Exam 12: Corporations

Which of the following situations would allow a shareholder to sue on behalf of the corporation?

A corporation is considered to be a separate legal entity from the shareholders who make it up.

In jurisdictions in which the registration system of incorporation is used, the rules governing the internal regulations of a company are called

To what does the term "due diligence" refer?

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.

Which two of the following are examples of breaches of fiduciary duty?

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

Mr. Ace of Oink Inc., a closely-held corporation, is one of three shareholders. After several years of considerable success, the corporation hit hard times. The other shareholders, Mr. Bane and Mr. Curr, in the best interests of the corporation, voted Mr. Ace out as a director and voted not to renew his employment contract. Upset by these events, Mr. Ace just wanted to sell his interest and leave the corporation. The other two shareholders, however, refused to buy his shares. Furthermore, when he attempted to sell his shares to his brother, who was interested in the corporation, they refused to register the brother as a member. Which of the following is true?

Explain the nature of the "corporate myth".

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

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

Explain the standard of care that a director must live up to in carrying out his duty towards the corporation.

Consider the decision in Agrium Inc. v. Hamilton. What did the Court find?

Distinguish between a par value share and a non-par value share.

Kent incorporated Dynamite Data Ltd., which worked with small businesses in developing graphs and charts from their data for presentations to bankers, shareholders, etc. Kent lent the company $25,000 by way of a shareholder's loan and took as security computers, plotters, and printers under a chattel mortgage document. An employee of the corporation, Jack, delivering some graphs to a customer, Roth, got into an argument with Roth, who was complaining that the graph was in red and not in pink as requested. It ended with Jack punching Roth, who fell onto a microscopic camera. The damage to the nose and camera: $35,000. Which of the following is true?

Which of the following is an advantage of incorporation?

The method of incorporating used in some jurisdictions in Canada whereby the government grants recognition to the company as a separate legal entity is known as ________.

A corporation does not die but may be dissolved.

Explain the nature of an annual general meeting.

A person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering is known as promoter. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.