Question 1

What is the significance of a corporation being classed as a separate legal entity?

Accepted Answer

As a separate legal person, it

Question 2

Explain the significance of a personal guarantee.

Accepted Answer

A personal guarantee is a guarantee of p

Question 3

In Salomon v. Salomon & Co., Mr. Salomon incorporated a business to which he loaned money, secured by a mortgage on the business assets. When the business failed, the creditors turned to Mr. Salomon, arguing that he should not be able to claim priority as a secured creditor and, in fact, should be responsible for the company's debts. What did the Court find?

Accepted Answer

A)  Mr. Salomon, as the incorporator, should be responsible for paying the creditors of his business, on the grounds of unjust enrichment. 
B)  Mr. Salomon could not claim priority as a secured creditor, because this would amount to a conflict of interest. 
C)  The company was a legal entity separate from Mr. Salomon, so Mr. Salomon could have priority as a secured creditor and bore no responsibility for the company's debts. 
D)  The company was a legal entity separate from Mr. Salomon, but it would not be fair to allow him to claim his money ahead of arm's length parties. 
E)  Mr. Salomon, by creating a fictionalized legal entity, had committed a fraud on the business' creditors, and so should bear total responsibility for the creditors' claims. 
A)  Mr. Salomon, as the incorporator, should be responsible for paying the creditors of his business, on the grounds of unjust enrichment. 
B)  Mr. Salomon could not claim priority as a secured creditor, because this would amount to a conflict of interest. 
C)  The company was a legal entity separate from Mr. Salomon, so Mr. Salomon could have priority as a secured creditor and bore no responsibility for the company's debts. 
D)  The company was a legal entity separate from Mr. Salomon, but it would not be fair to allow him to claim his money ahead of arm's length parties. 
E)  Mr. Salomon, by creating a fictionalized legal entity, had committed a fraud on the business' creditors, and so should bear total responsibility for the creditors' claims.

Question 4

Where a corporation is not able to pay the debts it owes, the creditors can turn to the shareholders for payment.

Accepted Answer

A) True 
 B)False

Question 5

The provincial agency that serves as watchdog on the issuance and trading of shares is known as ________.

Accepted Answer

the securi

Question 6

A director can be held responsible for unpaid taxes, wages, and environmental harm.

Accepted Answer

A) True 
 B)False

Question 7

Explain under what circumstances a shareholder will not be permitted to sell his shares.

Accepted Answer

Closely held corporations usua

Question 8

In Ontario, articles of incorporation are filed in order to incorporate.

Accepted Answer

A) True 
 B)False

Question 9

The articles of incorporation jurisdictions (except British Columbia) have abolished

Accepted Answer

A)  dividends. 
B)  preferred shares. 
C)  par-value shares. 
D)  voting shares. 
E)  promoters. 
A)  dividends. 
B)  preferred shares. 
C)  par-value shares. 
D)  voting shares. 
E)  promoters.

Question 10

Explain the significance of the determination that a corporation is a broadly held corporation as opposed to a closely held corporation.

Accepted Answer

There are more significant reporting and

Question 11

When shares are involved, even preferred shares, there is no legal obligation to pay dividends, but a failure to repay ________ constitutes a breach of the corporation's legal obligation.

Accepted Answer

A)  debts 
B)  assets 
C)  bondholders 
D)  shareholders 
E)  par-value shares 
A)  debts 
B)  assets 
C)  bondholders 
D)  shareholders 
E)  par-value shares

Question 12

Distinguish between a bond and a share.

Accepted Answer

A share involves a shareholder who has a

Question 13

A debenture creates a creditor/debtor relationship.

Accepted Answer

A) True 
 B)False

Question 14

You have been asked by two fellow graduates to join them in incorporating a closely held corporation that would commence a consulting business. One was in your class, so you know him quite well, but the other is graduating from a different school. You have been discussing the law to review the protection it gives you. Read each of the following statements separately and indicate which is true.

Accepted Answer

A)  As a shareholder, you will have the right to vote for the officers of the corporation. 
B)  A shareholder's agreement allows shareholders and not officers to manage the corporation. 
C)  If you each take one-third of the first allotment of the shares, you will necessarily be a minority shareholder, and have no voting rights in electing the directors of the corporation. 
D)  If you have pre-emptive rights and the directors decide to issue a new allotment of shares, the corporation must offer you a portion of the new issue to allow you to keep your proportional share of the corporation. 
E)  If you were voted out as a director by the others, who could show that it was in the best interests of the corporation, you could always sell your shares to any interested buyer without interference from the other directors. 
A)  As a shareholder, you will have the right to vote for the officers of the corporation. 
B)  A shareholder's agreement allows shareholders and not officers to manage the corporation. 
C)  If you each take one-third of the first allotment of the shares, you will necessarily be a minority shareholder, and have no voting rights in electing the directors of the corporation. 
D)  If you have pre-emptive rights and the directors decide to issue a new allotment of shares, the corporation must offer you a portion of the new issue to allow you to keep your proportional share of the corporation. 
E)  If you were voted out as a director by the others, who could show that it was in the best interests of the corporation, you could always sell your shares to any interested buyer without interference from the other directors.

