Canada [internet]. Accessed February 4, 2010. Available at: The Credit Process: A Guide For Small Business Owners. Federal Reserve Bank of New York. [internet]. Accessed February 4, 2010. Available at: The Nature of a Corporation. Corporation Law. The Canadian Encyclopaedia. [internet] Accessed February 4, 2010. Available at: http://www.thecanadianencyclopedia.com/PrinterFriendly.cfm?ArticleId=A0001938 Read More