Exam 25: The Nature of a Corporation and Its Formation

When we speak of lifting the corporate veil,we are referring to the ability of a court to recognize a proper case where the corporation has been set up simply as a means of protecting its incorporators from liability for acts of fraud or breach of duty.

Creation of a by-law is a two-step process involving first the board of directors and then the officers.

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

Regarding corporations,which statement follows the principle of limited liability?

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

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

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.

The classic case that established the existence of the corporation as a separate legal entity is

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

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

Associated corporations constitute a statutory limitation on the concept of separate corporate identities.In the legal sense,what is an associated corporation?

Briefly describe "cooperatives" and the most common purposes they are set up for.

Until the nineteenth century,all corporations were created by

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.

Explain the general distinction between the capital of a corporation and indebtedness of a corporation.Who owns the capital of the corporation?

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

Albert is the principal shareholder of a large investment company and holds 45 percent of its common shares,which are valued at $500 000.00.Recently,Albert's company invested heavily in a gold mining company,which fraudulently represented finding and owning a new gold deposit in northern Canada.Albert's company lost a substantial amount of money,with the result that the value of Albert's common shares dropped to $25 000.00.Albert now launches a lawsuit against the gold mining company for the loss in value of his shares.In this case

What does it mean to pierce the corporate veil? When can this be done?

Explain the concept of the preferred shareholder.

What capacity and powers does a corporation have in the eyes of the law?