Question 1

Unlike bonds,shares provide an opportunity to benefit from the corporation's growth.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following features distinguishes a bondholder from a shareholder?

Accepted Answer

A)  Shareholders are entitled to interest payments before bondholders. 
B)  A bondholder is a creditor of the corporation,unlike a shareholder. 
C)  The sale of shares is governed by security legislation,unlike the issuance of bonds. 
D)  Only shares can come with a conversion right. 
A)  Shareholders are entitled to interest payments before bondholders. 
B)  A bondholder is a creditor of the corporation,unlike a shareholder. 
C)  The sale of shares is governed by security legislation,unlike the issuance of bonds. 
D)  Only shares can come with a conversion right. B

Question 3

Among the objectives of securities legislation are to provide a mechanism for the transfer of securities and to regulate the activities of those engaged in the trading of securities.

Accepted Answer

A) True 
 B)False  True

Question 4

Sam recently assumed an equity position in a corporation rather than continuing as one of its unsecured creditors.What right has Sam exercised?

Accepted Answer

A)  his redemption right on a convertible debenture 
B)  his redemption right on a convertible bond 
C)  his conversion right on a convertible debenture 
D)  his conversion right on a convertible bond 
A)  his redemption right on a convertible debenture 
B)  his redemption right on a convertible bond 
C)  his conversion right on a convertible debenture 
D)  his conversion right on a convertible bond

Question 5

Shareholders do not have any power to manage the corporation.

Accepted Answer

A) True 
 B)False

Question 6

Identify and briefly explain the typical rights and privileges that may attach to a class of shares issued by a corporation.

Accepted Answer

The typical rights and privileges that m

Question 7

In reality,the distinction between federal and provincial corporations is of little practical significance due to provincial laws that permit the operation of out-of-province corporations.

Accepted Answer

A) True 
 B)False

Question 8

Remmie Ltd.owns all of the Class B shares in Rex Holdings Inc.,giving it 40 percent of the equity and 82 percent of the voting power.How is Remmie able to exert control over Rex?

Accepted Answer

A)  through a dual-share structure 
B)  through a fractional share structure 
C)  through a multi-class share structure 
D)  through a flow-through share structure 
A)  through a dual-share structure 
B)  through a fractional share structure 
C)  through a multi-class share structure 
D)  through a flow-through share structure

Question 9

"Bonds" and "debentures" are terms used interchangeably to refer to financing methods.How is it possible to understand precisely which type of financing either instrument actually pertains to?

Accepted Answer

A)  by noting the securities listed in the corporation's borrowing bylaws 
B)  by searching the corporate registry 
C)  by noting the securities listed in the corporation's debt ledger 
D)  by reading the document itself 
A)  by noting the securities listed in the corporation's borrowing bylaws 
B)  by searching the corporate registry 
C)  by noting the securities listed in the corporation's debt ledger 
D)  by reading the document itself

Question 10

Explain how a corporation is formed,and identify all of the issues that must be considered when contemplating this choice of business vehicle.

Accepted Answer

A corporation is formed by an incorporat

Question 11

A successful sole proprietor is considering incorporating.What are some decisions she must make prior to filing incorporation documents?

Accepted Answer

She must decide:
• whether to incorporat

Question 12

All Canadian jurisdictions follow a similar procedure for the creation of a corporation and all require payment of the filing fee,payable to the Receiver General,to be made concurrent with the submission of the incorporating documents for registration.

Accepted Answer

A) True 
 B)False

Question 13

A court has been asked to answer profound questions raised in a lawsuit regarding the alleged ability of empire builders to readily defraud investors and shareholders.What would the presiding judge most likely have to develop a working knowledge of?

Accepted Answer

A)  the corporation's fractional share structures 
B)  the corporations' governance structures 
C)  each of the corporation's respective tax structures 
D)  each of the corporation's securities disclosure reports 
A)  the corporation's fractional share structures 
B)  the corporations' governance structures 
C)  each of the corporation's respective tax structures 
D)  each of the corporation's securities disclosure reports

Question 14

Which of the following exempts entities from most of its requirements,provided the definition of a private corporation is met?

Accepted Answer

A)  corporate legislation 
B)  corporate law regulating winding up transactions 
C)  securities legislation 
D)  securities law regulating redemption on dissolution 
A)  corporate legislation 
B)  corporate law regulating winding up transactions 
C)  securities legislation 
D)  securities law regulating redemption on dissolution

Question 15

Which of the following best explains why the corporation is the predominant business vehicle in modern commerce?

