Question 1

Kim Phu and Joey Pantalone form a partnership. Kim and Andy Tortellini form a corporation. Kim dies. Which of the following is TRUE?

Accepted Answer

A) Only the partnership is dissolved 
B) Only the corporation is dissolved 
C) Both the corporation and the partnership are dissolved 
D) Neither the corporation nor the partnership is dissolved 
E) Andy and Joey become partners. 
A) Only the partnership is dissolved 
B) Only the corporation is dissolved 
C) Both the corporation and the partnership are dissolved 
D) Neither the corporation nor the partnership is dissolved 
E) Andy and Joey become partners. A

Question 2

As a favour to a friend, Jane Monroe became a director of Urban Attitudes, Inc. It went bankrupt and didn't send income tax money deducted from wages to the government, but used the money in a fruitless attempt to save the business. Jane did not attend any board meetings and didn't know of the failure to send the money to the government. Which of the following is true?

Accepted Answer

A) Jane is not liable to pay the taxes because she didn't know of the failure to send in the money. 
B) Jane is not liable to pay the taxes because she was not personally involved in the failure to send in the taxes. 
C) Jane is liable merely because she was a director at the time the corporation failed to send in the money. 
D) Jane is not liable to pay the taxes because she was not paid for being a director. 
E) Both A and B 
A) Jane is not liable to pay the taxes because she didn't know of the failure to send in the money. 
B) Jane is not liable to pay the taxes because she was not personally involved in the failure to send in the taxes. 
C) Jane is liable merely because she was a director at the time the corporation failed to send in the money. 
D) Jane is not liable to pay the taxes because she was not paid for being a director. 
E) Both A and B C

Question 3

Which of the following falls within the scope of the fiduciary duty of a director?

Accepted Answer

A) To disclose any indirect interest in contracts made with the corporation. 
B) To disclose any direct interest in contracts made with the corporation. 
C) To refrain from voting on any matter concerning a contract made with the corporation 
D) B and C 
E) All of the above. 
A) To disclose any indirect interest in contracts made with the corporation. 
B) To disclose any direct interest in contracts made with the corporation. 
C) To refrain from voting on any matter concerning a contract made with the corporation 
D) B and C 
E) All of the above. E

Question 4

Which of the following statements concerning shareholders is FALSE? Shareholders

Accepted Answer

A) have a right to receive notice of and attend the corporation's annual general meeting. 
B) have a right to see the daily accounting books and corporate business files. 
C) have a right to call special meetings of the corporation in particular situations where the Board of Directors refuses to call one. 
D) that have voting rights have the rights to elect directors of the corporation. 
E) have a right to seek a remedy if they have been unfairly treated by other shareholders. 
A) have a right to receive notice of and attend the corporation's annual general meeting. 
B) have a right to see the daily accounting books and corporate business files. 
C) have a right to call special meetings of the corporation in particular situations where the Board of Directors refuses to call one. 
D) that have voting rights have the rights to elect directors of the corporation. 
E) have a right to seek a remedy if they have been unfairly treated by other shareholders.

Question 5

Smith, Jones, and Brown incorporated a company called Yakima Ltd. The three were the only shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the company, but they disliked his personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and employee and raised their own salaries as employees. They then voted Smith out as a director at the next shareholders' meeting. Which of the following provisions of the Corporations Act would aid Smith?

Accepted Answer

A) Shareholder oppression 
B) Pre-emptive rights 
C) Indoor management rule 
D) Derivative action 
E) Dissent procedures 
A) Shareholder oppression 
B) Pre-emptive rights 
C) Indoor management rule 
D) Derivative action 
E) Dissent procedures

Question 6

Canada has a poor record when it comes to white collar crime because

Accepted Answer

A) there is no national securities regulator in Canada only many provincial regulators 
B) the RCMP lacks the money and manpower to prosecute many major cases 
C) it is difficult to meet the criminal burden of proof to get a conviction 
D) the risk of being caught is worth the reward of large illegal profits 
E) all of the above 
A) there is no national securities regulator in Canada only many provincial regulators 
B) the RCMP lacks the money and manpower to prosecute many major cases 
C) it is difficult to meet the criminal burden of proof to get a conviction 
D) the risk of being caught is worth the reward of large illegal profits 
E) all of the above

Question 7

A director will not be liable for a tort committed by him or her where it is proven that he or she was acting in the best interests of the company and within their scope of authority.

