Law 2 Mid-Term for Review ch 39-41 – Flashcards
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A corporation is an artificial being
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True
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State laws regarding corporations are uniform
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False
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A corporation does not possess the same right of access to the courts as natural persons
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False
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A corporate director is an "owner" of the corporation
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False
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The daily business of a corporation is managed by officers hired by the board of directors
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False
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An agreement between shareholders can restrict the transfer of a close corporation's stock
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True
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The purpose of a corporation may be specified in its articles of incorporation
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True
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A corporation has perpetual existence in most states unless the articles of incorporation state otherwise
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False
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Bylaws are the internal rules of management for a corporation
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False
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A de jure corporation is one that is not properly formed
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False
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A court will not pierce the corporate veil of a corporation that is merely set up never to make a profit
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False
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Venture capital is capital provided to new business ventures by professional, outside investors
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True
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Few qualifications are required for directors
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True
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Vacancies occur on the board of directors if a director dies or resigns, but a new position cannot be created by an amendment to the articles of incorporation
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False
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Directors are entitled to participate in all regular board of directors' meetings but not all special meetings
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False
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Public corporations typically create committees of directors and delegate certain tasks to these committees
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True
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Shareholders hire the officers and other executive employees
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False
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The ordinary rules of agency normally apply to the employment of corporate officers
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True
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Directors are not expected to act in accordance with their own knowledge and training, but to rely on information given to them by certain other persons
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False
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Directors must refrain from self-dealing
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True
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As a general rule, shareholders have responsibility for the daily management of the corporation
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False
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For shareholders to act during a meeting, a quorum must be present
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True
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Dividends can be paid in the stock of corporations other than the corporation that is paying the dividends
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True
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Every shareholder is entitled to examine specified corporate records but only in person, not through an agent
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False
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When the corporation is harmed by the actions of a third party, the directors can bring a lawsuit in the name of the corporation against that party
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True
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State law establishes the specific procedures for mergers
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True
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A merger involves the legal combination of one or more corporations
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True
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In a consolidation, two or more corporations combine in such a way that each corporation ceases to exist.
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True
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In a share exchange, one corporation will issue shares or pay some fair consideration to the shareholders of another corporation that will then cease to exist
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False
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The majority of the shareholders of each corporation must vote to approve a plan of merger
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True
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A short-form merger is the legal combination of two or more corporations online
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False
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Appraisal rights extend to mergers, consolidations, share exchanges, and sales of substantially all of the corporate assets
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True
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A corporation that is acquiring all or substantially all of the assets of another corporation by direct purchase must obtain shareholder approval for the purchase
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False
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Generally, the offering corporation must notify the Securities and Exchange Commission or the target corporation's management before a tender offer is made
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False
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To resist a takeover, a target company may make a self-tender
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True
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Courts apply the business judgment rule to analyze whether the directors acted reasonably in resisting a takeover attempt
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False
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When a corporation is dissolved voluntarily, the corporation does not need to file articles of dissolution with the state
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False
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If a corporation is dissolved, its assets can be liquidated without further notice to a party who has a claim against the firm
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False
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A state court can dissolve a corporation for engaging in mismanagement
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True
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On dissolution, corporate assets are distributed to shareholders according to their stock rights and any remaining assets are used to pay creditors
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False
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Ulrich and Vida want to form and do business as Whitewater Rafting Corporation. A corporation can be owned by
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other businesses or natural persons
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Dante and Eden want to form and do business as Farm-to-Fork Restaurant Corporation. Most statutes governing the formation and use of corporations are guided by
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State law
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Erin is a shareholder in Far East Expeditions. As a shareholder, Erin
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Owns shares of stock in Far East Expeditions
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Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with
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The board of directors
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George is the founder of Home Exotics Corporation. Wilson is a shareholder and director and Bill is an officer. The daily business operations of Excellent Exotics are overseen by
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Bill
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Painless Dental Equipment Company is incorporated in Colorado. In Wyoming, Painless is
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A foreign corporation
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Smalltown, Alabama is incorporated by the government. Smalltown is
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A public corporation
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A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate for a purpose other than making a profit. SDC is
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A non-profit Corporation
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Brightbox, a DVD rental company, would like to change its corporate status to that of an S corporation to avoid income taxes at the corporate level. To qualify, Brightbox must
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Be located in the United States
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Myron and Norah would like to form Originales, Inc. to do business in the art market. Generally, the articles of incorporation for a corporation do not include
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The minutes of the first organizational meeting
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Olinka is a registered agent for Pads, Pods & Phones, Inc., which incorporated in California. As a registered agent, Olinka
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Receives legal documents on behalf of Pads, Pods & Phones
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Stephan incorporates his scientific products business as Tech Supply, Inc. Unless the articles of incorporation state otherwise, Tech Supply most likely has
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Perpetual existence
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Like the bylaws of other corporations, the bylaws of Retail Sales, Inc.
