Exam 26: The Corporate Entity

In terms of the steps in the incorporation process,which of the following occurs after the charter is issued?

A promoter can escape personal liability on a preformation contract by having the corporation and the third party execute an adoption.

The main issue in the William Stewart v.R.A.Eberts,Company,Inc.case,detailed in A New Classic Case,was whether the corporate veil should be pierced and hold the shareholders owners liable for ignoring the terms of a contract that had been made several years earlier.

Grant wants to know the date of the annual shareholders meeting of Big Co.Which document will contain this information?

Undercapitalization will be considered convincing evidence that the corporate owners intended to use the corporate façade to escape liability.

A joint venture is an IRS-created taxable entity that allows limited liability for its owners.

Alan sells merchandise on credit to ABC Co.ABC fails to pay for the merchandise.Alan later discovers that ABC is not a corporation,but a partnership consisting of Alice,Betty,and Charles.Which legal doctrine might shield Alice,Betty,and Charles from personal liability?

________ refer(s)to the written application to the state for permission to form a limited liability company.

Which of the following is the official authorization of a corporation to do business in a state?

Wong and Burton owned several hundred shares of preferred stock in Classic,Inc.For three years,neither were paid dividends.In the fourth year,Classic paid dividends to both shareholders.Wong also received payment for dividends from the preceding three years.Burton did not receive any dividends from those years.Identify the type of stock owned by each shareholder.

Outstanding shares of stock of the Cattleman Corp.are held by seven shareholders,four from the Tate family,and 3 from the Anchustegui family.The Cattleman Corp.cannot be designated a close corporation because the shareholders are not from the same family.

Global Corp.is incorporated in Mexico and wants to do business in Ohio.Discuss the legal status of Global in relationship to Ohio and what Global must do to qualify to do business in Ohio.

Tom and Jim from JT Co.plan to engage in the building construction business.They obtain contracts in the name of JT Co. ,but fail to keep separate bank accounts for JT Co.funds,placing JT Co.money in their personal bank accounts.In addition,much of the JT Co.equipment is titled in the name of Tom and Jim.JT Co.breaches a construction contract with Titan Co.Discuss if Tom and Jim might have personal liability for this breach of contract.

Limited liability means that shareholders can be held personally liable for the debts of the corporation,but will not lose their capital investment.

Vivian,owner of Titan Corp. ,uses Titan Corp.as a way to order merchandise for her personal benefit and fails to pay for the merchandise.Creditors who have shipped merchandise to Titan want to sue Vivian personally.Which of the following legal doctrines would allow a personal suit against Vivian?

Jon,a promoter,is concerned about being personally liable on preincorporation contracts he signs on behalf of corporations that have not yet been formed.Discuss what Jon may lawfully do to avoid this liability.

Patricia holds 150 shares of common stock in a large corporation.Patricia:

Jan signs the articles of incorporation for a corporation being formed,and Tom wants to locate possible investors in the new corporation.Jan is a(n):

A(n)________ is one that has been formed properly by incorporators who followed all of the steps outlined by the state incorporation statute.

In the new Classic Case,Burwell v.Hobby Lobby,the Supreme Court concludes that the term person in the statute is meant to protect corporate "persons" only because the real protection flows to the people behind that corporate veil.