Question 1

Explain how a proxy is used.

Accepted Answer

The answer of Explain how a proxy is used....

Question 2

Regarding financial rights,shareholders have a right to

Accepted Answer

A) receive dividends when declared by the corporation. 
B) dividends when the corporation makes a profit. 
C) some discrimination in the payment of dividends. 
D) dividends paid in the order of preferences assigned to classes of shareholders-starting with the common shareholders. 
E) capital appreciation as a result of retained earnings.

Question 3

Why should a director or officer of a corporation ensure that a contract is signed in such a way as to make it clear that it is being signed on behalf of the corporation?

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Question 4

Claude will be a minority shareholder in a new corporation.All interested parties are now in a meeting to draft the incorporating documents.To protect his rights as a minority shareholder,Claude wants certain provisions included in a well-drafted shareholder's agreement.Which of the following provisions is unnecessary and won't be included in such an agreement?

Accepted Answer

A) the right to participate in management 
B) the unanimous approval of all shareholders 
C) the right to a fair price for her share interest 
D) the right to employment 
E) for the agreement to be included inside the charter

Question 5

Mary,Martha,Marge,and Alice incorporate a private corporation for the purpose of wholesaling sports equipment.Each owns an equal number of shares.Their incorporating documents neither specify what business the corporation is in nor restrict the type of business the corporation can operate.Martha,Mary,and Marge are the three directors and officers of the corporation,while Alice is being frozen out of the company's decision making.She has never been elected as a director,has never had a position in the management,and has not had any of her resolutions passed at the annual shareholder's meeting.Also,the corporation seemed to have abandoned its original purpose and gone into a different business-one that doesn't interest Alice.Explain to Alice the "oppression remedy" and its advantages over two other kinds of remedy.

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Question 6

Briefly describe the three basic groups common to all corporations and how the distinctions between these groups can become blurred in small private corporations.

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Question 7

Explain why most corporations issue pre-emptive rights on their new issues of stock when pre-emptive rights are generally not recognized by courts in Canada.

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Question 8

Dan is a director of a corporation,and without disclosing his conflict of interest,he entered into a contract to supply the corporation with widgets.The contract was made in the name of his mother so that the corporation would not know that Dan was involved.Pat is a minority shareholder in the corporation,has found out about the conflict,and intends to bring a derivative action against Dan.Explain what a derivative action is.Why is a derivative action appropriate in the circumstances? What must Pat show in order to bring a derivative action? What remedy might a court award?

Accepted Answer

The answer of Dan is a director of a corporation,and...

Question 9

Directors are appointed by the officers of the corporation.

Accepted Answer

A) True 
 B)False

Question 10

What duties do directors owe to shareholders of the corporation?

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The answer of What duties do directors owe to shareholders...

Question 11

When a director has a duty to acquire property for the corporation and instead acquires it for herself,she has

Accepted Answer

A) intercepted an opportunity belonging to the corporation and has committed a breach of duty. 
B) an obligation to immediately disclose the acquisition of the property to the shareholders. 
C) no obligation to disclose and has not committed any breach of duty. 
D) breached her obligation not to compete with the corporation.

Question 12

When a corporation has suffered an injury,the corporation may sue the wrongdoers to recover its losses.However,if the directors themselves are the wrongdoers,they are not likely to authorize the commencement of any action against themselves.The common law recognizes the right of a minority shareholder to start an action on behalf of the corporation,and this is referred to as

Accepted Answer

A) an appraisal action. 
B) a winding up action. 
C) a derivative action. 
D) an insider action. 
E) a "locked in" action.

Question 13

A shareholder agreement to which a majority of shareholders are parties is referred to as a unanimous shareholder agreement.

Accepted Answer

A) True 
 B)False

Question 14

Generally speaking,the common shares of a minority shareholder will be ordered to be purchased at fair market value by the remaining shareholders who have been found guilty of oppressing him or her.

Accepted Answer

A) True 
 B)False

Question 15

A director or officer of a public trading company who uses private information about the company to purchase shares of the company to make a profit is an insider trader.

Accepted Answer

A) True 
 B)False

Question 16

Can a shareholder agreement protect a minority shareholder from oppressive acts of the majority shareholders and,if so,how?

Accepted Answer

The answer of Can a shareholder agreement protect a minority...

Exam 26: Corporate Governance: the Internal Affairs of Corporations

Explain how a proxy is used.

Regarding financial rights,shareholders have a right to

Why should a director or officer of a corporation ensure that a contract is signed in such a way as to make it clear that it is being signed on behalf of the corporation?

Briefly describe the three basic groups common to all corporations and how the distinctions between these groups can become blurred in small private corporations.

Explain why most corporations issue pre-emptive rights on their new issues of stock when pre-emptive rights are generally not recognized by courts in Canada.

Directors are appointed by the officers of the corporation.

What duties do directors owe to shareholders of the corporation?

When a director has a duty to acquire property for the corporation and instead acquires it for herself,she has

A shareholder agreement to which a majority of shareholders are parties is referred to as a unanimous shareholder agreement.

Generally speaking,the common shares of a minority shareholder will be ordered to be purchased at fair market value by the remaining shareholders who have been found guilty of oppressing him or her.

A director or officer of a public trading company who uses private information about the company to purchase shares of the company to make a profit is an insider trader.

Can a shareholder agreement protect a minority shareholder from oppressive acts of the majority shareholders and,if so,how?