Question 1

"Bonds" and "debentures" are terms used interchangeably to refer to financing methods.How is it possible to understand precisely which type of financing either instrument actually pertains to?

Accepted Answer

The best way to understand whether an instrument is a bond or debenture is by reading the document itself. Each issuing company may use its own language to describe the security, and the only definitive way to identify it is to read the document itself.

Question 2

Nathaniel has been asked to obtain a NUANS report.What is the role of the NUANS report?

Accepted Answer

The NUANS report provides a newly upgraded automated name search of proposed conflicts in business names and trademarks. Therefore, option D is the correct answer. Option A and B are not completely accurate, and option C is missing the word "newly updated".

Question 3

In closely held corporations,which of the following would strongly support shareholders maintaining their business values and goals?

Accepted Answer

The answer of In closely held corporations,which of the following...

Question 4

Remmie Ltd.owns all of the Class B shares in Rex Holdings Inc.,giving it 40 percent of the equity and 82 percent of the voting power.Remmie is able to exert control over Rex through which of the following?

Accepted Answer

The answer of Remmie Ltd.owns all of the Class B...

Question 5

Which of the following is a distinguishing characteristic of a Notice of Directors?

Accepted Answer

The answer of Which of the following is a distinguishing...

Question 6

In a business law context,what are the terms "bonds" and "debentures" synonymous with?

Accepted Answer

The answer of In a business law context,what are the...

Question 7

So long as the definition of a private corporation is met,the entity is generally exempt from most of the obligations that are requirements set out under which of the following?

Accepted Answer

Securities legislation typically regulates the issuance and trading of securities, which a private corporation may not engage in. Therefore, a private corporation may be exempt from most obligations under securities legislation. Choices A, B, and D relate to corporate law and obligations that a private corporation would still need to comply with.

Question 8

In August,Martina decided to seek preferable tax status for her business income.She negotiated the novation of all contractual obligations acquired since November with each of her sole proprietorship's customers.Novation will allow those obligations to rest with her new corporate entity.In order to realize the tax benefit retroactively,which of the following did Martina require?

Accepted Answer

To retroactively seek preferable tax status, Martina would need a shelf company with an incorporation date pre-dating the earliest of her contracts. This would allow the contracts to be novated to the new corporate entity, while still recognizing the original effective date. A novation ruling from Canada Revenue Agency would not be necessary for this process. A numbered company that was active on the date of the earliest contract would not have the necessary pre-dated incorporation status. A novation ruling for the transfer of earnings would also not be necessary as the earnings would follow the obligations that were novated.

Question 9

Sam recently assumed an equity position in a corporation rather than continuing as one of its unsecured creditors.Which of the following would the corporation's lawyer most likely indicate Sam has exercised?

Accepted Answer

Sam has likely exercised the conversion right on a convertible debenture, which allows him to convert his debt position into equity in the corporation.

Question 10

A court has been asked to answer profound questions raised in a lawsuit regarding the alleged ability of empire builders to readily defraud investors and shareholders.Which of the following would the presiding judge most likely have to develop a working knowledge of?

Accepted Answer

The judge would need to understand the corporations' governance structures to assess how empire builders might defraud investors and shareholders, as governance structures dictate how decisions are made and how oversight is conducted within a corporation.

Question 11

Amber has received a lucrative offer to purchase her shares in a closely held corporation.She is required to give her fellow shareholders an opportunity to acquire her shares at the same price offered by the outsider.Why is Amber required to do so?

Accepted Answer

The requirement for Amber to offer her fellow shareholders an opportunity to purchase her shares at the same price offered by the outsider is likely due to a shareholders' agreement that includes a right of first refusal provision. This provision gives existing shareholders the option to purchase shares before they are sold to an outside party.

Question 12

With respect to completing incorporating documents,which of the following provisions would most strongly support Amanda's intention to incorporate a private company?

Accepted Answer

The answer of With respect to completing incorporating documents,which of...

Question 13

Which of the following is the reason given in the text for the U.S.Supreme Court's agreement to review Lord Black's white collar crime convictions?

Accepted Answer

The text explicitly states that the reason for the U.S. Supreme Court to agree to review Lord Black's convictions is because the issue of "deprivation of honest services" by corporate managers is not settled as a criminal matter.

Question 14

Daenna resides in Manitoba and is creating a new business entity.She has not settled on a name.She does intend to carry on business in the Western provinces and will be importing goods from Scandinavian countries in the near term.Which of the following will most likely accommodate Daenna's business needs and expectations,as well as legislative requirements?

Accepted Answer

A numbered corporation like "36993636 Canada Corp." allows Daenna to operate across provinces and import goods, meeting legislative requirements for a federal business entity.

Question 15

Why are shareholders required to hold a meeting within the first 18 months of the date of incorporation?

Accepted Answer

This initial meeting is crucial for replacing the first directors, who were likely appointed at the time of incorporation, with directors elected by the shareholders. These newly elected directors will serve until the next annual meeting, where shareholders have the opportunity to elect directors for the upcoming term. This process ensures that the corporation is governed by individuals who have the confidence and support of its shareholders from the outset.

Question 16

Which of the following is considered to be an added advantage that flows to a private corporation?

Accepted Answer

Private corporations in Canada benefit from a reduced tax rate on the first $400,000 of business income due to the small business deduction.

Question 17

Tammel's father established and trademarked his McDonalds Drive Inn business in 1962.He passed its ownership to her when he retired.The McDonalds franchise and its golden arches came into existence 20 or so years later.Eventually,a McDonalds franchise opened in her small city.Tammel was approached to discuss the legalities of the confusing business names.As a result of this unintentional conflict,which of the following would be the most favourable and likely outcome for Tammel and her business?

Accepted Answer

Tammel may be compensated for having to re-establish her corporate identity due to the confusion caused by the similar business names, as she had established her business before the McDonald's franchise became widely known.

Question 18

A single purpose document,used to facilitate formal communications with a corporate entity,is consistently described in each provincial jurisdiction as which of the following?

Accepted Answer

The "Notice of Registered Office" is a formal document used to communicate the official address of a corporation, which is required for legal and formal communications in each provincial jurisdiction.

Question 19

Depending on jurisdiction,the rules governing the day-to-day operations of a corporation incorporated anywhere in Canada could typically be set out in which of the following documents?

Accepted Answer

In Canada, the rules governing a corporation's operations are typically set out in the articles and bylaws. The articles of association are not commonly used in Canada, but rather in other jurisdictions like the UK.

Question 20

Armand,his two brothers,and each of their wives,own shares in Tri-Bro Inc.,a debt-free,well-financed corporation.How is it possible for the corporation to be well financed without borrowing capital?

Accepted Answer

Equity financing involves raising capital through the sale of shares, which does not require borrowing and thus keeps the corporation debt-free.

Quiz 15: The Corporate Form: Organizational Matters