BUL-4310 Final, Ch. 19 – Flashcards

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One of the key advantages of the corporate form is the unlimited liability of its owners.
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FALSE
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The state can suspend the entity's corporate status until the taxes are paid or even dissolve the corporation for failing to pay taxes
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TRUE
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A foreign corporation normally does not need a certificate of authority to sell goods or services via the Internet or by mail.
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TRUE
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A publicly held corporation is any corporation whose shares are publicly traded in a securities market
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TRUE
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If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level
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TRUE
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The articles of incorporation serve as a primary source of authority for the corporation's future organization and business functions
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TRUE
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The registered agent is the person who can receive legal punishment (such as fines and imprisonment) on behalf of the corporation
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FALSE
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There are no important consequences if the procedures for incorporation are not followed precisely.
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FALSE
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In the absence of express constitutional, statutory, or other provisions, the corporation has no implied powers.
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FALSE
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In corporate law, acts of a corporation that are beyond its express or implied powers are de facto or de jure acts.
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FALSE
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Most states do not permit the corporate articles or bylaws to authorize compensation for directors.
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FALSE
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A director who does not hold a management position in the corporation is an outside director
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TRUE
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Each director present at a meeting of the board of directors has one vote for each outstanding share of corporate stock that he or she holds.
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FALSE
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In most states, an individual cannot hold more than one corporate office and be both an officer and a director of the corporation.
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FALSE
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Directors are prevented from ever having financial dealings with the corporations they serve
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FALSE
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Shareholders own the corporation, and they have legal title to corporate property
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FALSE
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Shareholders have the power to vote to elect or remove members of the board of directors.
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TRUE
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A straight majority vote of the shares represented at a shareholders' meeting is usually required to pass resolutions.
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TRUE
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Dividends can be paid from the undistributed net profits earned by the corporation.
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TRUE
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Restrictions on the transfer of shares in a close corporation are usually void.
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FALSE
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Demario and Evander want to form and do business as a corporation—Farm-2-Fork Restaurant Inc. A corporation is
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an artificial person
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The shares of Home Mortgage Corporation are publicly traded in securities mar¬kets. Home Mortgage Corporation is
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a publicly held corporation
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Dollars & Sense, Inc., is incorporated in the state of New Jersey and is doing busi¬ness in the state of New York. In New York, Dollars & Sense is properly referred to as
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a foreign corporation
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Orel incorporates his business as Posts & Wire Corporation in Texas. He and his group of shareholders intend to make a profit from their sales of fencing materials. Posts & Wire is
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a private corporation
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Boutique Bodega Corporation would like to change its corporate status to that of an S corporation to avoid in¬come taxes at the corporate level. To qualify, the shareholders must not be
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partnerships
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Tech Personnel, Inc., is a corporation. Tech Personnel's implied powers enable it to
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borrow funds and lend funds
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Memphis Music Makers Inc.'s stated purpose is to sell musical instruments. If chief executive officer Neal contracts with Open Season Firearms in Memphis Music's name to sell a shotgun, he has likely committed
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an ultra vires act
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Godwin is a director on the board of Health Insurance Corporation. On the receipt of notice of a board meeting, Godwin attends the meeting and takes part in the discussion of business matters and votes on corporate issues. Godwin is entitled to be notified of, and to take part in, these meetings
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under the director's right to participation
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Sophie and Tiny incorporate their beverage-container business as U-Twist Products, Inc. The first board of directors may be appointed by the firm's
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incorporators
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Alain is chairman of the board of Barber & Beauty Supply Corporation. Consuela, a con¬sumer, is injured while using a Barber & Beauty product. She sues Barber & Beauty and Alain individu¬ally. The corporation may pay Alain's legal fees under
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under the director's right to indemnification
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Renee is a director of Sharp Focus Lens Corporation. With respect to Sharp Focus, Renee can access the corporation's books and records. Renee has this access under
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the director's right of inspection.
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Lewis is a director of Mines & Refineries, Inc. Using information that is not available to the public, Lewis makes a profit trading in Mines & Refineries stock. Lewis is most likely li¬able for breach of
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the duty of loyalty
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Eloise is a director for Frozen Yogurt Company. Eloise is also a director for Gelato Desserts, Inc. When the board of Frozen Yogurt considers entering into a contract with Gelato Desserts, Eloise must
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make a full disclosure of any conflict of interest
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Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders, they must approve
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conducting a merger
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Misha and Nguyen are shareholders of Outsourcing Solutions, Inc. Misha's written authorization to Nguyen to vote her shares at a shareholders' meeting is
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a proxy
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Mieko is a shareholder of Natural Gas, Inc. Natural Gas uses cumulative voting to elect directors. This means that the number of Mieko's votes is determined by the number of
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members of the board to be elected multiplied by the total number of voting shares that Mieko holds
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Reed owns one share of stock in SK8 Boards Corporation, as evidenced by a stock certificate. Reed loses the certificate. Reed's ownership of the stock is
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not affected
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Lovey is a shareholder of Made-2-Order Manufacturing Corporation with preemptive rights. With these rights, Lovey can
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buy a prorated share of a new issue of stock before other buyers
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Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A shareholders' meeting takes place before Max's ownership is entered in Lone Starz's stock book. A vote at the meeting can be cast by
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Kelly only
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Orsa is a shareholder in Pickles & Preserves Corporation. In some states, Orsa may be liable to the firm's creditors for unpaid corporate debts if she
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receives shares issued by the firm for less than fair-market value
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