Exam 12: Corporations

Your friend Harry became wealthy through the tremendous success of a gadget he designed that allowed micro-chips to be produced without being touched by humans.He has been invited to sit on the board of directors of different corporations.He is aware of the increasing number of cases finding directors personally liable.He does not want to be connected with a corporation involved with any wrong-doing.He has hired you to prepare in-depth reports on five corporations.Your reports reveal the following.In which of these is there no legal wrong?

In jurisdictions in which the registration system of incorporation is used,the rules governing the internal regulations of a company are called

When a closely held corporation is involved,it is common to include no restrictions on the transfer or sale of the shares.

The method of incorporating used in some jurisdictions in Canada whereby the government grants recognition to the company as a separate legal entity is known as ________.

Which of the following statements about pre-incorporation contracts is false?

A debenture is likely to be secured.

How can a corporation be brought to an end?

Where preemptive rights exist,existing shareholders must be offered their proportionate share of any new allotment of shares before the shares are offered to anyone else.

Explain the nature of the "corporate myth".

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

Discuss the concept of promoters,their duties,and their role in the corporate form.

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

After Bill Roles graduated from university,he incorporated Roles Enterprises Ltd.He put $10 000 into the corporation by way of a shareholder's loan and the corporation granted him a chattel mortgage of one of its two delivery trucks as security.You knew Bill at school; therefore,when Roles Enterprises Ltd.needed computer supplies,Bill,on behalf of the corporation,contracted with you,the owner of a business selling computer supplies.As it turned out,Bill placed such orders with you almost every three weeks.Read each of the following separately and indicate which of the following is true.

Explain what is meant by "lifting the corporate veil."

What are "preferred shares"?

Explain the standard of care that a director must live up to in carrying out his duty towards the corporation.

With regard to the law of corporations,which of the following is true?

An agent owes a fiduciary duty to his principal; a director owes a fiduciary duty to the corporation; partners owe a fiduciary duty to the firm and to the other parties.Which of the following is not true with regard to one's fiduciary duty?

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?

When a personal guarantee has been signed by a shareholder,the creditor can demand payment from that shareholder despite the separate legal entity nature of the corporation.