Question 1

Where an investor is offered either common or preference shares in a corporation on otherwise equally satisfactory terms, the investor who seeks to have his or her voice heard in management will choose to invest in common shares.

Accepted Answer

Common shares typically carry voting rights, allowing the shareholder to participate in important decisions affecting the corporation. Preference shares, on the other hand, usually do not grant voting rights but offer preferential treatment in terms of dividends and/or liquidation. Therefore, an investor who wants a say in management would choose common shares.

Question 2

Preferred shares have no right to vote but will receive dividends before common shareholders.

Accepted Answer

Preferred shares typically have priority in receiving dividends over common shares, but they do not have voting rights.

Question 3

"Manufacturing" is an example of a distinctive element in a corporate name.

Accepted Answer

The answer of "Manufacturing" is an example of a distinctive...

Question 4

A corporation must have a number or a name, but not both.

Accepted Answer

A corporation can have both a name and a number as part of its legal identity. The name is used for branding and operational purposes, while a number (such as a corporate or registration number) is often assigned by government agencies for identification and administrative purposes.

Question 5

Shareholders and directors of a corporation both have personally limited liability as against the liabilities of the corporation, but shareholders have their liability even more limited than do the directors.

Accepted Answer

Shareholders generally have limited liability, meaning their personal assets are not at risk for the debts or liabilities of the corporation. Directors also have limited liability, but may potentially be held liable for certain actions or decisions they make on behalf of the corporation. However, shareholder liability is typically more limited than director liability.

Question 6

A business can incorporate either provincially or federally.

Accepted Answer

A business can choose to incorporate either provincially or federally in Canada.

Question 7

Common shares have no voting rights but will receive dividends before preferred shareholders.

Accepted Answer

Common shares typically have voting rights and may have a lower dividend priority compared to preferred shares.

Question 8

Shares represent a shareholders' ownership interest in a corporation.

Accepted Answer

Shares represent the ownership interest of a shareholder in a corporation, giving them certain rights and privileges such as voting rights and the right to receive dividends.

Question 9

Common shares have the right to vote and may receive dividends.

Accepted Answer

Common shares generally come with voting rights and the possibility of receiving dividends, although the amount and frequency of dividends may vary.

Question 10

"Manufacturing" is an example of a descriptive element in a corporate name.

Accepted Answer

"Manufacturing" is a word that describes the type of business that the company is involved in, making it a descriptive element in the corporate name.

Question 11

Incorporating documents set out the purpose of the business.

Accepted Answer

Incorporating documents, such as the articles of incorporation, typically outline the purpose of the business.

Question 12

A corporation is one of the most common business formations in Canada.

Accepted Answer

A corporation is indeed one of the most common business formations in Canada, alongside sole proprietorships and partnerships.

Question 13

A corporation wishing to do business in more than one province must register federally.

Accepted Answer

A corporation can register provincially in each province where it wishes to conduct business, or it can choose to register federally. However, registering federally does not exempt the corporation from also registering in each individual province where it conducts business.

Question 14

When choosing a specific name, for a corporation, it must contain elements that are distinctive and descriptive.

Accepted Answer

A corporation's name must be distinctive and descriptive to clearly identify its purpose and differentiate it from other companies.

Question 15

Shareholders have ownership in a corporation but not the business or assets of the corporation.

Accepted Answer

Shareholders have ownership in a corporation through the ownership of stock, but they do not own the actual business or assets of the corporation.

Question 16

Preferred shares have the right to vote and may receive dividends.

Accepted Answer

Preferred shares usually do not have voting rights, but they may receive dividends before common shareholders.

Question 17

Dividends are a method of distributing the profits earned by a corporation to shareholders.

Accepted Answer

Dividends are indeed a method of distributing the profits earned by a corporation to shareholders.

Question 18

A federal corporation has the right to carry on business on any province or territory.

Accepted Answer

This is true as per the Canadian Constitution, section 91(2).

Question 19

Shareholders have a limited role in the management of the corporation.

Accepted Answer

Shareholders have the power to elect the board of directors and vote on certain major decisions, but day-to-day management of the corporation is typically the responsibility of the executives and employees.

Question 20

Directors' priority is to act in the best interests of the shareholders.

Accepted Answer

The answer of Directors' priority is to act in the...

Quiz 10: Business Organization