Accepted Answer

A)  because corporations are easily formed business entities 
B)  because none of a corporation's assets are at risk 
C)  because some of the owners' assets in a corporation are at risk 
D)  because of a corporation's existence as a separate legal entity 
A)  because corporations are easily formed business entities 
B)  because none of a corporation's assets are at risk 
C)  because some of the owners' assets in a corporation are at risk 
D)  because of a corporation's existence as a separate legal entity

Question 16

The board of directors of a corporation is charged with the management functions,including policy development,and is answerable directly to the shareholders,who may vote them out of office should they perform poorly.

Accepted Answer

A) True 
 B)False

Question 17

Taylor and Ebram are selecting a name for their new corporation and have decided to call the business Taleb Marketers and Design Group.Why will this not be an acceptable name for their corporation?

Accepted Answer

A)  because it uses a combination of their actual names 
B)  because it is not sufficiently distinctive 
C)  because the name is too long 
D)  because it must include a legal element such as Inc. 
A)  because it uses a combination of their actual names 
B)  because it is not sufficiently distinctive 
C)  because the name is too long 
D)  because it must include a legal element such as Inc.

Question 18

Why are shareholders required to hold a meeting within the first 18 months of the date of incorporation?

Accepted Answer

A)  to authorize the issuance of shares and other securities by the directors 
B)  to replace first directors with directors who have made banking arrangements 
C)  to replace first directors with directors who will hold office until the annual meeting 
D)  to authorize the appointment of officers to manage the operations of the corporation 
A)  to authorize the issuance of shares and other securities by the directors 
B)  to replace first directors with directors who have made banking arrangements 
C)  to replace first directors with directors who will hold office until the annual meeting 
D)  to authorize the appointment of officers to manage the operations of the corporation

Question 19

The first meeting of shareholders must be called within 18 months of incorporation.

Accepted Answer

A) True 
 B)False

Question 20

What is the most compelling reason for the creation of a corporate business entity?

Accepted Answer

A)  to extend director's liability in the event of bankruptcy 
B)  to limit owners' liability in the event of bankruptcy 
C)  to share joint liability in the event of bankruptcy 
D)  to proportion liability in the event of bankruptcy 
A)  to extend director's liability in the event of bankruptcy 
B)  to limit owners' liability in the event of bankruptcy 
C)  to share joint liability in the event of bankruptcy 
D)  to proportion liability in the event of bankruptcy

Exam 15: The Corporate Form: Organizational Matters

Unlike bonds,shares provide an opportunity to benefit from the corporation's growth.

Which of the following features distinguishes a bondholder from a shareholder?

Among the objectives of securities legislation are to provide a mechanism for the transfer of securities and to regulate the activities of those engaged in the trading of securities.

Sam recently assumed an equity position in a corporation rather than continuing as one of its unsecured creditors.What right has Sam exercised?

Shareholders do not have any power to manage the corporation.

Identify and briefly explain the typical rights and privileges that may attach to a class of shares issued by a corporation.

In reality,the distinction between federal and provincial corporations is of little practical significance due to provincial laws that permit the operation of out-of-province corporations.

Remmie Ltd.owns all of the Class B shares in Rex Holdings Inc.,giving it 40 percent of the equity and 82 percent of the voting power.How is Remmie able to exert control over Rex?

"Bonds" and "debentures" are terms used interchangeably to refer to financing methods.How is it possible to understand precisely which type of financing either instrument actually pertains to?

Explain how a corporation is formed,and identify all of the issues that must be considered when contemplating this choice of business vehicle.

A successful sole proprietor is considering incorporating.What are some decisions she must make prior to filing incorporation documents?

All Canadian jurisdictions follow a similar procedure for the creation of a corporation and all require payment of the filing fee,payable to the Receiver General,to be made concurrent with the submission of the incorporating documents for registration.

A court has been asked to answer profound questions raised in a lawsuit regarding the alleged ability of empire builders to readily defraud investors and shareholders.What would the presiding judge most likely have to develop a working knowledge of?

Which of the following exempts entities from most of its requirements,provided the definition of a private corporation is met?

Which of the following best explains why the corporation is the predominant business vehicle in modern commerce?

The board of directors of a corporation is charged with the management functions,including policy development,and is answerable directly to the shareholders,who may vote them out of office should they perform poorly.

Taylor and Ebram are selecting a name for their new corporation and have decided to call the business Taleb Marketers and Design Group.Why will this not be an acceptable name for their corporation?

Why are shareholders required to hold a meeting within the first 18 months of the date of incorporation?

The first meeting of shareholders must be called within 18 months of incorporation.

What is the most compelling reason for the creation of a corporate business entity?

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: Operational 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

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