Question 1

Preemptive rights are

Accepted Answer

A)  not legal in the majority of states.
B)  designed to prevent dilution of a shareholder's ownership in the company.
C)  required to be offered to shareholders by the Model Act.
D)  designed to indemnify managers who act in good faith. B

Question 2

A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that state.

Accepted Answer

A) True 
 B)False

Question 3

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans.The executives

Accepted Answer

A)  cannot sell that many shares unless they were authorized initially in the corporate charter.
B)  can sell as many shares as the market will bear.
C)  are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee.
D)  can sell the shares only if the shares have a par value which is close to the current market price.

Question 4

Mike is planning on incorporating his business in the state of Delaware.Which of the following regarding the name of Mike's business is TRUE?

Accepted Answer

A)  He will be able to use the words "Association" or "Institute" in his company name.
B)  He will not be able to use abbreviations (such as Inc. or Corp.)  in his company name.
C)  His company name will not have to include one of the following words: Corporation, Incorporated, Company or Limited.
D)  His company name can be the same as another corporation that already exists in Delaware.

Question 5

Isabel,Wesley,Gina,and Lucas worked together intensively to form and become the only shareholders of a corporation that is environmentally conscious.Is there anything they can do to avoid having shares of stock in their company sold to someone who does not share their vision for the environment?

Accepted Answer

Yes,they can sign a shareholder agreement that grants a right of first refusal for their company's stock.Typically with such an agreement,if a shareholder wants to sell his stock,he must first offer it to the company at the same price that the outsider has offered.If,after 30 days,the company has not agreed to buy the stock,he must then offer it to the other shareholders.Only if they also refuse to buy it within 30 days can he sell it to an outsider at the same price that he offered to the company and shareholders.

Question 6

A de jure corporation is not legal and cannot be recognized as a corporation because the incorporation process was defective.

Accepted Answer

A) True 
 B)False

Question 7

If a party enters into a contract believing in good faith that the corporation exists,he cannot later take advantage of the fact that it does not.

Accepted Answer

A) True 
 B)False

Question 8

MegaCorp occasionally sells products in Michigan.It does not have an office in that state and does not advertise in Michigan.The company's marketing representatives are based in New York but do travel to Michigan once a year to attend a trade show.Which statement is correct?

Accepted Answer

A)  MegaCorp must register in Michigan because its sales representatives attend a trade show in Michigan.
B)  MegaCorp is not required to register in Michigan because it does not have an ongoing presence in Michigan.
C)  MegaCorp must register in Michigan because its actions qualify as doing business.
D)  Whether MegaCorp has to register in Michigan depends on where its shareholders reside. B

Question 9

Under corporate law,a corporation that officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho" is too broad.A corporation's purpose must be more narrowly defined.

Accepted Answer

A) True 
 B)False

Question 10

In Delaware,lawsuits involving corporations are tried in a special court called

Accepted Answer

A)  corporate court.
B)  CEO's court.
C)  common court.
D)  chancery court.

Question 11

Denise is a promoter for a proposed corporation,EVR-Young Corp.As promoter,she signed a three-year lease to rent office space in an office park.She signed her name and indicated below her signature she is signing as "promoter for EVR-Young Corp.,a company yet to be incorporated."EVR-Young is never incorporated.The lessor believes that Denise is personally liable for any damages it will sustain as a result of the three-year lease having to be breached.Is Denise personally liable? Explain.

Accepted Answer

Since Denise signed the contract as a pr...

Question 12

What term identifies stock that has been authorized and sold?

Accepted Answer

A)  authorized and paid stock
B)  outstanding stock
C)  treasury stock
D)  authorized and unissued stock

Question 13

Discuss how a corporation is terminated.

Accepted Answer

Ordinarily,terminating a corporation is ...

Question 14

What is an exculpatory clause?

Accepted Answer

A)  A requirement that the company pay the legal fees of directors who are sued for actions taken on behalf of the company
B)  A provision that if a party enters into a contract believing in good faith that the corporation exists, he cannot later take advantage of the fact that it does not
C)  A requirement that a corporation cannot undertake any transaction unless the charter permits it
D)  A provision that protects directors from personal liability to the corporation and its shareholders

Question 15

Identify four circumstances that might persuade a court to pierce the corporate veil.

Accepted Answer

Courts generally pierce the corporate ve...

Question 16

Under most state statutes,a corporation may

Accepted Answer

A)  include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith.
B)  include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation.
C)  not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties.
D)  not include in its charter any provisions regarding indemnification of directors.

Question 17

MegaCorp is incorporated in the state of Delaware and is registered only in Delaware.Jolene purchased a MegaCorp product from a company's sales representative following a presentation in Michigan.Jolene was seriously injured by the product in Michigan.Under the Model Act,if Jolene sues in Michigan,can MegaCorp defend the suit there?

Accepted Answer

A)  MegaCorp may only defend against a lawsuit in Michigan if it first registers by paying back fees, taxes, and penalties.
B)  Yes, MegaCorp can bring or defend against a lawsuit in any state regardless of whether the corporation is registered to business in that state.
C)  Yes, MegaCorp can defend against a lawsuit in Michigan regardless of whether MegaCorp is registered to do business in that state.
D)  No. Jolene must sue and MegaCorp may defend a lawsuit only in Delaware.

Question 18

Corporate stock can be divided into categories called ________,which can be further divided into ________.

