Question 1

A derivative lawsuit is filed by the directors on behalf of the corporation against third parties who have committed wrongful acts and/or breaches of contract.

Accepted Answer

A) True 
 B)False  False

Question 2

If a court determines a manager's corporate decision amounted to self-dealing:

Accepted Answer

A)  the business judgment rule will not apply. 
B)  the transaction being challenged will be automatically voided. 
C)  the manager is automatically personally liable to the corporation. 
D)  All the above. 
A)  the business judgment rule will not apply. 
B)  the transaction being challenged will be automatically voided. 
C)  the manager is automatically personally liable to the corporation. 
D)  All the above. A

Question 3

After a new corporation adopts a contract that was signed by the promoter before the corporation was actually formed,the corporation is liable on the contract and the promoter no longer has any liability on the contract.

Accepted Answer

A) True 
 B)False  False

Question 4

Discuss how a corporation is terminated.

Accepted Answer

Ordinarily,terminating a corporation is

Question 5

Discuss how the Sarbanes-Oxley Act affects Haletronne Co.,a publicly traded corporation.

Accepted Answer

Under the Sarbanes-Oxley Act: the compan

Question 6

A corporate charter is filed with:

Accepted Answer

A)  a state's Secretary of State office. 
B)  a state's Treasury and/or Revenue Division. 
C)  the United States Department of Commerce. 
D)  All the above. 
A)  a state's Secretary of State office. 
B)  a state's Treasury and/or Revenue Division. 
C)  the United States Department of Commerce. 
D)  All the above.

Question 7

Alex is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Alex owns a warehouse.In order for Alex to sell his warehouse to Computers Plus:

Accepted Answer

A)  the transaction must be fair to both Alex and Computers Plus. 
B)  the disinterested members of the board of directors may approve the transaction. 
C)  he must resign his position on the board of directors of Computers Plus before any negotiations for the warehouse begin. 
D)  a court must review the opportunity to determine its favorability. 
A)  the transaction must be fair to both Alex and Computers Plus. 
B)  the disinterested members of the board of directors may approve the transaction. 
C)  he must resign his position on the board of directors of Computers Plus before any negotiations for the warehouse begin. 
D)  a court must review the opportunity to determine its favorability.

Question 8

A business corporation can only be incorporated under state law.

Accepted Answer

A) True 
 B)False

Question 9

For the business judgment rule to apply:

Accepted Answer

A)  there must be a conflict of interest. 
B)  the director must exercise extraordinary care. 
C)  the director must act in the best interests of the corporation. 
D)  All of the above. 
A)  there must be a conflict of interest. 
B)  the director must exercise extraordinary care. 
C)  the director must act in the best interests of the corporation. 
D)  All of the above.

Question 10

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their plans.The executives:

Accepted Answer

A)  cannot sell that many shares unless they were authorized initially in the corporate charter. 
B)  can sell as many shares as the market will bear. 
C)  are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee. 
D)  can sell the shares only if the shares have a par value which is close to the current market price. 
A)  cannot sell that many shares unless they were authorized initially in the corporate charter. 
B)  can sell as many shares as the market will bear. 
C)  are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee. 
D)  can sell the shares only if the shares have a par value which is close to the current market price.

Question 11

Better Built Storage Buildings,Inc.wants to incorporate in Delaware but has no office there.It must:

Accepted Answer

A)  open an office so it has an official address in Delaware where the Secretary of State can contact the business. 
B)  hire a registered agent to serve as its official presence in Delaware. 
C)  incorporate only where it actually does business so anyone who wants to sue the corporation can serve the complaint in-state. 
D)  give the Secretary of State of Delaware the address and phone number of its corporate office and a list of its top executives so the Secretary of State of Delaware can make sufficient contact out of state. 
A)  open an office so it has an official address in Delaware where the Secretary of State can contact the business. 
B)  hire a registered agent to serve as its official presence in Delaware. 
C)  incorporate only where it actually does business so anyone who wants to sue the corporation can serve the complaint in-state. 
D)  give the Secretary of State of Delaware the address and phone number of its corporate office and a list of its top executives so the Secretary of State of Delaware can make sufficient contact out of state.

Question 12

Shyff decided to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Shyff include one of the following words: "corporation," "incorporated," "limited," or "company" or an abbreviation thereof.

Accepted Answer

A) True 
 B)False

Question 13

When establishing takeover defenses,shareholder welfare must be the board's primary concern.

