Exam 33: Corporate Formation and Financing

A court will pierce the corporate veil of a corporation when the corporate privilege is abused for personal benefit.

Because state corporate laws differ, persons wishing to incorporate may look for the state that offers the most advantageous tax or other provisions.

Don sets up Empty Vessel Inc. (EVI), but fails to provide the firm with sufficient capital. Don formed EVI not to make a profit but to assume debts that he does not wish to pay. This most likely warrants

Like the partners in a partnership, the shareholders in a corporation cannot change without affecting the continued existence of the firm.

Oil Industries Inc. is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Po, the majority shareholder, misappropriates company funds. The shareholders whose interests are injured by Po's misconduct should

A benefit corporation is designed to make a profit and thereby provide long-term shareholder benefit.

To pierce the corporate veil means to reveal the identity of its true owner.

A shareholder in a professional corporation generally cannot be held liable for malpractice by other professionals at the firm.

Individual state laws should be relied on to determine corporate law because, despite the existence and use of model corporation acts, there is considerable variation among the states.

An S corporation avoids taxes at

PrimarySource.com Corporation is a new online, textbook, and school supply business. How can PrimarySource.com obtain capital to finance its operations?

All of a certain corporation's small number of shareholders agree that the firm can operate without directors, bylaws, shareholder meetings, stock certificates, and formal records of shareholders' decisions. This firm is most likely

A corporation's authority to act and its liability for those actions is, with respect to the firm's owners,

Most likely to appear in the articles of incorporation are the names of the company's initial

Robotics Inc. is a corporation. Its express powers can be found in

Local Moving Service holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, the outfit is most likely

The first step in the incorporation of a business firm is to

A close corporation need not meet all of the specific requirements set forth in state statutes for corporations because it is essentially a sole proprietorship.

Russ owns Statewide Freight Company. He uses the firm's funds to pay his personal expenses, creates Trucking Inc. to engage in the same business, transfers the assets to Trucking, and petitions Statewide into bankruptcy. This most likely warrants

Stocks, or equity securities, represent the purchase of ownership in the business firm.