Deck 43: Corporate Formation

Question 1

Because nonprofit corporations have a more restricted range of powers than business corporations,actions not authorized by the charters of nonprofit corporations are more likely to be found ultra vires.

Answer 1

True

Question 2

Stock that is reacquired by the corporation that issued it is commonly called "boomerang" stock.

Answer 2

False

Question 3

B-Corporations are for-profit corporations that create public benefits while providing economic returns to their investors.

Answer 3

True

Question 4

From the perspective of Texas,a California corporation is considered a foreign corporation.

Question 5

A state's police power may create any kind of corporation for any purpose.

Question 6

SuChapter S corporations have the benefits of limited liability as in partnerships and are taxed as corporations.

Question 7

Bylaws are typically adopted by the shareholders of a corporation and must be filed with the Secretary of State.

Question 8

Bylaws that conflict with state law are valid,but unenforceable.

Question 9

Corporations come into existence as the result of the activities of one or more persons known as promoters.

Question 10

In order to qualify as a close corporation,the majority of shares must be held by one person.

Question 11

When a corporation acts in excess of or beyond the scope of its powers,the corporation's act is described as "ultra vires."

Question 12

Debts of a corporation are not the personal debts of the corporate officers and shareholders.

Question 13

For the purpose of suing a corporation in federal court,the corporation is a citizen in the state where it has its principal place of business.

Question 14

An eleemosynary corporation is one that is organized for charitable or benevolent purposes.

Question 15

Shareholders are absolutely immune from corporate liabilities.

Question 16

A corporation may properly exist without a name.

Question 17

Private corporations are often called public in business circles when their stock is sold to the public.

Question 18

The corporate form of business continues regardless of changes in stock ownership.

Question 19

A corporation is a legal person created by governmental action.

Question 20

A corporation may exercise its power to borrow money by issuing bonds.

Question 21

"Conglomerate" describes the relationship of equal companies engaged in similar fields of business activity.

Question 22

Under the RMBCA,corporate existence begins when the articles of incorporation are filed with the secretary of state.

Question 23

If the proper procedure for incorporation has been followed,the corporation has a legal right to exist and is called a(n): ______.

A) corporation by estoppel
B) de jure corporation.
C) de facto corporation.
D) ultra vires corporation.

Question 24

A de facto corporation is not accorded legal recognition due to some recognized defect in its incorporation.

Question 25

Because ______ corporations have a more restricted range of powers than business corporations,actions not authorized by their corporate charters are more likely to be found ______.

A) nonprofit, ultra vires.
B) subchapter S, illegal.
C) a benefit, ultra vires
D) professional, illegal.

Question 26

Which of the following is a correct statement concerning the incorporation process?

A) Each application for incorporation is reviewed by the appropriate state legislature.
B) The incorporation process is essentially a matter of filing the correct papers and fees with the designated government official.
C) Most applications for incorporation are rejected.
D) Incorporator(s)are never required to give public notice of the intent to form a corporation.

Question 27

The Revised Model Business Corporation Act: ______.

A) has eliminated the certificate of incorporation.
B) has made the process of incorporation more difficult.
C) states that corporate existence begins when the secretary of state issues a certificate of incorporation.
D) has eliminated the need for articles of incorporation.

Question 28

What is not a correct statement concerning promoters?

A) Promoters are generally active before the corporation is formed.
B) Two (2)or more promoters are required to form a corporation.
C) Promoters are fiduciaries with respect to the corporation and its shareholders.
D) Promoters are liable for any torts that they commit while promoting the corporation.

Question 29

In a merger or consolidation,the surviving corporation generally succeeds to all the rights and property of the predecessor.

Question 30

A corporation is ______ on a contract made by its ______ for its benefit unless the corporation accepts the contract's benefits.

A) liable, promoters
B) not liable, promoters.
C) not liable, CEO.
D) ultra vires, promoters.

Question 31

If two firms consolidate,the new corporation usually succeeds to the rights,powers and immunities of its component parts.

Question 32

A public corporation is: ______.

A) also known as a public utility.
B) organized for charitable and benevolent purposes or for purposes of finance, industry, and commerce.
C) established for governmental purposes and for the administration of public affairs.
D) traded on the Wall Street Stock Exchange.

Question 33

Corporations may avoid liability for the obligations of a predecessor corporation by treating a consolidation or merger as a sale of assets.

Question 34

Under recent statutes,the articles of incorporation must contain all of the following except the: ______.

A) name of the corporation.
B) name and address of each incorporator.
C) purpose for which the corporation is organized.
D) number of shares the corporation is authorized to issue.

