Question 1

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?​

Accepted Answer

The answer of Guy is Hot Java Company's majority shareholder....

Question 2

Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders, they must approve​

Accepted Answer

Shareholders typically have the power to vote on the decision to conduct a merger. Deciding to pursue new business opportunities and negotiating a contract between management and labor are typically within the purview of the company's management, rather than the shareholders.

Question 3

Doris wants to go into business as eBeats to market a new fitness app. Organizational fees are required to form all of the following business organizations except ormal' except​

Accepted Answer

A sole proprietorship is the simplest and least expensive type of business organization to form, and it does not require any formal organizational fees. However, forming a corporation, limited partnership, or limited liability company typically involves filing paperwork with the state and paying fees to establish the business entity.

Question 4

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

Accepted Answer

Dividends are ordered by the firm's board of directors, which includes Ida, Jerzy, and Kit, as the directors of Liberty Convenience Stores, Inc. It is their responsibility to make decisions regarding the distribution of company profits as dividends to shareholders. Minority and majority shareholders do not have the authority to order dividends on their own.

Question 5

Fact Pattern 29-1
Ray is a shareholder of Small Biz Company (SBC). When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf.
-Refer to Fact Pattern 29-1. Any damages recovered by Ray's suit will go to

Accepted Answer

Any damages recovered by Ray's suit will go to the firm, SBC, as Ray filed the suit on the firm's behalf. Therefore, the damages will benefit SBC and not Ray individually.

Question 6

Fact Pattern 29-1
Ray is a shareholder of Small Biz Company (SBC). When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf.
-Refer to Fact Pattern 29-1. Ray's suit is a shareholder's

Accepted Answer

Ray is filing a suit on behalf of the company, which is known as a derivative suit. The other options are not applicable in this scenario as there is no indication of a breach of duty or negligence on the part of the directors.

Question 7

David wants to go into business as Explosive Bursts to make and market fireworks. When deciding which form of business organization would be most appropriate, David would normally take into account all of the following except

Accepted Answer

The forms of competitors' business organizations would not be a deciding factor when choosing which form of business organization to use for Explosive Bursts. The most important factors to consider are the liability of the owners, tax considerations, and the need for capital. Depending on David's personal preferences and business goals, he could consider a sole proprietorship, partnership, limited liability company (LLC), or corporation.

Question 8

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​

Accepted Answer

A shareholder will be considered to have a fiduciary duty to the corporation and its minority shareholders if the shareholder exercises de facto control over the corporation. This means that the shareholder has the power to exercise control over the corporation, even if they do not own a majority of the shares. The other options listed do not necessarily imply a fiduciary duty. The business judgment rule is a legal standard for reviewing the decisions of directors, not shareholders. Bringing a derivative suit and participating in a cumulative vote are both actions a shareholder can take, but they do not themselves create a fiduciary duty.

Question 9

Mitch is a director and officer of Numero Uno, Inc. Mitch makes a marketing decision that results in a dramatic decrease in profits for Numero Uno and its shareholders. The shareholders accuse Mitch of breaching his fiduciary duty to the corporation. What is Mitch's best defense against this accusation? Later, the Numero Uno board considers a resolution for the firm to compete with One-of-a-Kind Corporation. Mitch is a director and shareholder of One-of-a-Kind. What is Mitch's responsibility in this situation?​

Accepted Answer

The answer of Mitch is a director and officer of...

Question 10

Bea is a shareholder of Chocolate Confections Corporation. The right to inspect corporate books and records is

Accepted Answer

Shareholders generally have the right to inspect corporate books and records, but this right may be subject to some restrictions such as the purpose of the request and the manner of the inspection. Therefore, the correct answer is that Bea holds the right to inspect corporate books and records, but with some restrictions.

Question 11

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 liable for breach of​

Accepted Answer

The duty of loyalty requires directors to act in good faith and in the best interests of the company and its shareholders. Lewis made a profit using non-public information, which is a violation of this duty. Therefore, he is most likely liable for breach of duty of loyalty. The business judgment rule and duty of care are not applicable in this scenario.

Question 12

Shannon is an officer for Turista Shirts Corporation. Due to a bad business decision on Shannon's part, the company's sales decrease. Shannon is most likely liable for breach of​

Accepted Answer

The answer of Shannon is an officer for Turista Shirts...

Quiz 29: Corporations

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders, they must approve

Doris wants to go into business as eBeats to market a new fitness app. Organizational fees are required to form all of the following business organizations except ormal' except

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

Fact Pattern 29-1 Ray is a shareholder of Small Biz Company (SBC) . When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf. -Refer to Fact Pattern 29-1. Any damages recovered by Ray's suit will go to

Fact Pattern 29-1 Ray is a shareholder of Small Biz Company (SBC) . When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf. -Refer to Fact Pattern 29-1. Ray's suit is a shareholder's

David wants to go into business as Explosive Bursts to make and market fireworks. When deciding which form of business organization would be most appropriate, David would normally take into account all of the following except

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

Bea is a shareholder of Chocolate Confections Corporation. The right to inspect corporate books and records is

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 liable for breach of

Shannon is an officer for Turista Shirts Corporation. Due to a bad business decision on Shannon's part, the company's sales decrease. Shannon is most likely liable for breach of

Quiz 29: Corporations

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?​

Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders, they must approve​

Doris wants to go into business as eBeats to market a new fitness app. Organizational fees are required to form all of the following business organizations except ormal' except​

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

Fact Pattern 29-1 Ray is a shareholder of Small Biz Company (SBC) . When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf. -Refer to Fact Pattern 29-1. Any damages recovered by Ray's suit will go to

Fact Pattern 29-1 Ray is a shareholder of Small Biz Company (SBC) . When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf. -Refer to Fact Pattern 29-1. Ray's suit is a shareholder's

David wants to go into business as Explosive Bursts to make and market fireworks. When deciding which form of business organization would be most appropriate, David would normally take into account all of the following except

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​

Bea is a shareholder of Chocolate Confections Corporation. The right to inspect corporate books and records is

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 liable for breach of​

Shannon is an officer for Turista Shirts Corporation. Due to a bad business decision on Shannon's part, the company's sales decrease. Shannon is most likely liable for breach of​

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders, they must approve

Doris wants to go into business as eBeats to market a new fitness app. Organizational fees are required to form all of the following business organizations except ormal' except

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

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 liable for breach of

Shannon is an officer for Turista Shirts Corporation. Due to a bad business decision on Shannon's part, the company's sales decrease. Shannon is most likely liable for breach of