Exam 37: Corporate Formation and Financing

Because bonds do not represent debt, they need never be repaid.

Medical and investment professionals network and pool funds to invest in Medical Online Consult Inc. This is

Welding Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Welding undertakes business as a corporation. In this circumstance, the firm's existence may be challenged by

A director who becomes involved in litigation because of his or her position has no right to be indemnified for the costs.

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

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

Funds invested in an existing corporation to buy and reorganize it, and possibly sell shares in the reorganized company in an initial public offering, are known as

Masonry Inc.'s stated purpose is to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely

An S corporation avoids taxes at

When a vacancy occurs on a corporate board, how the position will be filled is most likely set forth in

Agents and employees of Deco Arts Corporation and Echo Imitations Inc. are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine. Can the corporations be held liable for these crimes? If so, how can they be punished?

When it comes to managing a corporation, the corporation relies on its board of directors and officers.

Directors, but not officers, are fiduciaries of the corporation.

Holly is an officer of Indelible Inc. The board removes Holly in violation of an employment contract. Indelible may be liable for breach of

The number of directors that serve on a corporate board is determined by its

The executive committee of a publicly held corporation handles

Because it may result in a piercing of the corporate veil, shareholders' continuous use of corporate property should most especially be avoided by

The audit committee of a publicly held corporation is responsible for

AstroStar Inc.'s board of directors consists of three members-Eckhart, Dolan, and Macero. At a regular board meeting, the board selects Galiard as president of the corporation. Later, an audit reveals that during his term as president he has openly embezzled $500,000 from AstroStar. The same audit reveals that the board knew when it selected Galiard that he had been previously convicted of embezzlement. Can the corporation hold directors Eckhart, Dolan, and Macero personally liable?

In many states, close corporations have more flexibility in determining their rules of operation.