Question 1

What is not a correct statement concerning promoters?

Accepted Answer

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 2

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

Accepted Answer

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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 5

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

Accepted Answer

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

Question 6

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.

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A corporation may be an incorporator of another corporation.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The Revised Model Business Corporation Act: ______.

Accepted Answer

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 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 43: Corporate Formation

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Revised Model Business Corporation Act: ______.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

What is not a correct statement concerning promoters?

Correct AnswerverifiedShow Answer

A corporation may be an incorporator of another corporation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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