Exam 12: Corporations

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?

There is one common method of creating corporations used across Canada.

Where a corporation borrows money, only the corporation is responsible for that debt, not the shareholders.

A share refers to a share interest in the indebtedness of a corporation, often used synonymously with debenture.

Another term commonly used where a bond is involved is

ABC Ltd. is a closely-held corporation. Two of the shareholders serve as directors. As directors, they voted to issue themselves more shares to increase their voting control of the corporation. Which of the following provisions would aid the other shareholders?

Indicate three advantages to incorporation.

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

If dividends are not paid, preferred shares usually convert to voting shares.

Which of the following is true with regard to the characteristics of corporations?

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 businesswoman recently bought that business; Raskle has a 45% 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?

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.

Shareholders in a closely held corporation can control the rights and responsibilities they have to each other by a shareholders' agreement.

Lee, a former head of a venture capital firm, sat on the board of directors of Angel Enterprises Ltd., a Broadly held corporation. During a board meeting, she recommended that the corporation invest in a new Technology startup. Lee failed to mention that she owned shares in this new tech company. When the Prospect of investing was put to the board, Lee voted in favour it. Read each of the following statements Separately, and choose the true statement.

What does it mean to be a broadly held corporation?

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

To what does "franchising" refer?

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.

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?

Which of the following is not an advantage of incorporation?