Accepted Answer

A) True 
 B)False

Question 8

Marcel Provost is a shareholder of Armstrong Realty Corp. He is not engaged in the management of the company. The other shareholders are Baun and Brewer, and they run the business. Armstrong Realty purchases a piece of land from Baun and Brewer for $100,000. Provost learns that the land is worth only $50,000. Which of the following is true?

Accepted Answer

A) The corporation has acted in a way that unfairly disregarded Marcel's right as a shareholder. 
B) The court could set aside the contract between Baun and Brewer and Armstrong Realty. 
C) The court could order Armstrong to purchase Provost's shares 
D) Both A and C 
E) All of the above 
A) The corporation has acted in a way that unfairly disregarded Marcel's right as a shareholder. 
B) The court could set aside the contract between Baun and Brewer and Armstrong Realty. 
C) The court could order Armstrong to purchase Provost's shares 
D) Both A and C 
E) All of the above

Question 9

Which of the following is an example of breach of fiduciary duty?

Accepted Answer

A) The directors of a corporation refuse to give a pay raise to the employees although they have not received one for five years. 
B) A director makes a profit of $120,000 from a contract between the corporation and a firm in which he has an interest after he has made full disclosure of his interest to the board of directors and abstained from the vote on the contract. 
C) An officer of a corporation learns of a business opportunity intended for the company and intercepts it for his own benefit 
D) The directors refuse to declare dividend contrary to a request by its preferred shareholders. 
E) A shareholder owning 2% of the outstanding shares starts a business in direct competition with a corporation in which he holds shares. 
A) The directors of a corporation refuse to give a pay raise to the employees although they have not received one for five years. 
B) A director makes a profit of $120,000 from a contract between the corporation and a firm in which he has an interest after he has made full disclosure of his interest to the board of directors and abstained from the vote on the contract. 
C) An officer of a corporation learns of a business opportunity intended for the company and intercepts it for his own benefit 
D) The directors refuse to declare dividend contrary to a request by its preferred shareholders. 
E) A shareholder owning 2% of the outstanding shares starts a business in direct competition with a corporation in which he holds shares.

Question 10

In which of the following is there NOT a fiduciary duty owed?

Accepted Answer

A) Officer of a corporation to the corporation 
B) Agent to her principal 
C) Director of a corporation to the corporation 
D) Partners to each other 
E) Shareholder of a corporation to the corporation 
A) Officer of a corporation to the corporation 
B) Agent to her principal 
C) Director of a corporation to the corporation 
D) Partners to each other 
E) Shareholder of a corporation to the corporation

Question 11

Cynthia Rattle is a shareholder in the Sunrise Corporation, holding 25% of its shares. She hears a rumour that Sunrise is developing a new product. She may want to buy more shares if this is so, but first wants to learn more details about the product. The CEO refuses to tell her anything about it. What are her rights as a shareholder?

Accepted Answer

A) She has a right on her own to call a special shareholders' meeting. 
B) She has the right to attend the annual general meeting 
C) She has the right to information about the development of the product and to force the company officers to answer question about it at the annual general meeting 
D) Both A and B 
E) None of the above 
A) She has a right on her own to call a special shareholders' meeting. 
B) She has the right to attend the annual general meeting 
C) She has the right to information about the development of the product and to force the company officers to answer question about it at the annual general meeting 
D) Both A and B 
E) None of the above

Question 12

What is the standard of care of directors under the Canada Business Corporations Act? To exercise the care, diligence and skill that

Accepted Answer

A) an experienced professional would exercise in comparable circumstances. 
B) a reasonably prudent person would exercise in comparable circumstances. 
C) a reasonable professional would exercise in comparable circumstances. 
D) an experienced director would exercise in comparable circumstances. 
E) the ordinary qualified director would exercise in comparable circumstances. 
A) an experienced professional would exercise in comparable circumstances. 
B) a reasonably prudent person would exercise in comparable circumstances. 
C) a reasonable professional would exercise in comparable circumstances. 
D) an experienced director would exercise in comparable circumstances. 
E) the ordinary qualified director would exercise in comparable circumstances.

