Question 1

Which of the following describes a role of the Canadian Securities Administrators (CSA)?

Accepted Answer

A)  to enforce mandatory guidelines that increase the lifting of the corporate veil 
B)  to establish best practices for corporate governance 
C)  to license directors and officers to oversee the financial affairs of public corporations 
D)  to impose licensing requirements for all directors of public corporations 
A)  to enforce mandatory guidelines that increase the lifting of the corporate veil 
B)  to establish best practices for corporate governance 
C)  to license directors and officers to oversee the financial affairs of public corporations 
D)  to impose licensing requirements for all directors of public corporations B

Question 2

In Peoples Department Stores v.Wise (2004),244 DLR (4th)564 (S.C.C.),the court noted that it may be legitimate for directors to consider inter alia the interests of shareholders,employees,suppliers,creditors,consumers,governments,and the environment.How does this ruling affect the fiduciary duty owed by directors to act in the best interests of the corporation?

Accepted Answer

A)  It complicates matters,because directors are now bound to consider these outside interests. 
B)  It is inconsequential,because directors are not bound to consider those interests. 
C)  Duties to the corporations are confounded by duties of corporate social responsibility. 
D)  It is inconsequential,because the duty owed to the corporation is relieved by social responsibility. 
A)  It complicates matters,because directors are now bound to consider these outside interests. 
B)  It is inconsequential,because directors are not bound to consider those interests. 
C)  Duties to the corporations are confounded by duties of corporate social responsibility. 
D)  It is inconsequential,because the duty owed to the corporation is relieved by social responsibility. B

Question 3

Ravi Inc.has been fined 10 percent of the amount it owed because it was the organization's first offence.What offence has Ravi most likely committed?

Accepted Answer

A)  a workplace safety offence causing the loss of a worker's limb 
B)  wilfully neglecting to pay fines for parking violations 
C)  failing to remit income tax deducted at source 
D)  failing to create a buffer zone to prevent damage to a wildlife habitat 
A)  a workplace safety offence causing the loss of a worker's limb 
B)  wilfully neglecting to pay fines for parking violations 
C)  failing to remit income tax deducted at source 
D)  failing to create a buffer zone to prevent damage to a wildlife habitat C

Question 4

SunDials4U Inc.will bear vicarious liability for the commission of torts by its directors and executive officers.

Accepted Answer

A) True 
 B)False

Question 5

Briefly discuss statutory derivative actions,including what they permit and what is required for their commencement.

Accepted Answer

A statutory derivative action permits a

Question 6

What must be used in order to circumvent the general powers of the directors of a corporation to manage or supervise the ongoing business and affairs of a corporation?

Accepted Answer

A)  provisions made in the bylaws or unanimous shareholders agreement 
B)  resolution of the majority shareholders of the corporation 
C)  provisions contained in the bylaws or a shareholders' agreement 
D)  unanimous resolution of majority and minority shareholders 
A)  provisions made in the bylaws or unanimous shareholders agreement 
B)  resolution of the majority shareholders of the corporation 
C)  provisions contained in the bylaws or a shareholders' agreement 
D)  unanimous resolution of majority and minority shareholders

Question 7

What is the legal term for the corporate practice of paying the litigation expenses of officers and directors for lawsuits related to corporate affairs?

Accepted Answer

A)  compensation 
B)  indemnification 
C)  ratification 
D)  surety 
A)  compensation 
B)  indemnification 
C)  ratification 
D)  surety

Question 8

Under what circumstances will a court find that a corporation is bound by a contract entered into by an agent of the corporation?

Accepted Answer

A)  where the agent is a promoter of the corporation 
B)  where the corporation will benefit from the contract 
C)  where the agent was acting with actual or apparent authority 
D)  where the contract terms were reasonable 
A)  where the agent is a promoter of the corporation 
B)  where the corporation will benefit from the contract 
C)  where the agent was acting with actual or apparent authority 
D)  where the contract terms were reasonable

Question 9

Identification theory holds that a corporation is liable when the person committing the wrong is the corporation's directing mind.

Accepted Answer

A) True 
 B)False

Question 10

In what way are a duty of competence and a fiduciary duty similar?

Accepted Answer

A)  Both are obligations owed to a corporation's creditors. 
B)  Both are strict liability obligations owed to external stakeholders. 
C)  Directors are relieved from them by delegating authority to officers. 
D)  Neither is an obligation owed by a director that can be delegated. 
A)  Both are obligations owed to a corporation's creditors. 
B)  Both are strict liability obligations owed to external stakeholders. 
C)  Directors are relieved from them by delegating authority to officers. 
D)  Neither is an obligation owed by a director that can be delegated.

Question 11

Why is it preferable for risk management to use a shelf company as the vehicle for taking prompt advantage of a valuable business opportunity?

Accepted Answer

A)  Outsiders retain liability if the corporation fails to come into existence. 
B)  It facilitates direct entrance into contractual obligations by the corporation. 
C)  It facilitates the ability of promoters to sign in a personal capacity. 
D)  Outsiders are restricted from relying on the apparent authority of agents. 
A)  Outsiders retain liability if the corporation fails to come into existence. 
B)  It facilitates direct entrance into contractual obligations by the corporation. 
C)  It facilitates the ability of promoters to sign in a personal capacity. 
D)  Outsiders are restricted from relying on the apparent authority of agents.

Question 12

Which of the following would a court most likely require in order to find there is no legal impediment to Marion proceeding to pursue a corporate opportunity declined by the corporation in which she holds a fiduciary position?

Accepted Answer

A)  a resolution enacted by the corporation declining the corporate opportunity 
B)  a consenting resolution passed by the directors of the corporation 
C)  a consenting resolution passed by the shareholders of the corporation 
D)  a resolution enacted by the corporation's consenting shareholders and directors 
A)  a resolution enacted by the corporation declining the corporate opportunity 
B)  a consenting resolution passed by the directors of the corporation 
C)  a consenting resolution passed by the shareholders of the corporation 
D)  a resolution enacted by the corporation's consenting shareholders and directors

Question 13

A self-dealing contract is one in which a fiduciary has a conflict of interest.

Accepted Answer

A) True 
 B)False

Question 14

Why is knowing whether directors have been purchasing shares of a corporation a fundamental right belonging to the shareholders of a corporation?

Accepted Answer

A)  It permits shareholders to maintain the optimum proportionate share of ownership. 
B)  It is the simplest and least costly method of earning capital gains. 
C)  It is the simplest and least costly method of soliciting proxies. 
D)  It permits shareholders to determine the use of confidential information for personal profit. 
A)  It permits shareholders to maintain the optimum proportionate share of ownership. 
B)  It is the simplest and least costly method of earning capital gains. 
C)  It is the simplest and least costly method of soliciting proxies. 
D)  It permits shareholders to determine the use of confidential information for personal profit.

Question 15

Shareholders carry out the actual day-to-day management of the corporation.

Accepted Answer

A) True 
 B)False

Question 16

What is the role of the fiduciary principle in matters with respect to corporate law relating to governance?

Accepted Answer

A)  to impose duties owed to the board of directors 
B)  to impose duties owed to the corporation 
C)  to uphold duties owed to creditors 
D)  to uphold duties owed to a group of shareholders 
A)  to impose duties owed to the board of directors 
B)  to impose duties owed to the corporation 
C)  to uphold duties owed to creditors 
D)  to uphold duties owed to a group of shareholders

Question 17

Corporations are immune from criminal law because they cannot be incarcerated.

Accepted Answer

A) True 
 B)False

Question 18

Briefly explain how corporate directors are able to meet their statutory standard of care,and identify the various methods that directors should employ to achieve this goal.

Accepted Answer

Directors can meet the statutory standar

Question 19

Which of the following are uncommon remedies available to a corporation's minority shareholders through common law and legislation?

Accepted Answer

A)  appraisal and the return of surplus assets 
B)  winding up and derivative action 
C)  appraisal and derivative action 
D)  winding up and the return of surplus assets 
A)  appraisal and the return of surplus assets 
B)  winding up and derivative action 
C)  appraisal and derivative action 
D)  winding up and the return of surplus assets

Question 20

Which of the following is a distinguishing characteristic attributable to common shares?

Accepted Answer

A)  They include a right to vote. 
B)  They must state "nonvoting" on the share certificate itself. 
C)  They have a preferential right in the distribution of proceeds on dissolution. 
D)  They do not usually share in dividends. 
A)  They include a right to vote. 
B)  They must state "nonvoting" on the share certificate itself. 
C)  They have a preferential right in the distribution of proceeds on dissolution. 
D)  They do not usually share in dividends.

Exam 16: The Corporate Form: Operational Matters

Which of the following describes a role of the Canadian Securities Administrators (CSA)?

Ravi Inc.has been fined 10 percent of the amount it owed because it was the organization's first offence.What offence has Ravi most likely committed?

SunDials4U Inc.will bear vicarious liability for the commission of torts by its directors and executive officers.

Briefly discuss statutory derivative actions,including what they permit and what is required for their commencement.

What must be used in order to circumvent the general powers of the directors of a corporation to manage or supervise the ongoing business and affairs of a corporation?

What is the legal term for the corporate practice of paying the litigation expenses of officers and directors for lawsuits related to corporate affairs?

Under what circumstances will a court find that a corporation is bound by a contract entered into by an agent of the corporation?

Identification theory holds that a corporation is liable when the person committing the wrong is the corporation's directing mind.

In what way are a duty of competence and a fiduciary duty similar?

Why is it preferable for risk management to use a shelf company as the vehicle for taking prompt advantage of a valuable business opportunity?

Which of the following would a court most likely require in order to find there is no legal impediment to Marion proceeding to pursue a corporate opportunity declined by the corporation in which she holds a fiduciary position?

A self-dealing contract is one in which a fiduciary has a conflict of interest.

Why is knowing whether directors have been purchasing shares of a corporation a fundamental right belonging to the shareholders of a corporation?

Shareholders carry out the actual day-to-day management of the corporation.

What is the role of the fiduciary principle in matters with respect to corporate law relating to governance?

Corporations are immune from criminal law because they cannot be incarcerated.

Briefly explain how corporate directors are able to meet their statutory standard of care,and identify the various methods that directors should employ to achieve this goal.

Which of the following are uncommon remedies available to a corporation's minority shareholders through common law and legislation?

Which of the following is a distinguishing characteristic attributable to common shares?

Knowledge of Law As a Business Asset

The Canadian Legal System

Managing Legal Risks

Dispute Resolution

An Introduction to Contracts

Forming Contractual Relationships

The Terms of a Contract

Non-Enforcement of Contracts

Termination and Enforcement of Contracts

Introduction to Tort Law

The Tort of Negligence

Other Torts

The Agency Relationship

Business Forms and Arrangements

The Corporate Form: Organizational Matters

Introduction to Property Law

Intellectual Property

Real Property

The Employment Relationship

Terminating the Employment Relationship

Professional Services

The Sale of Goods

Consumer Protection and Competition Law

Business and Banking

The Legal Aspects of Credit

Bankruptcy and Insolvency

Insurance

Filters