Question 1

It is common practice in Canada and the United States to put a value on the share, making it a par-value share.

Accepted Answer

A) True 
 B)False

Question 2

Owning shares gives the shareholder control of the corporation but no rights to the assets of the corporation upon dissolution.

Accepted Answer

A) True 
 B)False

Question 3

Explain under what circumstances a shareholder's right to sue against oppression arises.

Accepted Answer

Where the directors of the corporation m

Question 4

Joe is a shareholder of XYZ Corporation, an extremely profitable corporation in the software business, and was upset when the directors of the corporation refused to declare a dividend again, ploughing the money back into research and development. Joe sued, along with several other shareholders, claiming that there was no excuse for withholding dividends under these circumstances. Explain the likely outcome.

Accepted Answer

A shareholder has no

Question 5

What is meant by the term "prospectus"?

Accepted Answer

A prospectus is a pu

Question 6

Usually, a ________ will bear a promise to pay a specific dividend each year.

Accepted Answer

A)  bond 
B)  par-value share 
C)  preferred share 
D)  debt 
E)  bearer bond 
A)  bond 
B)  par-value share 
C)  preferred share 
D)  debt 
E)  bearer bond

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

John and two friends incorporated a closely held corporation. Each bought an equal number of common shares in the corporation. Each became a director, an officer, and an authorized agent of the corporation. Which of the following is true?

Accepted Answer

A)  As director, each owes a fiduciary duty to the creditors of the corporation. 
B)  The corporation is more highly regulated and less free of government regulations and control than a broadly held corporation would be. 
C)  Each of them, as directors, owe a fiduciary duty to each of the others, as shareholders. 
D)  Since the corporation is a legal fiction, all of its activities must be carried out through principals. 
E)  If the affairs of the corporation are being conducted in a manner that is unfairly prejudicial to any one shareholder, that shareholder could seek relief from such oppression from the courts. 
A)  As director, each owes a fiduciary duty to the creditors of the corporation. 
B)  The corporation is more highly regulated and less free of government regulations and control than a broadly held corporation would be. 
C)  Each of them, as directors, owe a fiduciary duty to each of the others, as shareholders. 
D)  Since the corporation is a legal fiction, all of its activities must be carried out through principals. 
E)  If the affairs of the corporation are being conducted in a manner that is unfairly prejudicial to any one shareholder, that shareholder could seek relief from such oppression from the courts.

Question 9

If a director fails in his duty to the corporation, what rights does a minority shareholder have to hold him accountable?

Accepted Answer

The minority shareholder can b

Question 10

Shareholders are participants in the corporation, whereas ________ are simply creditors.

Accepted Answer

A)  receivers 
B)  trustees 
C)  bondholders 
D)  preferred shareholders 
E)  directors 
A)  receivers 
B)  trustees 
C)  bondholders 
D)  preferred shareholders 
E)  directors

Question 11

Explain what is meant by pre-emptive rights.

Accepted Answer

Depending on the legislation and the jur

Question 12

Which of the following is a fiduciary relationship?

Accepted Answer

A)  Agent and the third party 
B)  Officer of the corporation and the shareholders 
C)  Director of the corporation and the shareholders of the corporation 
D)  Shareholders and the corporation 
E)  Directors of the corporation and the corporation 
A)  Agent and the third party 
B)  Officer of the corporation and the shareholders 
C)  Director of the corporation and the shareholders of the corporation 
D)  Shareholders and the corporation 
E)  Directors of the corporation and the corporation

Question 13

Discuss the principle of limited liability, why it arises in the law governing corporations, and its significance.

Accepted Answer

This is a relatively straightforward que

Question 14

Smith, Jones, and Brown incorporated XYZ Ltd. The three were sole shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the business, but they disliked his personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and employee and raised their own salaries as employees. They then voted Smith out as a director at the next shareholders' meeting. Which one of the following provisions would aid Smith?

Accepted Answer

A)  Relief-from-oppression provisions 
B)  Pre-emptive right provisions 
C)  Indoor-management rule 
D)  Derivative-action provisions 
E)  Dissent procedures 
A)  Relief-from-oppression provisions 
B)  Pre-emptive right provisions 
C)  Indoor-management rule 
D)  Derivative-action provisions 
E)  Dissent procedures

Question 15

Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships.

Accepted Answer

Because the corporat

Question 16

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

Accepted Answer

As a separate legal person, it

Question 17

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 18

Joe is an environmental activist and he acquired shares in Big Forestry Ltd. (a forestry corporation), only for the purpose of undermining Big Forestry Ltd. by speaking against their practices at annual shareholders' meetings and getting access to confidential information. Joe spoke against Big Forestry Ltd. at every opportunity. Explain his legal obligations to the corporation under these circumstances.

Accepted Answer

He has none. As a sh

Question 19

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 20

Distinguish between a par-value share and a non-par-value share.

Accepted Answer

Par value is simply a value that is plac

It is common practice in Canada and the United States to put a value on the share, making it a par-value share.

Owning shares gives the shareholder control of the corporation but no rights to the assets of the corporation upon dissolution.

Explain under what circumstances a shareholder's right to sue against oppression arises.

What is meant by the term "prospectus"?

Usually, a ________ will bear a promise to pay a specific dividend each year.

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

John and two friends incorporated a closely held corporation. Each bought an equal number of common shares in the corporation. Each became a director, an officer, and an authorized agent of the corporation. Which of the following is true?

If a director fails in his duty to the corporation, what rights does a minority shareholder have to hold him accountable?

Shareholders are participants in the corporation, whereas ________ are simply creditors.

Explain what is meant by pre-emptive rights.

Which of the following is a fiduciary relationship?

Discuss the principle of limited liability, why it arises in the law governing corporations, and its significance.

Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships.

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

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

Distinguish between a par-value share and a non-par-value share.

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

It is common practice in Canada and the United States to put a value on the share, making it a par-value share.

Owning shares gives the shareholder control of the corporation but no rights to the assets of the corporation upon dissolution.

Explain under what circumstances a shareholder's right to sue against oppression arises.

What is meant by the term "prospectus"?

Usually, a ________ will bear a promise to pay a specific dividend each year.

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

John and two friends incorporated a closely held corporation. Each bought an equal number of common shares in the corporation. Each became a director, an officer, and an authorized agent of the corporation. Which of the following is true?

If a director fails in his duty to the corporation, what rights does a minority shareholder have to hold him accountable?

Shareholders are participants in the corporation, whereas ________ are simply creditors.

Explain what is meant by pre-emptive rights.

Which of the following is a fiduciary relationship?

Discuss the principle of limited liability, why it arises in the law governing corporations, and its significance.

Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships.

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

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

Distinguish between a par-value share and a non-par-value share.

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