Question 15

Directors owe a fiduciary duty to the shareholders.

Accepted Answer

A) True 
 B)False

Question 16

Legislative requirements for distributing corporations are found not only in the Business Corporations Act, but also in the securities legislation, the Securities Act.

Accepted Answer

A) True 
 B)False

Question 17

The promoter of a corporation, called Seymour Holdings Ltd., contracted for $4000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation. After incorporation, the new directors want to ensure that the corporation is bound. They will be able to do so if

Accepted Answer

A)  the corporation ratifies the contract and ratification is permitted in the jurisdiction. 
B)  the promoter intended that the corporation, and not himself, would be bound by the contract. 
C)  the promoter made it clear that he was signing on behalf of the corporation. 
D)  the corporation is closely held and the promoter is a director. 
E)  the promoter was acting in the best interests of the corporation to be formed. 
A)  the corporation ratifies the contract and ratification is permitted in the jurisdiction. 
B)  the promoter intended that the corporation, and not himself, would be bound by the contract. 
C)  the promoter made it clear that he was signing on behalf of the corporation. 
D)  the corporation is closely held and the promoter is a director. 
E)  the promoter was acting in the best interests of the corporation to be formed.

Question 18

The separate existence of a corporation is said to be a legal myth. Discuss the development of this myth and its value in our society today.

Accepted Answer

The development of corporations can be t

Question 19

Discuss and contrast the various methods of financing a corporation. Deal with the advantages and disadvantages of each.

Accepted Answer

There are two main methods of financing

Question 20

Explain the power of a minority shareholder in decision-making situations.

Accepted Answer

The majority prevails, and an

What is the significance of a corporation being classed as a separate legal entity?

Explain the significance of a personal guarantee.

Where a corporation is not able to pay the debts it owes, the creditors can turn to the shareholders for payment.

The provincial agency that serves as watchdog on the issuance and trading of shares is known as ________.

A director can be held responsible for unpaid taxes, wages, and environmental harm.

Explain under what circumstances a shareholder will not be permitted to sell his shares.

In Ontario, articles of incorporation are filed in order to incorporate.

The articles of incorporation jurisdictions (except British Columbia) have abolished

Explain the significance of the determination that a corporation is a broadly held corporation as opposed to a closely held corporation.

When shares are involved, even preferred shares, there is no legal obligation to pay dividends, but a failure to repay ________ constitutes a breach of the corporation's legal obligation.

Distinguish between a bond and a share.

A debenture creates a creditor/debtor relationship.

Directors owe a fiduciary duty to the shareholders.

Legislative requirements for distributing corporations are found not only in the Business Corporations Act, but also in the securities legislation, the Securities Act.

The promoter of a corporation, called Seymour Holdings Ltd., contracted for $4000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation. After incorporation, the new directors want to ensure that the corporation is bound. They will be able to do so if

The separate existence of a corporation is said to be a legal myth. Discuss the development of this myth and its value in our society today.

Discuss and contrast the various methods of financing a corporation. Deal with the advantages and disadvantages of each.

Explain the power of a minority shareholder in decision-making situations.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Agency and Partnership

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters

Exam 11: Corporations

What is the significance of a corporation being classed as a separate legal entity?

Explain the significance of a personal guarantee.

Where a corporation is not able to pay the debts it owes, the creditors can turn to the shareholders for payment.

The provincial agency that serves as watchdog on the issuance and trading of shares is known as ________.

A director can be held responsible for unpaid taxes, wages, and environmental harm.

Explain under what circumstances a shareholder will not be permitted to sell his shares.

In Ontario, articles of incorporation are filed in order to incorporate.

The articles of incorporation jurisdictions (except British Columbia) have abolished

Explain the significance of the determination that a corporation is a broadly held corporation as opposed to a closely held corporation.

When shares are involved, even preferred shares, there is no legal obligation to pay dividends, but a failure to repay ________ constitutes a breach of the corporation's legal obligation.

Distinguish between a bond and a share.

A debenture creates a creditor/debtor relationship.

Directors owe a fiduciary duty to the shareholders.

Legislative requirements for distributing corporations are found not only in the Business Corporations Act, but also in the securities legislation, the Securities Act.

The promoter of a corporation, called Seymour Holdings Ltd., contracted for $4000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation. After incorporation, the new directors want to ensure that the corporation is bound. They will be able to do so if

The separate existence of a corporation is said to be a legal myth. Discuss the development of this myth and its value in our society today.

Discuss and contrast the various methods of financing a corporation. Deal with the advantages and disadvantages of each.

Explain the power of a minority shareholder in decision-making situations.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Agency and Partnership

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters