Question 1

When a corporation issues more than one class of shares, the specific rights of each class, does not have to be set out in the constitution.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  giving the right of first refusal to the existing shareholders. 
B)  placing the restriction outside the corporate charter. 
C)  giving a large shareholder the right of veto. 
D)  required consent of the board of directors. 
E)  placing the restriction in a by- law. 
A)  giving the right of first refusal to the existing shareholders. 
B)  placing the restriction outside the corporate charter. 
C)  giving a large shareholder the right of veto. 
D)  required consent of the board of directors. 
E)  placing the restriction in a by- law.

Question 3

Which of the following is not true about a corporation?

Accepted Answer

A)  A corporation is a person in law. 
B)  The corporation exists on the same principles as a partnership. 
C)  The primary advantage of incorporation is limited liability. 
D)  A corporation has perpetual existence. 
E)  A corporation has limited liability. 
A)  A corporation is a person in law. 
B)  The corporation exists on the same principles as a partnership. 
C)  The primary advantage of incorporation is limited liability. 
D)  A corporation has perpetual existence. 
E)  A corporation has limited liability.

Question 4

A professional corporation is a special type of corporation that may be established by members of a profession.

Accepted Answer

A) True 
 B)False

Question 5

What does it mean to pierce the corporate veil? When can this be done?

Accepted Answer

This is where the courts have been prepa

Question 6

A private corporation is one that is not permitted to offer its shares to the public.

Accepted Answer

A) True 
 B)False

Question 7

Explain the general distinction between the capital of a corporation and indebtedness of a corporation? Who owns the capital of the corporation?

Accepted Answer

Capital of a corporation is also known a

Question 8

What is the doctrine of ultra vires in corporate law and what is its current affect across Canada?

Accepted Answer

Ultra vires means "beyond the powers of

Question 9

As compared to a partnership, what are three major advantages of carrying on a business as a corporation?

Accepted Answer

Major advantages of carrying on a busine

Question 10

The By- laws of a corporation are always appended to the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 11

Associated corporations constitute a statutory limitations on the concept of separate corporate identities. In the legal sense, what is an associated corporation?

Accepted Answer

A)  Corporations producing the same product type such as Coca Cola and Pepsi or Apple and IBM. 
B)  Corporations that sell to the same market. 
C)  Corporations who have interlocking directorates. 
D)  Where one corporation controls another or where two or more are controlled by the same person. 
E)  Corporations who buy and sell to each other. 
A)  Corporations producing the same product type such as Coca Cola and Pepsi or Apple and IBM. 
B)  Corporations that sell to the same market. 
C)  Corporations who have interlocking directorates. 
D)  Where one corporation controls another or where two or more are controlled by the same person. 
E)  Corporations who buy and sell to each other.

Question 12

Edith is the only shareholder and director of Edie Inc., a corporation incorporated by Edie 2 years ago. Edie is also the president of Edie Inc. Edie Inc. has no employees and no assets. Edie will be personally liable to creditors of Edie Inc.

Accepted Answer

A) True 
 B)False

Question 13

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?

Accepted Answer

She would have very little influence as

Question 14

In the event of a corporations liquidation, which group of persons would receive any surplus funds after all creditors have been paid?

Accepted Answer

A)  whatever the corporate charter or by- laws dictate 
B)  preferred shareholders 
C)  bond holders 
D)  preferred and common shareholders (split evenly) 
E)  management 
A)  whatever the corporate charter or by- laws dictate 
B)  preferred shareholders 
C)  bond holders 
D)  preferred and common shareholders (split evenly) 
E)  management

Question 15

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

Accepted Answer

A)  under apparent ownership. 
B)  truthfully. 
C)  in good faith. 
D)  for value. 
E)  without notice of defect. 
A)  under apparent ownership. 
B)  truthfully. 
C)  in good faith. 
D)  for value. 
E)  without notice of defect.

Question 16

A shareholder that engages in a conflict on interest with a corporation is which the shareholder holds shares must:

Accepted Answer

A)  get the consent of the corporation in which the shareholders holds shares 
B)  pay damages to the corporation 
C)  disgorge any profit the shareholder makes through the conflict of interest 
D)  sell the shareholders shares to the corporation 
E)  none of the above 
A)  get the consent of the corporation in which the shareholders holds shares 
B)  pay damages to the corporation 
C)  disgorge any profit the shareholder makes through the conflict of interest 
D)  sell the shareholders shares to the corporation 
E)  none of the above

Question 17

Corporations may be private corporations or public corporations. What are the differences between a public corporation and a private corporation?

Accepted Answer

Private corporations have limitations on

Question 18

In 1975, Parliament passed the Canada Business Corporations Act (CBCA) which adopted a new system for incorporating businesses. It has become the model for most provinces. This system is called

Accepted Answer

A)  the certificate of incorporation system. 
B)  the CBCA system. 
C)  the memorandum system. 
D)  the letter patent system. 
E)  the articles of incorporation system. 
A)  the certificate of incorporation system. 
B)  the CBCA system. 
C)  the memorandum system. 
D)  the letter patent system. 
E)  the articles of incorporation system.

Question 19

James is retired and wants to invest in a local business. He is wishes to choose a corporation for his business structure because he "likes the separation of ownership and management". This way he

Accepted Answer

A)  need not be active in managing the company. 
B)  knows the entrepreneurial spirit will be operative. 
C)  can see that the management has good motivation. 
D)  will need loyalty towards the company. 
E)  can get more involved with the company. 
A)  need not be active in managing the company. 
B)  knows the entrepreneurial spirit will be operative. 
C)  can see that the management has good motivation. 
D)  will need loyalty towards the company. 
E)  can get more involved with the company.

Question 20

Which of the following is included in the Articles of Incorporation?

Accepted Answer

A)  if there are two or more classes of shares, the rights and restrictions attached to each 
B)  any restriction the business that may be carried on 
C)  name of the corporation 
D)  any restrictions on the transfer of shares 
E)  all of the above 
A)  if there are two or more classes of shares, the rights and restrictions attached to each 
B)  any restriction the business that may be carried on 
C)  name of the corporation 
D)  any restrictions on the transfer of shares 
E)  all of the above

Exam 27: The Nature of a Corporation and Its Formation

When a corporation issues more than one class of shares, the specific rights of each class, does not have to be set out in the constitution.

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

Which of the following is not true about a corporation?

A professional corporation is a special type of corporation that may be established by members of a profession.

What does it mean to pierce the corporate veil? When can this be done?

A private corporation is one that is not permitted to offer its shares to the public.

Explain the general distinction between the capital of a corporation and indebtedness of a corporation? Who owns the capital of the corporation?

What is the doctrine of ultra vires in corporate law and what is its current affect across Canada?

As compared to a partnership, what are three major advantages of carrying on a business as a corporation?

The By- laws of a corporation are always appended to the articles of incorporation.

Associated corporations constitute a statutory limitations on the concept of separate corporate identities. In the legal sense, what is an associated corporation?

Edith is the only shareholder and director of Edie Inc., a corporation incorporated by Edie 2 years ago. Edie is also the president of Edie Inc. Edie Inc. has no employees and no assets. Edie will be personally liable to creditors of Edie Inc.

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?

In the event of a corporations liquidation, which group of persons would receive any surplus funds after all creditors have been paid?

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

A shareholder that engages in a conflict on interest with a corporation is which the shareholder holds shares must:

Corporations may be private corporations or public corporations. What are the differences between a public corporation and a private corporation?

In 1975, Parliament passed the Canada Business Corporations Act (CBCA) which adopted a new system for incorporating businesses. It has become the model for most provinces. This system is called

James is retired and wants to invest in a local business. He is wishes to choose a corporation for his business structure because he "likes the separation of ownership and management". This way he

Which of the following is included in the Articles of Incorporation?

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Impeached: Mistake

Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Internal Affairs of Corporations

The External Responsibilities of a Corporation

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

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