BLAW final bisk
Terms in this set (37)
Following the formation of a corporation, which of the following terms best describes the process by which the promoter is released from, and the corporation is made liable for, pre-incorporation contractual obligations?
The president of a company has signed a $10 million contract with a construction company to build a new corporation office. Which of the following corporate documents sets forth the scope of authority under which this transaction is governed?
Which of the following statements best states the purpose of cumulative voting?
To allow minority shareholders to gain on the board of directors
Furl Corp., a corporation organized under the laws of State X, sued Row, a customer residing in State Y, for nonpayment for goods sold. Row attempted to dismiss a suit brought by Furl in State y, on the grounds that Furl was conducting business in State Y but had not obtained a certificate of authority from State Y to transact business therein. Which of the following actions by Furl would generally result in the court ruling that Furl was conducting business in State Y?
Owning and operating a small manufacturing plant in State Y
Which of the following statements is (are) correct regarding the methods a target corporation may use to ward off a takeover attempt?
Both I and II
The principle that protects corporate directors from personal liability for acts performed in good faith on behalf of the corporation is known as
The business judgment rule
Under the Revised Model Business Corporation Act, which of the following statements is correct regarding corporate officers of a public corporation?
A corporation may be authorized to indemnify its officers for liability incurred in a suit by stockholders
Bixler refused, claiming the building was worth far more than $200,000 both when he secured the option and when he deeded it to the corporation. Which of the following statements correctly applies to Bixler's conduct?
Even if, as Bixler claimed, the building was fairly worth more than $200,000, Bixler nevertheless must return the $45,000 to the corporation
Which of the following circumstances may permit the piercing of the corporate veil of a closely held corporation and, thus, may cause its shareholders to be held personally liable?
Hughes and Brody start a business as a closely held corporation. Hughes owns 51 of the 100 shares of stock issued by the firm and Brody owns 49. One year later, the corporation decides to sell another 200 shares. Which of the following types of rights would give Hughes and Brody a preference over other purchases to buy shares to maintain control of the firm?
Acorn Corp. wants to acquire business of Trend Corp. Which of the following methods of business combination will best satisfy Acorn's objectives without requiring the approval of the shareholders of either corporation?
A cash tender offer, whereby Acorn acquires at least 90% of Trend's shares, followed by a short-form merger of Trend into Acorn
Under the Revised Model Business Corporation Act, which of the following actions by a corporation would entitle a stockholder to dissent from the action and obtain payment of the fair value of her/his shares?
Both I and II
In which of the following situations is a subscription contract least likely to be enforceable?
An investor agrees to subscribe to a corporation's stock without any explicit conditions, but the corporation has not complied with all applicable securities laws
The owners of Elise Components made a good faith effort to incorporate. Not realizing that all of the prescribed procedures were not followed, the entity established a corporate charter and entered into good faith business dealings in the corporate name with Miner Company. A valid statute exists under which the business could have been incorporated legally. Despite the defects in the incorporation process, an appropriate court held that Elsie Components was a corporation. What type entity is Elise Components?
A de facto corporation
Which of the following rights is a holder of a public corporation's cumulative preferred stock always entitled to?
Dividend carryovers from years in which dividends were not paid, to future years
Under the Revised Model Business Corporation Act, a corporate director is authorized to
Rely on information provided by the appropriate corporate officer
Which of the following actions is required to ensure the validity of a contract between a corporation and a director of the corporation?
The director must disclose the interest to the independent members of he board and refrain from voting
Food Corp. owned a restaurant called The Ambers. The corporation president, T.J. Jones, hired a contractor to make repairs at the restaurant, signing the contract, "T.J. Jones for The Ambers." Two invoices for restaurant repairs were paid by Food Corp. with corporate checks. Upon presenting the final invoice, the contractor was told that it would not be paid. The contractor sued Food Corp. Which of the following statements is correct regarding the liability of Food Corp.?
It is liable because Jones had authority to make the contract
What is the doctrine under which a corporation is made liable for the torts of its employees, committed within the scope of their employment?
Golden Enterprises, Inc. entered into a contract with Hidalgo Corporation for the sale of its mineral holdings. The transaction proved to be ultra vires. Which of the following parties, for the reason stated, may properly assert the ultra vires doctrine?
A shareholder of Golden Enterprises to enjoin the sale
Which of the following acts is most likely to cause to pierce the corporate veil?
Using corporate assets for the owner's personal purpose
To which of the following rights is a stockholder of a public corporation entitled?
The right to a reasonable inspection of corporate records
Under the Revised Model Business Corporation Act, following what type of corporate acquisition does the acquiring corporation automatically become liable for all obligations of the acquired corporation?
Which of the following would be grounds for the judicial dissolution of a corporation on the petition of a shareholder?
Waste of corporate assets by the board of directors
Absent a specific provision in its articles of incorporations, a corporation's board of directors has the power to do all of the following, except
Amend the articles of incorporation
Which of the following statements is (are) correct regarding corporate debt and equity securities?
Neither I nor II
Price owns $2,000 shares of Universal Corp's $10 cumulative preferred stock. During its first year of operations, cash dividends of $5 per share were declared on the preferred stock but were never paid. In the second year, dividends on the preferred stock were neither declared nor paid. If Universal is dissolved, which of the following statements is correct?
Universal will be liable to Price as an unsecured creditors for $10,000
Under the Revised Model Business Corporation Act, which of the following dividends is not defined as a distribution?
Davis, an inventor, developed a new product, but lacked money to get the product to the marketplace. Before creating a corporation to raise capital. Davis leased office space and equipment, entered into contracts with third parties, and identified investors. Who has liability for pre-incorporation debts?
Davis is liable until the corporation assumed the debts in novation
The Business Judgment Rule is a rule that immunizes corporate
Managements from liability for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of management to make
Fairwell is executive vice president and treasurer of Wonder Corporation. He was named as a party in shareholder derivative that he was liable for negligence in performance of his duties. Fairwell seeks indemnity from the corporation for his liability. The board would like to indemnify him. The articles of incorporation do not contain any provisions regarding indemnification of officers and directors. Indemnification
May be permitted by court order despite the fact that Fairwell was found to be negligent
What is the most likely effect if a court pierces the corporate veil?
The corporation's shareholders, officers, and directors can be assigned liability.
Which of the following parties is liable to repay an illegal distribution to a corporation?
A shareholder not knowing of the illegality of the distribution and the corporation is insolvent
Frey Corp. has 1,000 shares of issued and outstanding common stock. Frey's articles of incorporation permit a stockholder who owns 5% or more of the outstanding stock or who has owned the stock for longer than six months to inspect Frey's books and records. Ace, who has owned 25 shares of Frey stock for four months, wants to inspect the books and records. Under the Revised Model of Business Corporation Act, which of the following statements is correct regarding Ace's right to inspect the books and records?
Ace may, after giving five days' written notice, inspect the books and records to determine the value of Frey stock
Which of the following corporate shareholder rights is enforceable by means of a derivative suit?
Recovering damages from a third party
Under the Revised Model Business Corporation Act, which of the following conditions is necessary for a corporation to achieve a successful voluntary dissolution?
A recommendation of dissolution by the board of directors and approval by a majority of all shareholders entitled to vote`
Which of the following parties generally has the most management rights?
Member of a limited liability company
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