Exam 11: Corporations

To what does "franchising" refer?

Shareholders have a right to bring an action against the directors on behalf of the company when the directors fail in their duty to the corporation.

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

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

John Hollin was an officer, director, and employee of a large broadly held corporation. At a directors' meeting, he learned that the corporation was voting on a resolution to buy a piece of property from Sam Keanu for $100,000. It happened that Hollin was one of three co-owners of that property. Hollin voted for the purchase and the resolution passed without discussion by a vote of 5-0. Several months after completion of the purchase, the other directors learned of Hollin's ownership and called on him to account to the corporation for any profit made. Which of the following is False?

A real estate agent, by virtue of his fiduciary duty to his principal, is not allowed to buy the property being sold by his principal without full disclosure to and consent from his principal. The real estate agent does not want to disclose that he is the buyer of the property, so he forms a corporation and takes an offer to his principal from the corporation. Based on these facts, which of the following is true if the principal finds out the corporation/buyer is owned by the real estate agent and objects to the contract?

Explain what is meant by a preferred share.

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 False.

What is the purpose of a unanimous shareholder agreement?

Discuss the advantages and disadvantages of incorporation as a method of carrying on business as compared to sole proprietorship and partnership.

Shareholders in a closely held corporation are entitled to sell their shares to whomever they want without restriction.

When lending money to a closely held corporation, what will a bank usually insist on from the major shareholders or other principals?

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.

Indicate three significant results of a corporation being classed as a separate legal personality.

Kent incorporated Dynamite Data Ltd., which worked with small businesses in developing graphs and charts from their data for presentations to bankers, shareholders, etc. Kent lent the company $25,000 by way of a shareholder's loan and took as security computers, plotters, and printers under a General Security Agreement. An employee of the corporation, Jack, got into an argument with a customer named Roth while making a delivery. Roth was complaining that the graph was in red and not in pink as requested. It ended with Jack punching Roth, who fell onto a camera. The damage to Roth's nose and the camera totalled $35,000. Which of the following is true?

Mr. A is the sole shareholder of X Ltd., and is also a director of Y Ltd. Y Ltd. is negotiating to buy property from X Ltd. Which of the following is False?

Another term commonly used where a bond is involved is

In 2016, Rambolin incorporated Rambolin Industries Ltd. and became its sole shareholder. He lent the corporation $10,000 and took a General Security Agreement from the corporation as security for repayment of the loan. He became director, president, and secretary of the corporation. The corporation prospered. Last year, you began supplying the corporation with office supplies. You were paid at the end of each month for supplies delivered during that month. For the last six months, however, you have not been paid. You learn that other suppliers have not been paid either because sales have dropped drastically, apparently due to Rambolin's nasty temper caused by ill health. Which of the following is true?

A debenture is likely to be secured.

A securities commission is