Question 35

A merger is subject to antitrust law,while a corporate consolidation is not.

Question 36

A nonprofit corporation can include all the following except: ______.

A) Eleemosynary corporations.
B) Charitable or benevolent purposes.
C) Hospitals and universities.
D) Benefit corporations.

Question 37

A corporation may be an incorporator of another corporation.

Question 38

A holder of a single share of stock who objects to a merger has the power to stop the merger.

Question 39

A corporation may be judicially dissolved when its management is deadlocked and the deadlock cannot be broken by the shareholders.

Question 40

A corporation that does business in the state in which it was created is called a(n): ______.

A) domestic corporation.
B) foreign corporation.
C) alien corporation.
D) home corporation.

Question 41

An enterprise that conducts business following a merger or consolidation succeeds to all of the following except: ______.

A) all of the rights of the predecessor.
B) all of the property of the predecessor.
C) all of the debts and liabilities of the predecessor.
D) all of the management team of the predecessor.

Question 42

If there is a consolidation of corporations A,B,and C: ______.

A) corporations B and C are absorbed into corporation A, and corporation A continues to exist.
B) all of the corporations continue to exist.
C) all corporations continue to exist, but corporation A owns all of the stock of corporations B and C.
D) corporations A, B, and C cease to exist, and a new corporation with the property and assets of the old corporations comes into being.

Question 43

In states that have adopted the Revised Model Business Corporation Act,the secretary of state may commence proceedings to administratively dissolve a corporation under all but which of the following circumstances?

A) the corporation adopts more than one business purpose.
B) the corporation does not pay franchise taxes within sixty (60)days after they are due.
C) the corporation does not file its annual report within sixty (60)days after it is due.
D) the corporation is without a registered agent or registered office for sixty (60)days or more.

Question 44

After a corporate charter has been forfeited,the owners and officers of the dissolved corporation are __________ shielded from personal liability by using the corporate name when making contracts.

A) still
B) conditionally
C) not
D) retroactively

Question 45

In a merger situation,what is the right of a dissenting shareholder?

A) to block the merger until satisfied regarding its terms.
B) to have their shares appraised and purchased by the corporation.
C) to enforce a consolidation instead of a merger.
D) dissenting shareholders have no rights with respect to a merger.

Question 46

A successor enterprise is not subject to the contract obligations of the former business if: ______.

A) one corporation is absorbed by another through merger.
B) a corporation merely purchases the assets of another business.
C) two or more corporations consolidate.
D) there is a merger by estoppel.

Question 47

When two corporations merge: ______.

A) their separate existences cease, and a new corporation is formed.
B) one of the corporations absorbs the other.
C) each corporation's stockholders keep their original shares of stock
D) a new charter is needed.

Question 48

_________ of a corporation may occur when management is deadlocked and the deadlock cannot be broken by the shareholders.

A) Bankruptcy
B) Consolidation
C) Reinstatement
D) Judicial dissolution

Question 49

Where a corporation is properly formed,it is called a corporation: ______.

A) di giorno.
B) de facto.
C) de jure.
D) by estoppel.

Question 50

The Miller family,who operates a musical instrument manufacturing concern,has decided to incorporate.The three (3)members of the Miller family,Mary,Mark and Sue,would like to become a corporation and obtain limited liability; however,taxation at the corporate level would be very costly for them.If possible,Mary Miller would rather be taxed as a partnership.Mark Miller is worried about the additional paperwork and meetings that incorporation would surely bring.Sue Miller does not want a large board of directors to be formed.Sue fears that the board would somehow detract from the family goals and orientation the business has always enjoyed.In light of these concerns,is there a corporate form that would better suit the Miller family?

Question 51

Osvaldo was attempting to promote a corporation to be named Xavier,Inc.In that capacity,Osvaldo signed a lease in the name of Xavier and ordered furniture in the company's name.The corporation was in fact formed and the board of directors,knowing of the actions of Osvaldo,moved into the space Osvaldo had leased.Upon delivery and inspection of the furniture Osvaldo ordered,numerous defects were discovered,and the furniture was accordingly rejected and returned to the seller.The corporation was not successful,and as a result,the rent was not paid.Osvaldo was sued for the unpaid rent and for breach of contract concerning the furniture.The corporation was sued on the same grounds.Decide the cases against Osvaldo and Xavier,Inc.

Question 52

If a wire manufacturing company owned amill to produce the metal used in making the wire,this relationship between the companies would be best be described as: ______.

A) a conglomerate.
B) a holding company.
C) an integrated industry.
D) a merger.