Question 13

When a private corporation decides to sell its shares to the public for the first time it is called

Accepted Answer

A) a prospectus 
B) an IPO (initial public offering) 
C) a share transfer 
D) share capital 
E) insider trading 
A) a prospectus 
B) an IPO (initial public offering) 
C) a share transfer 
D) share capital 
E) insider trading

Question 14

Under what circumstances does a shareholder have a right to share in the profits of the company?

Accepted Answer

A) Upon the presentation of a creditor's petition for the winding up of the company 
B) When the company has been wound up and there are assets remaining after all creditors have been paid 
C) When the directors declare a dividend 
D) When all monies owed to the company has been repaid 
E) When the company has been dissolved 
A) Upon the presentation of a creditor's petition for the winding up of the company 
B) When the company has been wound up and there are assets remaining after all creditors have been paid 
C) When the directors declare a dividend 
D) When all monies owed to the company has been repaid 
E) When the company has been dissolved

Question 15

The term that refers to the way a corporation is internally and managed to meet both its internal and external responsibilities is called

Accepted Answer

A) auditors liability 
B) directors liability 
C) shareholders agreement 
D) corporate governance 
E) corporate organization 
A) auditors liability 
B) directors liability 
C) shareholders agreement 
D) corporate governance 
E) corporate organization

Question 16

Ali Khan has a plan to make his business "judgement proof". He incorporates a holding company called Khanco Ltd., which owns all the shares of a subsidiary; Khanex Inc. Khanex operates his business. As Khanex makes profits, they are distributed in full by dividends to Khanco. Khanco then lends the money back to Khanex for purchasing assets, and registers a security interest in those assets. If Khanex runs into financial difficulty, which of the following is true?

Accepted Answer

A) This is a perfectly legitimate (or at least legal)scheme 
B) Khanco's security interests takes priority over the claims of any unsecured creditors of Khanex, even though Khanex is subsidiary to Khanco. 
C) Before extending credit to Khanex, its creditors should have checked to see if there were any registered security interests attaching to its assets. 
D) Both A and B 
E) All of the above 
A) This is a perfectly legitimate (or at least legal)scheme 
B) Khanco's security interests takes priority over the claims of any unsecured creditors of Khanex, even though Khanex is subsidiary to Khanco. 
C) Before extending credit to Khanex, its creditors should have checked to see if there were any registered security interests attaching to its assets. 
D) Both A and B 
E) All of the above

Question 17

Joshua is a Director of Great Lakes Limited, a company that manufactures sporting equipment. At one meeting of the Board of Directors, Joshua was informed about some of the company's plans to expand its operations in a new product line. Armed with this information, Joshua started his own company which manufactured and sold the same products that Great Lakes had planned to commence manufacturing thereby capturing the initial market. Which of the following statements is correct?

Accepted Answer

A) Joshua does not owe any duties to Great Lakes 
B) Joshua has not breached any duty owed to Great Lakes as any person is free to take advantage of a new business opportunity. 
C) By starting his own company on the basis of information learnt at the meeting, Joshua has breached a fiduciary duty owed to Great Lakes. 
D) As Joshua did not steal the information from confidential files, he is free to use it. 
E) Simply by starting his own company in order compete with Great Lakes; Joshua has breached a fiduciary duty owed to Great Lakes. 
A) Joshua does not owe any duties to Great Lakes 
B) Joshua has not breached any duty owed to Great Lakes as any person is free to take advantage of a new business opportunity. 
C) By starting his own company on the basis of information learnt at the meeting, Joshua has breached a fiduciary duty owed to Great Lakes. 
D) As Joshua did not steal the information from confidential files, he is free to use it. 
E) Simply by starting his own company in order compete with Great Lakes; Joshua has breached a fiduciary duty owed to Great Lakes.

Question 18

The Management of Warrenco Limited has just circulated a notice convening the annual general meeting of the company to all shareholders. Harry Jessup, a major shareholder of the company is out of the country on vacation and will not be able to attend the meeting. Harry however wishes to exercise his voting rights at the meeting as he is very dissatisfied with the manner in which the affairs of the company are being conducted. Which of the following actions can Harry reasonably take?