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Were adopted at its first organizational meeting
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Custom Business Applications Corporation substantially complies with all conditions precedent to incorporation. Custom Business is most likely
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A de jure corporation
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Wings2Go Corporation fails to hold an organizational meeting. In this circumstance, at common law Wings2Go is most likely
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A de facto corporation
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O.K. Oil holds itself out to others as being a corporation but makes no attempt to incorporate. In this circumstance, O.K. is most likely
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A corporation by estoppel
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When a conflict arises among the documents that involve Simpatico Social Media Corporation, the first priority for resolving the conflict is given to
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the U.S. Constitution
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Ring Tone Phones, Inc., is a corporation. Ring Tone's implied powers enable it to
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Borrow funds, extend credit, and make charitable contributions
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Vincento buys 500 shares of common stock in Water Reclamation Services, Inc. As a shareholder of record, Vincento owns a proportionate interest in terms of
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control, earnings, and net assets
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Retail Outsourcing, Inc., issues bonds. Bonds
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are sometimes referred to as fixed-income securities
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Godfrey is elected as a director for Healthful Snax, Inc. He will most likely serve for a term of
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one year
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Clive, Domina, and Elgar are the first directors on the board of Face x Face Corporation, a social media host. Subsequent directors are elected by a majority vote of Face x Faxe's
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shareholders
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Doyle and Emily are directors of Freshe' Bottled Water Corporation. As corporate directors, unless the articles or bylaws provide otherwise, their compensation is set by Freshe's
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Board of directors
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Bret and Courtney form Delite Day Care, Inc. Ultimate responsibility for policy decisions necessary to the management of corporate affairs rests with Delite's
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Board of directors
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Customs Business Apps, Inc. has a board of ten directors. Custom Business's bylaws do not state quorum requirements. In most states, a quorum for Custom Business would be defined as
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Six directors
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Dwayne is a director of Eco Packaging Company. Dwayne's rights, as a director, do not include a right to
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Self-dealing
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Ronaldo is a director of Startright, Inc. Ronaldo is also a chief corporate officer in the firm and receives compensation for both positions. He is
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An inside director
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Management Consultants, Inc., has a large number of directors. The board can delegate certain tasks to
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Committees of directors
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Order fulfillment, Inc., is a shipping and distribution company. Like most corporations, Order Fulfillment's employees include its
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Officers
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Regina is a director of Shale Oil, Inc As a director, with respect to the corporation, Regina is
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A Fiduciary
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Nina is a director of Outback Outfitters, Inc. Under the standard of due care owed by directors of a corporation, Nina's decisions must be informed and
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reasonable
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Gannon is an officer for Hawaiian shirts Corporation. Due to a bad business decision on Gannon's part, the company's sales decrease. Gannon is most likely liable for breach of
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None of the choices
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Honi is a director of Italian Desserts, Inc. Honi opposes a tender offer that is in the company's best interest because its acceptance would cost her her position as a director. Honi is most likely liable for a breach of
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The duty of loyalty
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EcoProducts Corporation permits the election of its directors by cumulative voting. This
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allows minority shareholders to be represented on teh board
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Lonny owns one share of stock in McQuik's Smoothies Corporation, as evidenced by a stock certificate. Because stock is intangible personal property, Fiona's ownership of the stock
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exists independently of the stock certificate
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Galye is a shareholder of Harbor Bay Equipment Rentals & Sales Inc. As a shareholder, Galye does not have
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a right to compensation
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Ida, Jerzy, and Kit are the directors of Liberty Convenience Stores, Inc. Liberty has nine officers and forty-six shareholders. Dividends are ordered by the firm's
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Board of directors
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Darius is a shareholder of Energy Renewable, Inc. When the directors fail to undertake an action to redress a wrong suffered by the corporation, Darius files a suit on the firm's behalf. Refer to Fact Pattern 40-1A. Darius's suit is a shareholder's
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Derivative suit
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Darius is a shareholder of Energy Renewable, Inc. When the directors fail to undertake an action to redress a wrong suffered by the corporation, Darius files a suit on the firm's behalf. Refer to Fact Pattern 40-1A. Any damages recovered by Darius's suit will normally go to
