Exam 12: Corporations

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 chattel mortgage document.An employee of the corporation,Jack,delivering some graphs to a customer,Roth,got into an argument with Roth,who was complaining that the graph was in red and not in pink as requested.It ended with Jack punching Roth,who fell onto a microscopic camera.The damage to the nose and camera: $35 000.Which of the following is true?

In jurisdictions where the registration system of incorporation is used,registration is accomplished by filing which of the following combinations of documents?

Which two of the following are examples of breaches of fiduciary duty?

What duty to directors owe to creditors?

Mr.Malik,an investment counsellor by training,sat on the board of directors of Talbot Enterprises Ltd.,a broadly held corporation.During a meeting of the board,he advised the corporation to buy some condominiums given the present soft real estate market.Malik did not disclose that he owned shares in the corporation that owned the property,nor did he disclose that he would be entitled to a commission for every unit he helped sell.When the question was put to the board,he voted for it.Read each of the following statements separately,and indicate which is true.

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 prospectus is an internal document detailing the expected performance of a corporation.

A person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering is known as promoter.

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?

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

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

Mr.Ace of Oink Inc.,a closely held corporation,is one of three shareholders.After several years of considerable success,the corporation hit hard times.The other shareholders,Mr.Bane and Mr.Curr,in the best interests of the corporation,voted Mr.Ace out as a director and voted not to renew his employment contract.Upset by these events,Mr.Ace just wanted to sell his interest and leave the corporation.The other two shareholders,however,refused to buy his shares.Furthermore,when he attempted to sell his shares to his brother,who was interested in the corporation,they refused to register the brother as a member.Which of the following is true?

Another term commonly used where a bond is involved is

A person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering is known in law as

Legislative requirements for distributing corporations are found not only in the Business Corporations Act,but also in the securities legislation,the Securities Act.

Preferred shareholders usually get preference when dividends are declared but no vote.

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.

Distinguish between a par-value share and a no-par-value share.

What is a "share"?

Discuss and contrast the various methods of financing a corporation.Deal with the advantages and disadvantages of each.