Exam 25: The Nature of a Corporation and Its Formation

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?

Briefly describe a professional corporation (PC)and the main effect on a professional who incorporates either alone or together with other members as a PC.

The principle that a corporation has an existence separate from its shareholders is absolute and there are no exceptions.

Bond and share certificates in bearer form are considered to be negotiable instruments.The holder of such instruments,if acquired honestly,is said to have acquired them

John,who has a reputation for dishonesty,recently incorporated an investment company to protect himself from liability for his dishonest activities.John makes himself an employee of the company and fraudulently misrepresents an investment to a new customer who invests a large sum of money,which John pockets.A few days later the company goes bankrupt.In this situation,the investor

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

Albert is employed by a large company that manufactures aluminum siding.The company allows Albert to use its truck for deliveries and also for his personal use.The truck has the name of the company on it.One evening after the company has closed for business,Albert causes an accident while driving the truck and damages the car of a third party.In this situation

Bill and Ted decide to set up a small company to invest in real estate.Before incorporating they find a prime piece of real estate that is suitable for investment purposes.They want to buy the property through a limited company but have not as yet incorporated.They attend at a lawyer's office for purposes of filing articles of incorporation.The lawyer asks them what name they plan to use for the corporation.Bill immediately says "Bill and Ted's Excellent Investments Inc." The lawyer advises them that she will need some time to have the name approved through the appropriate government office.Bill tells the lawyer there is no time to wait for the name approval.In these circumstances Bill and Ted can

Which of the following is included in the articles of incorporation?

Jim incorporated his small business so that he would obtain limited liability on company indebtedness.But when he applied for a bank loan,the bank insisted that he give a personal guarantee for the loan made to the corporation.Has the incorporating of the business helped Jim as far as limiting his business liability?

Leaving aside certain mandatory requirements for federal corporations,what is the main consideration in deciding whether to incorporate federally or provincially?

Although the theory is that a private corporation provides the best protection from liability for its incorporators,why is this not always the case in practice?

Restrictions on share transfer can take many forms.The most common restrictions include all of the following EXCEPT

A and B incorporate a trucking company in which,of the 100 issued common shares,A holds 45 shares and B holds the rest.The company has a fleet of trucks valued at $200 000.In this case,the fleet of trucks is owned by

Luzzos Corp.is a closely held corporation where "The right to transfer shares needs to be restricted in some manner." This is most likely to be done by

In the articles of incorporation jurisdictions,the concept of authorized capital has been abolished.Now,what's important is

There is no practical difference between a limited liability partnership and a professional corporation.Explain.

When a corporation is liquidated,the first group of persons to be paid are the preferred creditors.

A shareholder who engages in a conflict of interest with a corporation in which the shareholder holds shares must

In rare circumstances,courts are prepared to disregard the separate existence of a corporation and "lift the veil" to impose liabilities on those who control it.Which of the following is NOT one of the conditions that must be met for the court to impose liability on an individual?