Accepted Answer

A) Appoint a proxy 
B) Appoint a lawyer to represent him at the meeting. 
C) Ask the directors to delay voting on all important matters until he returns 
D) Obtain a copy of the agenda and submit his vote on relevant matters in advance of the meeting. 
E) Obtain an injunction stopping the directors from convening the meeting. 
A) Appoint a proxy 
B) Appoint a lawyer to represent him at the meeting. 
C) Ask the directors to delay voting on all important matters until he returns 
D) Obtain a copy of the agenda and submit his vote on relevant matters in advance of the meeting. 
E) Obtain an injunction stopping the directors from convening the meeting.

Question 19

Directors can be liable for CPP, EI and taxes the corporation has not remitted to the government as well as workers' unpaid wages.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is FALSE? Executive compensation for large public corporations

Accepted Answer

A) is set by the directors of the corporation 
B) is usually only very large if the corporation has been very profitable 
C) is disclosed to the public 
D) often includes salary, stock options and bonuses 
E) is often excessively out of proportion to the income of the average worker in their company 
A) is set by the directors of the corporation 
B) is usually only very large if the corporation has been very profitable 
C) is disclosed to the public 
D) often includes salary, stock options and bonuses 
E) is often excessively out of proportion to the income of the average worker in their company

Kim Phu and Joey Pantalone form a partnership. Kim and Andy Tortellini form a corporation. Kim dies. Which of the following is TRUE?

Which of the following falls within the scope of the fiduciary duty of a director?

Which of the following statements concerning shareholders is FALSE? Shareholders

Canada has a poor record when it comes to white collar crime because

A director will not be liable for a tort committed by him or her where it is proven that he or she was acting in the best interests of the company and within their scope of authority.

Which of the following is an example of breach of fiduciary duty?

In which of the following is there NOT a fiduciary duty owed?

What is the standard of care of directors under the Canada Business Corporations Act? To exercise the care, diligence and skill that

When a private corporation decides to sell its shares to the public for the first time it is called

Under what circumstances does a shareholder have a right to share in the profits of the company?

The term that refers to the way a corporation is internally and managed to meet both its internal and external responsibilities is called

Directors can be liable for CPP, EI and taxes the corporation has not remitted to the government as well as workers' unpaid wages.

Which of the following statements is FALSE? Executive compensation for large public corporations

Fundamental Rights

The Canadian Court System

Intentional Torts

Negligence

Making Enforceable Business Agreements

Important Terms and Contract Interpretation

Contract Defects and Breach of Contract

Special Business Contracts and Consumer Protection

The Organization of a Business

Banking Disagreements and Secured Transactions

Bankruptcy

Employment Law

Intellectual Property and Computer Law

Real Estate and Insurance Law

Filters

Exam 10: Corporate Law and White-Collar Crime

Kim Phu and Joey Pantalone form a partnership. Kim and Andy Tortellini form a corporation. Kim dies. Which of the following is TRUE?

Which of the following falls within the scope of the fiduciary duty of a director?

Which of the following statements concerning shareholders is FALSE? Shareholders

Canada has a poor record when it comes to white collar crime because

A director will not be liable for a tort committed by him or her where it is proven that he or she was acting in the best interests of the company and within their scope of authority.

Which of the following is an example of breach of fiduciary duty?

In which of the following is there NOT a fiduciary duty owed?

What is the standard of care of directors under the Canada Business Corporations Act? To exercise the care, diligence and skill that

When a private corporation decides to sell its shares to the public for the first time it is called

Under what circumstances does a shareholder have a right to share in the profits of the company?

The term that refers to the way a corporation is internally and managed to meet both its internal and external responsibilities is called

Directors can be liable for CPP, EI and taxes the corporation has not remitted to the government as well as workers' unpaid wages.

Which of the following statements is FALSE? Executive compensation for large public corporations

Fundamental Rights

The Canadian Court System

Intentional Torts

Negligence

Making Enforceable Business Agreements

Important Terms and Contract Interpretation

Contract Defects and Breach of Contract

Special Business Contracts and Consumer Protection

The Organization of a Business

Banking Disagreements and Secured Transactions

Bankruptcy

Employment Law

Intellectual Property and Computer Law

Real Estate and Insurance Law

Filters