Accepted Answer

A) True 
 B)False

Question 14

The business judgment rule:

Accepted Answer

A)  permits directors to do their job. 
B)  keeps judges out of corporate management. 
C)  encourages directors to serve. 
D)  accomplishes all of the above goals. 
A)  permits directors to do their job. 
B)  keeps judges out of corporate management. 
C)  encourages directors to serve. 
D)  accomplishes all of the above goals.

Question 15

Which of the following is not true in applying the Williams Act?

Accepted Answer

A)  An individual or group acquiring more than 5 percent of a company's publicly traded stock must file a public disclosure document with the SEC. 
B)  A bidder must keep a tender offer open for at least 30 business days initially. 
C)  If any substantial change is made in the terms of the tender offer, it must be kept open for at least ten business days following the change. 
D)  Any shareholder may withdraw acceptance of the tender offer at any time while the offer is still open. 
A)  An individual or group acquiring more than 5 percent of a company's publicly traded stock must file a public disclosure document with the SEC. 
B)  A bidder must keep a tender offer open for at least 30 business days initially. 
C)  If any substantial change is made in the terms of the tender offer, it must be kept open for at least ten business days following the change. 
D)  Any shareholder may withdraw acceptance of the tender offer at any time while the offer is still open.

Question 16

Defining a corporation with such information as the corporate name,the number and type of authorized shares of stock,identification of the purpose and the agent,is done through the:

Accepted Answer

A)  charter. 
B)  articles of incorporation. 
C)  certificate of organization. 
D)  All of the above. All of these terms are used to identify the same document. 
A)  charter. 
B)  articles of incorporation. 
C)  certificate of organization. 
D)  All of the above. All of these terms are used to identify the same document.

Question 17

Identify four circumstances that might persuade a court to pierce the corporate veil.

Accepted Answer

Courts generally pierce the corporate ve

Question 18

Jenny is an officer of a corporation.She made a difficult business decision.When challenged about her decision,the court ruled she had acted in good faith and that the business judgment rule applied.As such:

Accepted Answer

A)  Jenny will not be held personally liable for a decision that results in money losses to the company. 
B)  Jenny's decision will be reviewed by a court. 
C)  Jenny is immune from a lawsuit. 
D)  Jenny must resign from the board. 
A)  Jenny will not be held personally liable for a decision that results in money losses to the company. 
B)  Jenny's decision will be reviewed by a court. 
C)  Jenny is immune from a lawsuit. 
D)  Jenny must resign from the board.

Question 19

The shareholders decide how much directors will be paid since the Model Act prohibits directors from setting their own compensation.

Accepted Answer

A) True 
 B)False

Question 20

Larry has owned $5,000 of stock in E-prise,Inc.for the past 18 months.Under SEC rules,Larry can require that one proposal be placed in the company's proxy statement to be voted on at the shareholder meeting.

Accepted Answer

A) True 
 B)False

Exam 19: Corporations

A derivative lawsuit is filed by the directors on behalf of the corporation against third parties who have committed wrongful acts and/or breaches of contract.

If a court determines a manager's corporate decision amounted to self-dealing:

After a new corporation adopts a contract that was signed by the promoter before the corporation was actually formed,the corporation is liable on the contract and the promoter no longer has any liability on the contract.

Discuss how a corporation is terminated.

Discuss how the Sarbanes-Oxley Act affects Haletronne Co.,a publicly traded corporation.

A corporate charter is filed with:

Alex is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Alex owns a warehouse.In order for Alex to sell his warehouse to Computers Plus:

A business corporation can only be incorporated under state law.

For the business judgment rule to apply:

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their plans.The executives:

Better Built Storage Buildings,Inc.wants to incorporate in Delaware but has no office there.It must:

Shyff decided to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Shyff include one of the following words: "corporation," "incorporated," "limited," or "company" or an abbreviation thereof.

When establishing takeover defenses,shareholder welfare must be the board's primary concern.

The business judgment rule:

Which of the following is not true in applying the Williams Act?

Defining a corporation with such information as the corporate name,the number and type of authorized shares of stock,identification of the purpose and the agent,is done through the:

Identify four circumstances that might persuade a court to pierce the corporate veil.

Jenny is an officer of a corporation.She made a difficult business decision.When challenged about her decision,the court ruled she had acted in good faith and that the business judgment rule applied.As such:

The shareholders decide how much directors will be paid since the Model Act prohibits directors from setting their own compensation.

Larry has owned $5,000 of stock in E-prise,Inc.for the past 18 months.Under SEC rules,Larry can require that one proposal be placed in the company's proxy statement to be voted on at the shareholder meeting.

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