Question 1

Distinguish between a bond and a share.

Accepted Answer

A share involves a shareholder who has a

Question 2

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?

Accepted Answer

A)  A partner of a firm that sold hospital supplies had, without the knowledge or consent of his partners, started a competing business that he ran from his own home. 
B)  The directors failed to declare a dividend for the fourth year in a row. 
C)  A director of a corporation profited $25,000 from a contract between the corporation and sellers of some property in which the director had an interest, after the director made full disclosure of his interest to the board of directors and abstained from the vote. 
D)  An officer of a corporation took advantage of an opportunity he learned about as an officer of the corporation, but took steps to determine that the corporation was not interested in it and received permission to do so from the board of directors. 
E)  A shareholder belongs to a group that directly opposes the policy of the corporation with regard to its logging and mining operations. 
A)  A partner of a firm that sold hospital supplies had, without the knowledge or consent of his partners, started a competing business that he ran from his own home. 
B)  The directors failed to declare a dividend for the fourth year in a row. 
C)  A director of a corporation profited $25,000 from a contract between the corporation and sellers of some property in which the director had an interest, after the director made full disclosure of his interest to the board of directors and abstained from the vote. 
D)  An officer of a corporation took advantage of an opportunity he learned about as an officer of the corporation, but took steps to determine that the corporation was not interested in it and received permission to do so from the board of directors. 
E)  A shareholder belongs to a group that directly opposes the policy of the corporation with regard to its logging and mining operations.

Question 3

Explain the concept of a promoter.

Accepted Answer

A promoter is a person who par

Question 4

Explain what is meant by pre-emptive rights.

Accepted Answer

Depending on the legislation and the jur

Question 5

Shareholders do not owe a duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 6

In which of the following relationships is a fiduciary duty owed?

Accepted Answer

A)  The officers of a corporation to the shareholders 
B)  An employer to his employees 
C)  The director of a corporation to the corporation 
D)  A principal to his agent 
E)  The director of a corporation to the shareholders 
A)  The officers of a corporation to the shareholders 
B)  An employer to his employees 
C)  The director of a corporation to the corporation 
D)  A principal to his agent 
E)  The director of a corporation to the shareholders

Question 7

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

Accepted Answer

A)  "Relief from oppression" provisions allow a party who has contracted with the corporation to force the corporation to honour a contract it has signed in an irregular manner. 
B)  In many jurisdictions, pre-emptive rights entitle a shareholder to pass on their right to vote to someone else. 
C)  A creditor of a corporation could sue for some remedy if the directors of the corporation voted for a resolution to pay a dividend when the corporation was insolvent. 
D)  A director of a corporation could not be personally liable on a promissory note even if he just signed his own name as long as at the time he intended to sign on behalf of the corporation. 
E)  If a minority shareholder is treated unfairly, the appropriate relief to request is that the court "lift the corporate veil." 
A)  "Relief from oppression" provisions allow a party who has contracted with the corporation to force the corporation to honour a contract it has signed in an irregular manner. 
B)  In many jurisdictions, pre-emptive rights entitle a shareholder to pass on their right to vote to someone else. 
C)  A creditor of a corporation could sue for some remedy if the directors of the corporation voted for a resolution to pay a dividend when the corporation was insolvent. 
D)  A director of a corporation could not be personally liable on a promissory note even if he just signed his own name as long as at the time he intended to sign on behalf of the corporation. 
E)  If a minority shareholder is treated unfairly, the appropriate relief to request is that the court "lift the corporate veil."

Question 8

What is meant by the term "prospectus"?

Accepted Answer

A prospectus is a pu

Question 9

Mr. A is the sole shareholder of X Ltd., and is also a director of Y Ltd. Y Ltd. is negotiating to buy property from X Ltd. Which of the following is false?

