Exam 33: Nature and Formation of Corporations

Identify and give the basic characteristics of each of the following specialized types of corporations. a.Professional corporations b.Public corporations c.Nonprofit corporations

A corporation has perpetual existence unless otherwise stated in its articles of incorporation.

General Supply owns all the stock of Playne Pencils.A Playne employee commits a tort for which the employer is liable.The suit results in a judgment for $1 million against Playne.Playne's assets total $650,000, but General Supply's assets are in the millions.In which of the following situations would the judgment have to be paid by General?

Mark complied with all formation requirements for incorporating his taxicab business.He is the sole shareholder in the corporation.The corporation owns two automobiles that Mark frequently uses for his own personal use.In addition, he sometimes deposits the money he takes in during the day into his personal checking account.One day, an employee of the company, while driving one of the company vehicles, accidentally hits a pedestrian in a crosswalk.The pedestrian sues both Mark and the taxi company for $100,000.The corporate assets are only $32,000.Is the corporation liable for the acts of its employee? Will Mark be personally liable under the facts? Explain.

A corporation is a creature of the state and may be formed only by substantial compliance with a state incorporation statute.

All of the following are characteristics of a corporation EXCEPT:

Norez Corporation is incorporated in the state of Nevada.It now wants to open a retail outlet in Utah.Norez must obtain a certificate qualifying it to do business in the state of Utah .

Identify each of the following corporations by type. a.Dr.Smith and Dr.Jones are both medical doctors who practice together.They incorporate their medical practice so that they can offer themselves and their employees better employment benefits. b.A group of concerned citizens obtains a corporate charter from the state to form a local Water Planning and Management Corporation that is authorized to do water planning on a local level and to grant permits for such purposes as the installation of ditches, and the encouragement of good water usage practices in their jurisdictional area. c.Agatha and Betty, who are sisters, form a corporation in which they are the sole shareholders.They plan to operate a large retail store that sells collectibles.Agatha is the president and Betty is the chairperson of the board of directors. d.Bill and Carl form a corporation to prevent spouse and child abuse.The corporation operates a shelter for battered women and homeless children. e. Zeron Corporation is incorporated in the state of West Virginia.It decides to expand its business to Kentucky.What type of corporation is it in West Virginia? What type of corporation is it in Kentucky?

Which of the following is correct regarding a foreign corporation?

Under the Revised Act, a corporation can act as an incorporator of another corporation.

Title to corporate property belongs to the shareholders.

Under which of the following provisions of the U.S.Constitution is a corporation not a "person"?

A promoter is a person who takes the preliminary steps to organize a corporation.

What are the consequences of a defective incorporation?

Which of the following may influence a promoter to choose to incorporate in a particular state?

The case of Harris v.Looney dealt with the issue of:

Snazzy Sneakers Co. sues SureFast Glue Corporation for breach of contract for $2,400 of shoe glue that was not delivered according to their agreement.SureFast may assert as a defense to payment that Snazzy Sneakers is not a de jure corporation.

The Statutory Close Corporation Supplement to the Model and Revised Acts applies only to corporations having fewer than 100 shareholders that elect statutory close corporation status.

Claire opened Claire's Beauty Parlor in her home.She solicited funds to begin the business from Jack, who believed that the business was incorporated.Claire had, in fact, never filed the papers.One day, Claire fell asleep while giving a customer a perm and the solution caused her customer severe burns.The customer sued the Beauty Parlor for $500,000, an amount enormously in excess of the business assets.Under the Revised Model Act, what would be the result?

A corporation has no constitutional protection against unreasonable searches and seizures.