Question 1

A corporation by estoppel is based on fairness rather than strict legal rules.

Accepted Answer

A corporation by estoppel is a legal concept that allows a person or organization to be treated as a corporation even if it has not been legally incorporated. This is based on the principle of fairness rather than strict legal rules, as it prevents individuals or organizations from avoiding liability by claiming they are not a corporation.

Question 2

Incorporators of Maizey Co.signed and delivered the corporate charter to the proper office,but due to inefficiencies in the government office,the filing was delayed.During the period between the delivery of the charter and the filing,a promoter of Maizey Co.entered a contract for the delivery of goods using the corporate name.The supplier,if it finds out the filing had not been completed when the contract was entered,may hold the promoter personally liable on the contract.

Accepted Answer

False

Question 3

Common stock is last stock in line for any corporate payouts,including dividends and liquidation payments.

Accepted Answer

Common stock is considered the riskiest type of stock as it has the lowest priority in terms of corporate payouts. First, bondholders and preferred stockholders are served, then the common stockholders receive payments. Therefore, common stock is the last stock in line for any corporate payouts, including dividends and liquidation payments.

Question 4

Zach decided to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Zach include one of the following words: "corporation," "incorporated," "limited," or "company" or an abbreviation thereof.

Accepted Answer

This statement is true. The Model Act requires that a corporation include one of the specified words or abbreviations in its name.

Question 5

In Delaware,lawsuits involving corporations are tried in a special court called:

Accepted Answer

Lawsuits involving corporations are tried in Delaware's chancery court, which is a specialized court. The court has a reputation for expertise in corporate law, and its opinions often influence corporate law decisions in other states.

Question 6

TriColor,Inc.is doing business in Minnesota,West Virginia,and Oklahoma.TriColor must register in all three of these states.

Accepted Answer

Companies must register to do business in every state where they operate, including TriColor in Minnesota, West Virginia, and Oklahoma.

Question 7

MegaCorp purchased 10,000 shares of its own stock that had previously been owned by private investors.The stock MegaCorp repurchased is called:

Accepted Answer

The stock that MegaCorp repurchased is called treasury stock. This refers to shares of a company's stock that were previously issued to investors but were later bought back by the company itself. The company can hold onto these shares or reissue them at a later date.

Question 8

Sara decided to incorporate her business under the name Gomo,Inc.Before Gomo was incorporated,Sara signed a contract in the name of Gomo,Inc.to lease a store front.Sara did not tell the other party that Gomo was not yet formed.Sara is personally liable on the lease.

Accepted Answer

Sara signed the lease contract in the name of Gomo,Inc. before the company was officially formed. Therefore, since the company did not exist at the time of the contract, Sara is personally liable for the lease.

Question 9

Laurie is incorporating her business.Laurie's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie:

Accepted Answer

Laurie can choose to incorporate her business in any state she prefers. However, she may want to consider factors such as state taxes, business regulations, and the ease of doing business in each state before making a decision. Incorporating in Delaware is a popular choice for businesses due to its favorable business laws and tax policies, but it may not be the best choice for Laurie's specific business needs.

Question 10

It is illegal for shareholders to transfer their stock to a trust and give the trustee the power to vote the shares.

Accepted Answer

It is not illegal for shareholders to transfer their stock to a trust and give the trustee the power to vote the shares. In fact, it is a common practice for estate planning purposes and can provide certain benefits to the shareholder and their beneficiaries. However, it is important to ensure that the trust is set up properly and in compliance with applicable laws and regulations.

Question 11

A business corporation can be incorporated under either state law or federal law.

Accepted Answer

The answer of A business corporation can be incorporated under...

Question 12

A de jure corporation is not legal and cannot be recognized as a corporation because the incorporation process was defective.

Accepted Answer

A de jure corporation is a corporation that was properly incorporated according to the law. The term "de jure" means "by law." Therefore, a de jure corporation is legal and recognized as a corporation.

Question 13

Incorporators are required to sign the charter,deliver it to the proper state officials,and purchase a certain percentage of the initial stock offering.

Accepted Answer

Incorporators are required to sign the charter and deliver it to the proper state officials, but they are not required to purchase a certain percentage of the initial stock offering.

Question 14

A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that state.

Accepted Answer

A corporation must have a registered agent in the state of incorporation regardless of whether it maintains an office in that state. The registered agent is responsible for receiving legal and other important documents on behalf of the company.

Question 15

Owners of preferred stock typically have a preference in liquidation.

Accepted Answer

Preferred stockholders have a preference in liquidation over common stockholders, meaning they will receive payment before common stockholders in the event of a company's liquidation or bankruptcy.

Question 16

A corporation is not allowed to issue dividends to shareholders unless it is solvent.

Accepted Answer

When a corporation is insolvent, it means that it has more liabilities than assets and is unable to pay its debts. In this situation, the corporation must prioritize its creditors over shareholders, and therefore cannot issue dividends until the debts are settled.

Question 17

Terminating a corporation is a three-step process: dissolution,winding up,and termination.

Accepted Answer

Terminating a corporation typically involves a two-step process: dissolution and winding up. Termination is not a separate step but rather the end result of the winding-up process.

Question 18

Carey decided to incorporate her business under the name yStar Inc.Before yStar was incorporated,Carey signed a contract in the name of yStar,Inc.to have some office space remodeled.Which statement is correct?

Accepted Answer

A corporation is a separate legal entity and it only becomes liable on contracts and other obligations after it has been properly incorporated. Therefore, at the time Carey signed the contract, yStar was not yet incorporated and could not be held liable on the contract. However, yStar may still be able to adopt the contract and become liable if it chooses to do so.

Question 19

A corporate charter is filed with:

Accepted Answer

A corporate charter is typically filed with a state's Secretary of State office as this office is responsible for registering and keeping records of business entities operating within the state. While the Treasury and/or Revenue Division may also be involved in regulating certain aspects of corporate operations, they would not typically be the agency responsible for processing a corporate charter. The United States Department of Commerce generally does not handle the initial filing of corporate charters, although they may provide resources and support for businesses once they are operational.

Question 20

Under corporate law,a corporation that officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho" is too broad.A corporation's purpose must be more narrowly defined.

Accepted Answer

The answer of Under corporate law,a corporation that officially states...

Quiz 33: Life And Death Of A Corporation