Exam 28: Formation and Termination of Corporations

Jones Corp. is a business concern in the process of being set up. Benito, its promoter has entered into preincorporation contracts. After the corporation comes into existence, Benito can be released from liability on the preincorporation contracts through:

Which of the following types of corporations sells shares to people who often have little interest in it except as investors?

According to the Model Business Corporation Act (MBCA), which of the following is an optional content that could be included in the articles of incorporation?

A municipal corporation:

As a general rule, promoters are not liable for contracts they make on behalf of corporations that are not yet formed.

Which of the following statements is true for the dissolution of a corporation by agreement?

As a general rule, corporations are required to compensate promoters for the services they render during the preincorporation process.

A de facto corporation:

The bylaws of a corporation:

Under general incorporation laws, _____.

All business corporations derive their existence from the:

Failure to appoint a registered agent in the state of incorporation is grounds for an involuntary dissolution.

Esther and Salim are promoters for Kale Inc. Prior to its incorporation, Esther negotiated several preincorporation contracts with Ian, an investor. She signed each contract in the name of Kale Inc. Kale subsequently was incorporated, but the Kale Board of Directors refused to adopt the contracts. Ian later sues Kale, Esther, and Salim on the contracts. Which of the following statements is true of this case?

A court may pierce the corporate veil if the corporation is undercapitalized.

In the context of the preincorporation process, discuss the legal liability of promoters to the corporation.

The current trend in law is to permit the corporation to issue shares in return for the promoters' preincorporation services.

Which of the following steps governing the incorporation process is included in the Model Business Corporation Act (MBCA)?

Close corporation shares are seldom intended to be sold to the public at large.

Under the revised Model Business Corporation Act (MBCA), if there are business debts following a defective incorporation, liability for the debts will be imposed upon:

According to the traditional judicial rule, courts can pierce the corporate veil when: