Exam 12: Corporations

A corporation is a fiction that does not exist in reality.

A par-value share reflects the actual value on the market.

Which of the following is an example of a breach of a fiduciary duty?

Indicate two examples where a director can be personally liable for the debts of the corporation.

A corporation does not die but may be dissolved.

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

What is a prospectus?

If there is only one class of shares,they will be common shares.

What happens if annual returns are not filed for a corporation?

"In modern business practice,the shareholders of a corporation own that corporation." Explain the accuracy of that statement.

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

Explain under what circumstances a shareholder's right to dissent arises.

Explain the nature of an annual general meeting.

Explain the power of a minority shareholder in decision-making situations.

Joe,along with two friends,bought a peat bog with the idea of incorporating a corporation and reselling it to promote the development of the peat bog.Joe bought the bog for $40 000 and,when the corporation was incorporated,had himself and his two friends named as directors.They then held a meeting and on the first order of business,they bought the bog from themselves for $500 000.Then they voted to sell all of the shares of the business to five interested businessmen for $500 000,based on the value of the sole asset of the corporation,the peat bog.When the businessmen found out what had happened,they sued Joe and his friends.Explain the nature of the complaint and the likely outcome.

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

In Salomon v.Salomon & Co.,Mr.Salomon incorporated a business to which he loaned money,secured by a mortgage on the business assets.When the business failed,the creditors turned to Mr.Salomon,arguing that he should not be able to claim ahead as a secured creditor and,in fact,should be responsible for the company's debts.What did the Court find?

Jack Kihn incorporated and put $20 000 into the corporation by way of a shareholder's loan and took back a chattel mortgage on the corporation's equipment.The corporation created decorative boxes.An employee of the company delivered some boxes to a customer who complained about the colour used.The employee became so angry that he shoved the customer,who fell into a glass display case,causing $30 000 damage to the customer and the case.Given these facts,which of the following is false?

Since a variety of rights and restrictions can be incorporated into ______________,depending on the interests of the parties,it is important that these matters be negotiated before they are issued.

To what does the term "due diligence" refer?