Question 1

A corporation owned by a single person is treated under the law as the same entity as that person.

Accepted Answer

A) True 
 B)False

Question 2

Bill Bonney, the sole stockholder of Kidd Corporation, wrongfully used the corporation to avoid a personal liability. A court order that disregards the corporate entity and holds Bonney personally liable is called:

Accepted Answer

A)  limited liability. 
B)  ultra vires. 
C)  diversity of interest. 
D)  piercing the corporate veil.

Question 3

What powers does a corporation normally possess?

Accepted Answer

The answer of What powers does a corporation normally possess?...

Question 4

The Revised Act provides that at least two persons need to act as incorporators, though more may do so.

Accepted Answer

A) True 
 B)False

Question 5

What are the consequences of a defective incorporation?

Accepted Answer

The answer of What are the consequences of a defective...

Question 6

Shareholders do not have limited liability for corporate debts.

Accepted Answer

A) True 
 B)False

Question 7

A corporation is considered to be a person within the meaning of the Fifth Amendment protection against self-incrimination.

Accepted Answer

A) True 
 B)False

Question 8

Define "promoter" in reference to a corporation.

Accepted Answer

The answer of Define "promoter" in reference to a corporation....

Question 9

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

Accepted Answer

A) True 
 B)False

Question 10

The RMBCA has been adopted, in whole or in part, by most states.

Accepted Answer

A) True 
 B)False

Question 11

Snazzy Sneakers Co. sues SureFast Glue Corporation for breach of contract for $2,400 of shoe glue that was not delivered according to their agreement. SureFast may assert as a defense to payment that Snazzy Sneakers is not a de jure corporation.

Accepted Answer

A) True 
 B)False

Question 12

Under the RMBCA, the bylaws may be amended and must be publicly filed with the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 13

What is the doctrine of ultra vires ? What is the effect of an ultra vires contract?

Accepted Answer

The answer of What is the doctrine of ultra vires...

Question 14

The modern approach follows the common law rule in holding that a corporation cannot commit a criminal act.

Accepted Answer

A) True 
 B)False

Question 15

A corporation is considered a citizen:

Accepted Answer

A)  of the state in which it has its principal office, for the purpose of determining diversity of citizenship. 
B)  of the state of its incorporation, for the purpose of determining diversity of citizenship. 
C)  in both of these situations. 
D)  in neither of these situations.

Question 16

A promoter is a person who takes the preliminary steps to organize a corporation.

Accepted Answer

A) True 
 B)False

Question 17

If incorporated, the City of Chicago would best be described as which of the following?

Accepted Answer

A)  A corporation formed pursuant to the Model Business Corporation Act. 
B)  A close corporation. 
C)  A public corporation. 
D)  A domestic corporation.

Question 18

Norez Corporation is incorporated in the state of Nevada. It now wants to open a retail outlet in Utah. Norez must obtain a certificate qualifying it to do business in the state of Utah .

Accepted Answer

A) True 
 B)False

Question 19

Opal, a promoter of Victory Corporation, has a fiduciary duty to:

Accepted Answer

A)  any other promoters of Victory Corporation. 
B)  only Victory Corporation. 
C)  the initial shareholders of Victory Corporation. 
D)  A ny other promoters of Victory Corporation and also  the initial shareholders of Victory Corporation.

Question 20

The Revised Act authorizes shareholders in closely held corporations to adopt shareholder agreements that depart from statutory norms by altering the governance of the corporation. These agreements:

Accepted Answer

A)  are effective if adopted by a majority of the shareholders. 
B)  are valid for the life of the corporation unless a new agreement is reached. 
C)  are binding on shareholders, the state, creditors, and other third parties. 
D)  terminate automatically if the corporation's shares are traded publicly.

Exam 33: Nature and Formation of Corporations

A corporation owned by a single person is treated under the law as the same entity as that person.

Bill Bonney, the sole stockholder of Kidd Corporation, wrongfully used the corporation to avoid a personal liability. A court order that disregards the corporate entity and holds Bonney personally liable is called:

What powers does a corporation normally possess?

The Revised Act provides that at least two persons need to act as incorporators, though more may do so.

What are the consequences of a defective incorporation?

Shareholders do not have limited liability for corporate debts.

A corporation is considered to be a person within the meaning of the Fifth Amendment protection against self-incrimination.

Define "promoter" in reference to a corporation.

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

The RMBCA has been adopted, in whole or in part, by most states.

Snazzy Sneakers Co. sues SureFast Glue Corporation for breach of contract for $2,400 of shoe glue that was not delivered according to their agreement. SureFast may assert as a defense to payment that Snazzy Sneakers is not a de jure corporation.

Under the RMBCA, the bylaws may be amended and must be publicly filed with the articles of incorporation.

What is the doctrine of ultra vires ? What is the effect of an ultra vires contract?

The modern approach follows the common law rule in holding that a corporation cannot commit a criminal act.

A corporation is considered a citizen:

A promoter is a person who takes the preliminary steps to organize a corporation.

If incorporated, the City of Chicago would best be described as which of the following?

Norez Corporation is incorporated in the state of Nevada. It now wants to open a retail outlet in Utah. Norez must obtain a certificate qualifying it to do business in the state of Utah .

Opal, a promoter of Victory Corporation, has a fiduciary duty to:

The Revised Act authorizes shareholders in closely held corporations to adopt shareholder agreements that depart from statutory norms by altering the governance of the corporation. These agreements: