Exam 12: Corporations

A share interest in the indebtedness of a corporation that is normally secured against specific assets is known as ________.

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

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.

Art Raskle was an officer,director,and employee of a broadly held corporation.At a directors' meeting,he was surprised but pleased to learn that the corporation was discussing a resolution to contract with the firm of Fielding's Office Supply for $200 worth of office equipment.He and a partner had recently bought that business; Raskle has a 45 percent interest.Raskle voted for the contract and the resolution passed without discussion by a vote of 6-0.Several months after completion of the purchase,the other directors learned of Raskle's interest in Fielding's Office Supply and called on him to account to the corporation for any profit made.Which of the following is true?

Joe was the director of XYZ Corporation,and the corporation was experiencing some financial difficulties.The shareholders had received dividends over the years,and this year insisted that they be paid a similar dividend,despite the fact that the corporation did not have enough reserved funds to pay off its debts.Joe,along with the other directors,complied with this request,and a few months later,the corporation was unable to pay a required payment on a bank loan.What can the bank do in these circumstances?

To what does "franchising" refer?

Explain under what circumstances a shareholder will not be permitted to sell his shares.

Distinguish between a bond and a share.

What are pre-emptive rights?

Four years ago,Ben Ratzi incorporated a corporation and became the sole shareholder,director,and officer.He lent the corporation $10 000 and took a debenture from the corporation as security for repayment of the loan.The corporation prospered.Last year,your brother began supplying the corporation with office supplies.He was paid at the end of each month for supplies delivered during that month.For the last six months,however,he has not been paid.He learned that other suppliers had not been paid either because sales dropped drastically,apparently due to Ratzi's harsh management style,which has upset the entire staff.Which of the following is true?

Explain the concept of a promoter.

Jed Wimsey,in auditing the books of various businesses around town,was talking to you,his best friend,about certain practices that he thought improper.Which of the following practices he found would be a breach of fiduciary duty?

Smith,Jones,and Brown incorporated XYZ Ltd.The three were sole shareholders,directors,officers,and employees.Jones and Brown disliked working with Smith.They knew he was good for the business,but they disliked his personality and politics.After a year,Jones and Brown,as directors,removed Smith as an officer and employee and raised their own salaries as employees.They then voted Smith out as a director at the next shareholders' meeting.Which one of the following provisions would aid Smith?

Joe is a shareholder of XYZ Corporation,an extremely profitable corporation in the software business,and was upset when the directors of the corporation refused to declare a dividend again,ploughing the money back into research and development.Joe sued,along with several other shareholders,claiming that there was no excuse for withholding dividends under these circumstances.Explain the likely outcome.

Which of the following attracts the dissent procedure,which can result in the corporation being forced to buy the shares of a shareholder at market value?