Question 1

As compared to a partnership, what are three major advantages of carrying on a business as a corporation?

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Question 2

Explain the concept of the preferred shareholder.

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Question 3

Florence has $100,000 to invest. She decides to invest in the common shares of a well known blue- chip company. As part owner, how would she expect to participate in the company and to benefit from her investment?

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Question 4

The attribute of negotiability of bond and share certificates has increased the problem of forged and stolen certificates. Explain.

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Question 5

Explain the principle enunciated in Salomon v. Salomon & Co. Ltd.

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Question 6

What capacity and powers does a corporation have in the eyes of the law?

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Question 7

Milton Brown is a business consultant and obtained confidential information about a publicly traded corporation which, if made public, would cause the stock to rise dramatically. Milton formed a private corporation with himself as the sole shareholder and director and had that corporation purchase stock in the publicly traded corporation. When the news which Milton was aware of became public the price of the publicly traded shares increased dramatically and the corporation Milton has formed sold its shareholdings at a substantial profit. Milton is subsequently charged with insider trading, that is, using confidential information for his own personal gain. His defense is that the gain was made by his corporation and not by himself and his corporation is a separate legal entity. Will Milton's defense be successful? Give the legal basis for your answer.

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Question 8

What is the doctrine of ultra vires in corporate law and what is its current affect across Canada?

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Question 9

Mario Black has, along with two others, formed a corporation to market specialized computer software. Each partner initially purchased ten common shares at $10 apiece-giving the corporation $300 in capital. The company requires an additional $25,000 to operate. Describe three different ways the corporation could acquire that $25,000 and give a brief reason why you would recommend or not recommend each of the ways.

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Question 10

What are two disadvantages of carrying on a business as a corporation?

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Question 11

The "charter" an unsuitable instrument for reflecting special arrangements and side agreements between shareholders? Explain.

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Question 12

Corporations may be private corporations or public corporations. What are the differences between a public corporation and a private corporation?

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Question 13

What does it mean to pierce the corporate veil? When can this be done?

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Question 14

Explain the general distinction between the capital of a corporation and indebtedness of a corporation? Who owns the capital of the corporation?

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Question 15

If you are a small, local, one- person business, can you incorporate under the federal CBCA (Canada Business Corporations Act)? Explain.

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Question 16

Explain the difference between the rights of a shareholder and a bondholder.

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Quiz 27: The Nature of a Corporation and Its Formation