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Energy Renewable
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Brandi is a shareholder of Cloud Servers & Routers Inc. Brandi will be deemed to have a fiduciary duty to Cloud and its minority shareholders if she has a sufficient number of shares to
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Exercise de facto control
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Like other corporations, Western Steel Corporation can extend its operations through
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a merger
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Natural Laminate Corporation and Oak Wood Flooring Company combine so that all that remains after the papers have been signed is Natural Laminate. This is
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a merger
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Grandview Office Suites, Inc. mergers with Hilltop Commercial Properties, Inc. Only Hilltop remains. Refer to Fact Pattern 41-1A. Grandview owed money to Innovative Decor, Inc. and other creditors. After the merger, Hilltop must pay
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all of Grandview's debts
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Grandview Office Suites, Inc. mergers with Hilltop Commercial Properties, Inc. Only Hilltop remains. Refer to Fact Pattern 41-1A. Grandview held rights in certain real property. After the merger, Hilltop acquires the rights
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automatically
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Grandview Office Suites, Inc. mergers with Hilltop Commercial Properties, Inc. Only Hilltop remains. Refer to Fact Pattern 41-1A. The articles of merger include changes that differ from Hilltop's articles of incorporation. The articles of incorporation
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are deemed amended to include the changes
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Shale Oil Processing Corporation combines its assets and debts with those of Tierra Frakking Company to form United Resources, Inc. Shale and Tierra cease to exist. Refer to Fact Pattern 41-2A. The formation of United Resources is
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a consolidation
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Shale Oil Processing Corporation combines its assets and debts with those of Tierra Frakking Company to form United Resources, Inc. Shale and Tierra cease to exist. Refer to Fact Pattern 41-2A. United Resources acquires
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all of Shale's and Tierra's assets
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Shale Oil Processing Corporation combines its assets and debts with those of Tierra Frakking Company to form United Resources, Inc. Shale and Tierra cease to exist. Refer to Fact Pattern 41-2A. United Resources assumes
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all of Shale's and Tierra's debts
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Lorelei files a suit against Memphis Music Makers, Inc. While the suit is pending. Memphis Music consolidates with Nashville Recording Company to form Omni Productions, Inc. Now, liability in the suit, if any, rest with
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Omni
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Through a certain transaction, Coffee Bean Cafes, Inc. acquires all of the shares of Deli Dining Corporation for some of Coffee Bean's shares. Both Coffee Bean and Deli Dining continue to exist. This is
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a share exchange
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Algorhythm Stock Trades, Inc. and Big Data Market Analyses, Inc. plan to merge. Most likely, the articles of merger will be filed with
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the states's secretary of state
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Mobile Device Corporation and Nano Instruments, Inc. decide to merge. This corporate combination does not require the approval of
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Mobile's and Nano's officers
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Broncobuster BarBq Company and Cowpuncher Cuisine, Inc. decide to combine. Deanna, a Cowpuncher shareholder, is dissatisfied with the price that she will receive for her stock. In the absence of fraud or other illegal conduct, Deanna's exclusive remedy is to
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exercise an appraisal right
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Ben is a shareholder of Cotton Fabric, Inc. whose management is considering extending its operations through some type of combination or acquisition with Denim Dungaree Corporation. Ben could normally exercise appraisal rights if Cotton Fabric participates in
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a sale of substantially all of the corporate assets
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Mediterranean Herbs Inc. wants to purchase all of the assets of Nature's Spice Company. Olina is a Nature's Spice shareholder. Approval of the deal must be obtained from the shareholders of
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Nature's Spice only
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Continental Capital, Inc. increases its holdings, making tender offers in many states. These offers are subject to
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state antitakeover statutes and federal securities laws
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Corporate Properties, Inc. attempts to acquire a substantial number of the shares of Downtown Investment Corporation through a public offer to Downtown's shareholders. This is
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a tender offer
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Speculation Business Corporation can be compelled to dissolve by
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itself, through its shareholders and directors, or the state
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Diversified Corporation's articles of incorporation prohibit a sale of its assets without a vote of the board of directors. Diversified's officers sell some assets to Enterprise Company without notice to the board. The officers also fail to pay Diversified's taxes on time, and some Diversified funds are not accounted for. Refer to Fact Pattern 41-3A. The appropriate remedy is most likely
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Diversified's dissolution
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Diversified Corporation's articles of incorporation prohibit a sale of its assets without a vote of the board of directors. Diversified's officers sell some assets to Enterprise Company without notice to the board. The officers also fail to pay Diversified's taxes on time, and some Diversified funds are not accounted for. Refer to Fact Pattern 41-3A. With respect to Diversified's shareholders, this conduct is most likely
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oppressive because it departs form the standards of fair dealing
