Question 1

Pamela is a corporate promoter for Nulla Corporation,a corporation yet to be formed.Pamela determines that Nulla will need to lease a building in which to conduct its business.Pamela owns an office building that is suitable for Nulla.What should Pamela do if she wants to make a contract for Nulla to lease the building from her?

Accepted Answer

The answer of Pamela is a corporate promoter for Nulla...

Question 2

Short-term certificated options that are usually transferable are referred to as:

Accepted Answer

Rights are short-term certificated options that are usually transferable.

Question 3

When close corporation shareholders want to ensure that there is a market for their shares upon their deaths,they should use a:

Accepted Answer

When close corporation shareholders want to ensure that there is a market for their shares upon their deaths,they should use a buy-and-sell agreement.

Question 4

ABC is a nonprofit corporation formed by Alex.As its promoter,Alex made a few contracts with Johnsons Inc.The following year,Alex formed another for-profit company.Meanwhile,Johnsons Inc. ,claimed that Alex has not honored the contracts he made with them as promoter of ABC.Is Alex liable for those contracts? If not,what remedies are available for Johnsons Inc.?

Accepted Answer

The answer of ABC is a nonprofit corporation formed by...

Question 5

The board of directors of Laylow Corporation issued 1,000 shares representing 10 percent of the corporation to Don in exchange for an unsecured promissory note to pay Laylow $50,000 within the next 20 years.Don is the son of Charles,owner of 70 percent of the shares of the corporation.The total book value of the corporation at the time Laylow issued the shares was $5,000,000.Alan and Bob,owners of 20 percent of the total shares,discovered the transaction one month after it occurred.Alan and Bob sued Don on behalf of Laylow Corporation seeking to invalidate the transaction.Should the court invalidate it? Discuss.

Accepted Answer

The answer of The board of directors of Laylow Corporation...

Question 6

What is the term for an agreement that makes the shareholder sell his shares back to the corporation at a price determined in the agreement and binds the corporation to purchase the shares?

Accepted Answer

A Buy and sell agreement will bind the shareholder to sell the shares to the corporation and bind the corporation into purchasing the shares.

Question 7

Several states' constitutions place stricter limits than the MBCA on permissible considerations for issuance of common shares by corporations.Which of the following considerations is permissible under the MBCA but not permissible by such state constitutions?

Accepted Answer

Several states' constitutions place stricter limits than the MBCA on permissible considerations for issuance of common shares by corporations.They provide that shares may be issued only for money paid to the corporation,labor done for the corporation,or property actually received by the corporation.As such,a gratuitous promise to contribute $35,000 cash to the corporation will not qualify as a permissible consideration for issuance of common shares under such a rule.

Question 8

Pedro is a corporate promoter for Nolo Corporation,a corporation yet to be formed.Pedro spends $40,000 of his own money and devotes 400 hours to bring Nolo and its business into existence.When Nolo is incorporated,Pedro asks the board of directors to issue some of its common shares to Pedro as compensation for his expenses and services.Would such an issuance be legal?

Accepted Answer

The answer of Pedro is a corporate promoter for Nolo...

Question 9

Andrew decides to incorporate his sole proprietorship under the name Sampras Entertainment Corporation.He tells his lawyer to file articles of incorporation,and the lawyer says that the filing will be done on July 1.On June 25,Andrew makes a contract with Wimbledon Corporation.Andrew signs the contract in the name of Sampras Entertainment Corporation only.On July 1,the secretary of state files the articles.Under the MBCA,is Andrew liable on the contract with Wimbledon?

Accepted Answer

The answer of Andrew decides to incorporate his sole proprietorship...

Question 10

What article of the Uniform Commercial Code (UCC)governs the issuance of stocks by a corporation?

Accepted Answer

Uniform Commercial Code Article 8 governs the issuance of securities including the shares given by a corporation.

Quiz 42: Organization and Financial Structure of Corporations

Short-term certificated options that are usually transferable are referred to as:

When close corporation shareholders want to ensure that there is a market for their shares upon their deaths,they should use a:

What is the term for an agreement that makes the shareholder sell his shares back to the corporation at a price determined in the agreement and binds the corporation to purchase the shares?

Several states' constitutions place stricter limits than the MBCA on permissible considerations for issuance of common shares by corporations.Which of the following considerations is permissible under the MBCA but not permissible by such state constitutions?

What article of the Uniform Commercial Code (UCC) governs the issuance of stocks by a corporation?