Exam 43: Corporate Formation

Because nonprofit corporations have a more restricted range of powers than business corporations, actions not authorized by the charters of nonprofit corporations are more likely to be found ultra vires.

A public corporation is: ______.

Stock that is reacquired by the corporation that issued it is commonly called "boomerang" stock.

Private corporations are often called public in business circles when their stock is sold to the public.

The Miller family, who operates a musical instrument manufacturing concern, has decided to incorporate. The three (3) members of the Miller family, Mary, Mark and Sue, would like to become a corporation and obtain limited liability; however, taxation at the corporate level would be very costly for them. If possible, Mary Miller would rather be taxed as a partnership. Mark Miller is worried about the additional paperwork and meetings that incorporation would surely bring. Sue Miller does not want a large board of directors to be formed. Sue fears that the board would somehow detract from the family goals and orientation the business has always enjoyed. In light of these concerns, is there a corporate form that would better suit the Miller family?

In states that have adopted the Revised Model Business Corporation Act, the secretary of state may commence proceedings to administratively dissolve a corporation under all but which of the following circumstances?

The corporate form of business continues regardless of changes in stock ownership.

Osvaldo was attempting to promote a corporation to be named Xavier, Inc. In that capacity, Osvaldo signed a lease in the name of Xavier and ordered furniture in the company's name. The corporation was in fact formed and the board of directors, knowing of the actions of Osvaldo, moved into the space Osvaldo had leased. Upon delivery and inspection of the furniture Osvaldo ordered, numerous defects were discovered, and the furniture was accordingly rejected and returned to the seller. The corporation was not successful, and as a result, the rent was not paid. Osvaldo was sued for the unpaid rent and for breach of contract concerning the furniture. The corporation was sued on the same grounds. Decide the cases against Osvaldo and Xavier, Inc.

If a wire manufacturing company owned a mill to produce the metal used in making the wire, this relationship between the companies would be best be described as: ______.

An eleemosynary corporation is one that is organized for charitable or benevolent purposes.

For the purpose of suing a corporation in federal court, the corporation is a citizen in the state where it has its principal place of business.

Debts of a corporation are not the personal debts of the corporate officers and shareholders.