Accepted Answer

A)  Mr. A. has a duty to act in the best interests of Y Ltd., and to avoid any conflict of interest. 
B)  So long as Mr. A discloses his position to the board of directors of Y Ltd., he can vote in favour of the contract at the directors' meeting. 
C)  To protect himself, Mr. A must disclose his interest to the other directors and refrain from voting or influencing the decision. 
D)  Failure to disclose his interest will make Mr. A liable to Y Ltd. for any profits he makes on the transaction and for any losses suffered by Y Ltd. 
E)  Mr. A. does not owe a fiduciary duty to X Ltd. or to his fellow X Ltd. shareholders. 
A)  Mr. A. has a duty to act in the best interests of Y Ltd., and to avoid any conflict of interest. 
B)  So long as Mr. A discloses his position to the board of directors of Y Ltd., he can vote in favour of the contract at the directors' meeting. 
C)  To protect himself, Mr. A must disclose his interest to the other directors and refrain from voting or influencing the decision. 
D)  Failure to disclose his interest will make Mr. A liable to Y Ltd. for any profits he makes on the transaction and for any losses suffered by Y Ltd. 
E)  Mr. A. does not owe a fiduciary duty to X Ltd. or to his fellow X Ltd. shareholders.

Question 10

What is the purpose of a shareholder agreement?

Accepted Answer

To protect the right

Question 11

A real estate agent, by virtue of his fiduciary duty to his principal, is not allowed to buy the property being sold by his principal without full disclosure to and consent from his principal. The real estate agent does not want to disclose that he is the buyer of the property, so he forms a corporation and takes an offer to his principal from the corporation. Based on these facts, which of the following is true if the principal finds out the corporation/buyer is owned by the real estate agent and objects to the contract?

Accepted Answer

A)  The court would enforce the contract because the corporation is a separate legal entity in the eyes of the law. 
B)  The court would enforce the contract, but the principal would be able to claim any profits from the agent when he took them out of the corporation. 
C)  The court would not enforce the contract and would "lift the corporate veil." 
D)  The court would enforce the contract because this is not a direct breach of the agent's fiduciary duty. 
E)  The court would dissolve the corporation. 
A)  The court would enforce the contract because the corporation is a separate legal entity in the eyes of the law. 
B)  The court would enforce the contract, but the principal would be able to claim any profits from the agent when he took them out of the corporation. 
C)  The court would not enforce the contract and would "lift the corporate veil." 
D)  The court would enforce the contract because this is not a direct breach of the agent's fiduciary duty. 
E)  The court would dissolve the corporation.

Question 12

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

Accepted Answer

Closely held corporations usua

Question 13

What is typically the most expensive form of business organization to create and maintain?
ESSAY. Write your answer in the space provided or on a separate sheet of paper.

Accepted Answer

The answer of What is typically the most expensive form...

Question 14

Who is the party responsible for for ensuring that financial statements for an organization are properly done?

Accepted Answer

The answer of Who is the party responsible for for...

Question 15

A debenture creates a creditor/debtor relationship.

Accepted Answer

A) True 
 B)False

Question 16

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. On these facts, which of the following is false?

Accepted Answer

A)  If the corporation went bankrupt, Kihn himself would be a secured creditor. 
B)  The employee is liable for his tort and his employer is also liable. 
C)  The employee is liable for the tort of battery. 
D)  Although Kihn is the sole shareholder of the corporation, he is not responsible for company debts. 
E)  Kihn himself is vicariously liable for the damage caused by the employee. 
A)  If the corporation went bankrupt, Kihn himself would be a secured creditor. 
B)  The employee is liable for his tort and his employer is also liable. 
C)  The employee is liable for the tort of battery. 
D)  Although Kihn is the sole shareholder of the corporation, he is not responsible for company debts. 
E)  Kihn himself is vicariously liable for the damage caused by the employee.

Question 17

Directors owe a fiduciary duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

In Peoples Department Stores Inc. et al. v. Wise et al., the Supreme Court of Canada had to clarify to whom a director owes its duties. What did the Court hold?

