Exam 25: The Nature of a Corporation and Its Formation

Restrictions on share transfers are common and can take almost any form.Such restrictions must be set out in the corporation's constitution and must be noted on the share certificate,otherwise

Mario Black has,along with two others,formed a corporation to market specialized computer software.Each partner initially purchased ten common shares at $10 a piece,giving the corporation $300 in capital.The company requires an additional $25 000 to operate.Describe three different ways the corporation could acquire that $25 000 and give a brief reason why you would recommend or not recommend each of the ways.

The principle that a corporation has an existence separate from its shareholders is absolute and there are no exceptions.

The attribute of negotiability of bond and share certificates has increased the problem of forged and stolen certificates.Explain.

Use the fact situation in Q5 to answer the related question that follows. Assume that at the time of Mary's negligence,the company has failed to pay one of its suppliers of dental products.In this case,the supplier can sue

Although the theory is that a private corporation provides the best protection from liability for its incorporators,why is this not always the case in practice?

A and B incorporate a trucking company in which,of the 100 issued common shares,A holds 45 shares and B holds the rest.The company has a fleet of trucks valued at $200 000.In this case,the fleet of trucks is owned by

Which of the following will NOT end the existence of a corporation?

Which of the following is NOT a distinguishing feature of closely held corporations?

Edith is the only shareholder and director of Edie Inc. ,a corporation incorporated by Edie two years ago.Edie is also the president of Edie Inc.Edie Inc.has no employees and no assets.Edie will be personally liable to creditors of Edie Inc.

Jack,who recently retired,wants to invest in a new upstart local company,The Turmoil Corp.As part of the deal for investing in The Turmoil Corp. ,the company has agreed to give Jack "...some sort of maintenance or security job for as long as he feels able." This agreement would best be placed

Milton Brown is a business consultant who obtained confidential information about a publicly traded corporation which,if made public,would cause the stock to rise dramatically.Milton formed a private corporation with himself as the sole shareholder and director and had that corporation purchase stock in the publicly traded corporation.When the news that Milton was already aware of became public,the price of the publicly traded shares increased dramatically and the corporation Milton had formed sold its shareholdings at a substantial profit.Milton is subsequently charged with insider trading,that is,using confidential information for his own personal gain.His defence is that the gain was made by his corporation and not by himself and that his corporation is a separate legal entity.Will Milton's defense be successful? Give the legal basis for your answer.

Florence has $100 000 to invest.She decides to invest in the common shares of a well-known blue chip company.As part owner,how would she expect to participate in the company and to benefit from her investment?

When a corporation is liquidated,the first group of persons to be paid are the preferred creditors.

The by-laws of a corporation are always appended to the articles of incorporation.

Explain the concept of the preferred shareholder.

If you are a small,local,one-person business,can you incorporate under the federal CBCA (Canada Business Corporations Act)? Explain.

In comparison with a partnership,which of the following is NOT considered to be an advantage of the corporate form of business?

A parent corporation will be liable to creditors of a subsidiary corporation

Six years ago,Michael incorporated his small business in Alberta.Now,in order to do business in Ontario,Michael must