Accepted Answer

A)  authorized shares, classes
B)  classes, series
C)  equity, assets
D)  debentures, classes

Question 19

What are some of the advantages for a business to incorporate in Delaware?

Accepted Answer

Delaware offers corporations several adv...

Question 20

Laurie is incorporating her business.Laurie's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie

Accepted Answer

A)  must incorporate the business in Wisconsin, the home state.
B)  must incorporate the business in Wisconsin, California, Michigan, Pennsylvania and Virginia.
C)  must incorporate in Delaware.
D)  can incorporate the business in any state.

Exam 33: Life and Death of a Corporation

Preemptive rights are

Correct Answer
verified
B

A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that state.

Correct Answer
verified

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans.The executives

Correct Answer
verified

Mike is planning on incorporating his business in the state of Delaware.Which of the following regarding the name of Mike's business is TRUE?

Correct Answer
verified

Isabel,Wesley,Gina,and Lucas worked together intensively to form and become the only shareholders of a corporation that is environmentally conscious.Is there anything they can do to avoid having shares of stock in their company sold to someone who does not share their vision for the environment?

A de jure corporation is not legal and cannot be recognized as a corporation because the incorporation process was defective.

Correct Answer
verified

If a party enters into a contract believing in good faith that the corporation exists,he cannot later take advantage of the fact that it does not.

Correct Answer
verified

MegaCorp occasionally sells products in Michigan.It does not have an office in that state and does not advertise in Michigan.The company's marketing representatives are based in New York but do travel to Michigan once a year to attend a trade show.Which statement is correct?

Correct Answer
verified
B

Under corporate law,a corporation that officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho" is too broad.A corporation's purpose must be more narrowly defined.

Correct Answer
verified

In Delaware,lawsuits involving corporations are tried in a special court called

Correct Answer
verified

Correct Answer
verified
Since Denise signed the contract as a pr...
View Answer

What term identifies stock that has been authorized and sold?

Correct Answer
verified

Discuss how a corporation is terminated.

Correct Answer
verified
Ordinarily,terminating a corporation is ...
View Answer

What is an exculpatory clause?

Correct Answer
verified

Identify four circumstances that might persuade a court to pierce the corporate veil.

Correct Answer
verified
Courts generally pierce the corporate ve...
View Answer

Under most state statutes,a corporation may

Correct Answer
verified

Correct Answer
verified

Corporate stock can be divided into categories called ,which can be further divided into .

Correct Answer
verified

What are some of the advantages for a business to incorporate in Delaware?

Correct Answer
verified
Delaware offers corporations several adv...
View Answer

Laurie is incorporating her business.Laurie's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie

Correct Answer
verified

Exam 33: Life and Death of a Corporation

Preemptive rights are

Correct AnswerverifiedB

A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that state.

Correct AnswerverifiedShow Answer

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans.The executives

Correct AnswerverifiedShow Answer

Mike is planning on incorporating his business in the state of Delaware.Which of the following regarding the name of Mike's business is TRUE?

Correct AnswerverifiedShow Answer

Isabel,Wesley,Gina,and Lucas worked together intensively to form and become the only shareholders of a corporation that is environmentally conscious.Is there anything they can do to avoid having shares of stock in their company sold to someone who does not share their vision for the environment?

A de jure corporation is not legal and cannot be recognized as a corporation because the incorporation process was defective.

Correct AnswerverifiedShow Answer

If a party enters into a contract believing in good faith that the corporation exists,he cannot later take advantage of the fact that it does not.

Correct AnswerverifiedShow Answer

MegaCorp occasionally sells products in Michigan.It does not have an office in that state and does not advertise in Michigan.The company's marketing representatives are based in New York but do travel to Michigan once a year to attend a trade show.Which statement is correct?

Correct AnswerverifiedB

Under corporate law,a corporation that officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho" is too broad.A corporation's purpose must be more narrowly defined.

Correct AnswerverifiedShow Answer

In Delaware,lawsuits involving corporations are tried in a special court called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSince Denise signed the contract as a pr...View AnswerShow Answer

What term identifies stock that has been authorized and sold?

Correct AnswerverifiedShow Answer

Discuss how a corporation is terminated.

Correct AnswerverifiedOrdinarily,terminating a corporation is ...View AnswerShow Answer

What is an exculpatory clause?

Correct AnswerverifiedShow Answer

Identify four circumstances that might persuade a court to pierce the corporate veil.

Correct AnswerverifiedCourts generally pierce the corporate ve...View AnswerShow Answer

Under most state statutes,a corporation may

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Corporate stock can be divided into categories called ________,which can be further divided into ________.

Correct AnswerverifiedShow Answer

What are some of the advantages for a business to incorporate in Delaware?

Correct AnswerverifiedDelaware offers corporations several adv...View AnswerShow Answer

Laurie is incorporating her business.Laurie's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie

Correct AnswerverifiedShow Answer

Correct Answer
verified
B

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B

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Correct Answer
verified
Since Denise signed the contract as a pr...
View Answer

Correct Answer
verified

Correct Answer
verified
Ordinarily,terminating a corporation is ...
View Answer

Correct Answer
verified

Correct Answer
verified
Courts generally pierce the corporate ve...
View Answer

Correct Answer
verified

Correct Answer
verified

Corporate stock can be divided into categories called ,which can be further divided into .

Correct Answer
verified

Correct Answer
verified
Delaware offers corporations several adv...
View Answer

Correct Answer
verified