Exam 44: Shareholder Rights in Corporations

Manis owns 100 shares of stock of the Linquist Corporation. She sells her stock to Sosnik and delivers to him: (1) her stock certificate for 100 shares and (2) a written, signed assignment of the 100 shares to Sosnik. The assignment form printed on the back of the share certificate is left blank and is not signed. Sosnik refuses to take the certificate and the assignment on the ground that Manis must fill in and sign the assignment form on the stock certificate to make the transfer of stock effective. Is he correct?

Which of the following is not a factor that may lead to "piercing the corporate veil" and imposing liability on corporate owners (shareholders)?

In close corporations, restrictions on the transfer of stock to "outsiders" are void. A provision giving a corporation the right to purchase a shareholder's shares on the death of the shareholder is invalid.

As an owner of the corporation, a shareholder always has the right to inspect the books of the corporation for any purpose, regardless of whether the inspection is related to the shareholder's interest as a shareholder.

The Toy Corporation issued 200 shares of stock with no par value. The articles of incorporation provided that the board of directors had the right to fix the value of the stock. Through subscription agreements between the directors and two subscribers, 101 shares were issued to Maria Perez for $5,000, and 99 shares were issued to Ken Pilar for $15,000. Toy is now insolvent and is unable to pay the $6,000 it owes to Pine, its major supplier. Pine has brought suit against Perez, claiming that the subscription agreement was invalid. How will the case be decided?

A shareholder has a right to inspect the books of the shareholder's corporation in any of the following situations, except: ______.

A shareholder has: ______.

When a shareholder brings a _______ action, he is suing on behalf of the corporation itself to enforce a right.

If a share certificate is lost, destroyed, or stolen, the ownership of the shareholder is destroyed.

A corporate bond can be all of the following except: ______.

Capital stock refers to the value received by the corporation for its outstanding stock.

Ordinarily, each shareholder is entitled to one vote for each voting share.

Shares exist for only as long as the corporation exists.

Which of the following is an effective means of notice to purchasers of shares that there are restrictions on the sale?

A physical transfer of the certificate without a necessary indorsement is not necessary for future gifts and sales.

Shares may be issued with: ______.

Cumulative voting: ______.

Voting trusts are usually illegal.

Preferred stock is ordinarily nonvoting stock.

Which of the following statements is not true of common stock?