Accepted Answer

A)  A fiduciary duty is owed to the company and to other stakeholders. 
B)  A duty of care is owed only to creditors, while a fiduciary duty can also be owed to other stakeholders. 
C)  A fiduciary duty is owed only to the company, while a duty of care can also be owed to other stakeholders. 
D)  A duty of care is owed only to the company, while a fiduciary duty can also be owed to other stakeholders. 
E)  A fiduciary duty is owed only to creditors, while a duty of care can also be owed to other stakeholders. 
A)  A fiduciary duty is owed to the company and to other stakeholders. 
B)  A duty of care is owed only to creditors, while a fiduciary duty can also be owed to other stakeholders. 
C)  A fiduciary duty is owed only to the company, while a duty of care can also be owed to other stakeholders. 
D)  A duty of care is owed only to the company, while a fiduciary duty can also be owed to other stakeholders. 
E)  A fiduciary duty is owed only to creditors, while a duty of care can also be owed to other stakeholders.

Question 20

Three classmates incorporated about a week after graduation. The authorized capital was 500,000 common no-par-value shares. Each took one share; each was a director. If the directors decide to issue more shares from the treasury to raise more capital, which of the following provisions ensures that they keep their proportionate holdings?

Accepted Answer

A)  Preemptive right provision 
B)  Relief-from-oppression provision 
C)  Derivative-action provision 
D)  Indoor-management rule 
E)  Dissent procedure 
A)  Preemptive right provision 
B)  Relief-from-oppression provision 
C)  Derivative-action provision 
D)  Indoor-management rule 
E)  Dissent procedure

Distinguish between a bond and a share.

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?

Explain the concept of a promoter.

Explain what is meant by pre-emptive rights.

Shareholders do not owe a duty to the corporation.

In which of the following relationships is a fiduciary duty owed?

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

What is meant by the term "prospectus"?

Mr. A is the sole shareholder of X Ltd., and is also a director of Y Ltd. Y Ltd. is negotiating to buy property from X Ltd. Which of the following is false?

What is the purpose of a shareholder agreement?

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

What is typically the most expensive form of business organization to create and maintain? ESSAY. Write your answer in the space provided or on a separate sheet of paper.

Who is the party responsible for for ensuring that financial statements for an organization are properly done?

A debenture creates a creditor/debtor relationship.

Directors owe a fiduciary duty to the corporation.

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

In Peoples Department Stores Inc. et al. v. Wise et al., the Supreme Court of Canada had to clarify to whom a director owes its duties. What did the Court hold?

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes the Courts and Alternatives to Litigation

Intentional Torts

Negligence, Professional Liability, and Insurance Law

Formation of Contracts

Formation of Contracts Continued

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Agency and Partnership

Real, Personal and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Priority of Creditors

Filters

Exam 12: Corporations

Distinguish between a bond and a share.

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?

Explain the concept of a promoter.

Explain what is meant by pre-emptive rights.

Shareholders do not owe a duty to the corporation.

In which of the following relationships is a fiduciary duty owed?

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

What is meant by the term "prospectus"?

Mr. A is the sole shareholder of X Ltd., and is also a director of Y Ltd. Y Ltd. is negotiating to buy property from X Ltd. Which of the following is false?

What is the purpose of a shareholder agreement?

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

What is typically the most expensive form of business organization to create and maintain? ESSAY. Write your answer in the space provided or on a separate sheet of paper.

Who is the party responsible for for ensuring that financial statements for an organization are properly done?

A debenture creates a creditor/debtor relationship.

Directors owe a fiduciary duty to the corporation.

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

In Peoples Department Stores Inc. et al. v. Wise et al., the Supreme Court of Canada had to clarify to whom a director owes its duties. What did the Court hold?

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes the Courts and Alternatives to Litigation

Intentional Torts

Negligence, Professional Liability, and Insurance Law

Formation of Contracts

Formation of Contracts Continued

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Agency and Partnership

Real, Personal and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Priority of Creditors

Filters