Exam 12: Corporations

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 true.

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

A debenture creates a creditor/debtor relationship.

The provincial agency that serves as watchdog on the stock market is known as ________.

If a corporation had been wronged by negligent and fraudulent acts of one of its directors and consequently suffered a $45 000 loss,and the board of directors would not take any action on behalf of the corporation against the wrongdoer,which of the following is true?

Aunt Juliet wants to incorporate a small closely held corporation.Which of the following bits of advice,given to her by friends,is false?

A shareholder has an obligation not to compete with the corporation.

Because a director of a closely held corporation breached his duties to the corporation,the corporation lost $15 000.Despite the urging of the shareholders,the board of directors refused to begin an action on behalf of the corporation.Which one of the following provisions would aid the shareholders?

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

Directors owe a fiduciary duty to the shareholders.

Discuss the process of incorporation in your jurisdiction,including practical tips for maximizing the advantages offered by this form of business organization.

What is typically the most expensive form of business organization to create and maintain?

When shares are involved,even preferred shares,there is no legal obligation to pay dividends,but a failure to repay ________ constitutes a breach of the corporation's legal obligation.

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

To whom does the director owe the duty to be careful?

Which of the following situations would allow a shareholder of a closely held corporation,with permission of the court,to sue on behalf of the corporation?

A securities commission is a provincial agency that serves as watchdog on the stock market.

In which of the following relationships is a fiduciary duty owed?

Punam was the director of a broadly held corporation that made educational software.Without the knowledge or consent of the board of directors,Punam started a competing business that she ran from home.Which of the following is true?

In Peoples Department Stores Inc.et al.v.Wise et al.,the Supreme Court of Canada had to clarify to whom a director owes its duties.What did the Court hold?