Question 1

How is incorporation effected in a registration jurisdiction?

Accepted Answer

Memorandum of association and articles of association are registered with the registrar of companies and a fee paid.

Question 2

Indicate three advantages to incorporation.

Accepted Answer

Advantages include limited liability,reduced taxes under some circumstances,ease of transferability,the corporation does not end with the death or bankruptcy of a shareholder,the shareholders are free to carry on their activities without obligation to the corporation,management is separated from ownership,and a majority vote of the shareholders prevails.

Question 3

To what does "franchising" refer?

Accepted Answer

Arrangements based on contracts of service and the supply of products between larger and smaller units of one organization.

Question 4

The promoter of a corporation,called Seymour Holdings Ltd.,contracted for $4000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation.After incorporation,the new directors want to ensure that the corporation is bound.They will be able to do so if

Accepted Answer

A) the corporation ratifies the contract and ratification is permitted in the jurisdiction. 
B) the promoter intended that the corporation,and not himself,would be bound by the contract. 
C) the promoter made it clear that he was signing on behalf of the corporation. 
D) the corporation is closely held and the promoter is a director. 
E) the promoter was acting in the best interests of the corporation to be formed. 
A) the corporation ratifies the contract and ratification is permitted in the jurisdiction. 
B) the promoter intended that the corporation,and not himself,would be bound by the contract. 
C) the promoter made it clear that he was signing on behalf of the corporation. 
D) the corporation is closely held and the promoter is a director. 
E) the promoter was acting in the best interests of the corporation to be formed.

Question 5

Distinguish between a bond and a share.

Accepted Answer

A share involves a shareholder who has a

Question 6

Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships.

Accepted Answer

Because the corporat

Question 7

A corporation does not die but may be dissolved.

Accepted Answer

A) True 
 B)False

Question 8

The corporation can also borrow funds,thereby accumulating

Accepted Answer

A) shares. 
B) debt. 
C) bonds. 
D) assets. 
E) trustees. 
A) shares. 
B) debt. 
C) bonds. 
D) assets. 
E) trustees.

Question 9

When a closely held corporation is involved,it is common to include no restrictions on the transfer or sale of the shares.

Accepted Answer

A) True 
 B)False

Question 10

When lending money to a closely held corporation,what will a bank usually insist on from the major shareholders or other principals?

Accepted Answer

A) a debenture 
B) a negotiable instrument 
C) a fiduciary obligation 
D) a pre-emptive right 
E) a personal guarantee 
A) a debenture 
B) a negotiable instrument 
C) a fiduciary obligation 
D) a pre-emptive right 
E) a personal guarantee

Question 11

A securities commission is a provincial agency that serves as watchdog on issuance and trading of shares.

Accepted Answer

A) True 
 B)False

Question 12

Where a corporation borrows money,only the corporation is responsible for that debt,not the shareholders.

Accepted Answer

A) True 
 B)False

Question 13

Another term commonly used where a bond is involved is

Accepted Answer

A) a loan. 
B) a negotiable instrument. 
C) a debenture. 
D) a personal property security. 
E) a share. 
A) a loan. 
B) a negotiable instrument. 
C) a debenture. 
D) a personal property security. 
E) a share.

Question 14

To whom does the director owe the duty to be careful?

Accepted Answer

To the cor

Question 15

What have been the three distinct methods that are used for the creation of small companies and corporations in Canada?

Accepted Answer

Letters patent,regis

Question 16

Kent incorporated Dynamite Data Ltd.,which worked with small businesses in developing graphs and charts from their data for presentations to bankers,shareholders,etc.Kent lent the company $25,000 by way of a shareholder's loan and took as security computers,plotters,and printers under a General Security Agreement.An employee of the corporation,Jack,got into an argument with a customer named Roth while making a delivery.Roth was complaining that the graph was in red and not in pink as requested.It ended with Jack punching Roth,who fell onto a camera.The damage to Roth's nose and the camera totalled $35,000.Which of the following is true?

Accepted Answer

A) The corporation is not liable for the damage caused by the action of its employee,Jack. 
B) Kent is liable for the damage to Roth and the camera if neither Jack nor the employer/corporation has sufficient funds. 
C) If the corporation went bankrupt but owed creditors (other than Roth),Kent would be in a worse position than unsecured creditors to collect proceeds realized from the sale of the corporation's assets. 
D) Even if Kent,the only shareholder,died,the corporation would not die and would still owe its outstanding debts. 
E) Roth's action against Jack is for the tort of assault. 
A) The corporation is not liable for the damage caused by the action of its employee,Jack. 
B) Kent is liable for the damage to Roth and the camera if neither Jack nor the employer/corporation has sufficient funds. 
C) If the corporation went bankrupt but owed creditors (other than Roth),Kent would be in a worse position than unsecured creditors to collect proceeds realized from the sale of the corporation's assets. 
D) Even if Kent,the only shareholder,died,the corporation would not die and would still owe its outstanding debts. 
E) Roth's action against Jack is for the tort of assault.

Question 17

The corporation typically makes a debt commitment to a ________,who then issues shares in the indebtedness to individual bondholders.

Accepted Answer

A) creditor 
B) trustee 
C) shareholder 
D) bondholder 
E) tribunal 
A) creditor 
B) trustee 
C) shareholder 
D) bondholder 
E) tribunal

Question 18

Mr.A is the sole shareholder of X Ltd.,and is also a director of Y Ltd.Y Ltd.is negotiating to buy property from X Ltd.Which of the following is false?

Accepted Answer

A) Failure to disclose his interest will make Mr.A liable to Y Ltd.for any profits he makes on the transaction and for any losses suffered by Y Ltd. 
B) So long as Mr.A discloses his position to the board of directors of Y Ltd.,he can vote in favour of the contract at the directors' meeting. 
C) Mr.A does not owe a fiduciary duty to X Ltd.or to his fellow X Ltd.shareholders. 
D) To protect himself,Mr.A must disclose his interest to the other directors and refrain from voting or influencing the decision. 
E) Mr.A has a duty to act in the best interests of Y Ltd.,and to avoid any conflict of interest. 
A) Failure to disclose his interest will make Mr.A liable to Y Ltd.for any profits he makes on the transaction and for any losses suffered by Y Ltd. 
B) So long as Mr.A discloses his position to the board of directors of Y Ltd.,he can vote in favour of the contract at the directors' meeting. 
C) Mr.A does not owe a fiduciary duty to X Ltd.or to his fellow X Ltd.shareholders. 
D) To protect himself,Mr.A must disclose his interest to the other directors and refrain from voting or influencing the decision. 
E) Mr.A has a duty to act in the best interests of Y Ltd.,and to avoid any conflict of interest.

Question 19

Which of the following is an advantage of incorporation?

Accepted Answer

A) Shareholders are liable for debts of the corporation. 
B) There are no tax advantages as compared to a sole proprietorship. 
C) Shareholders can veto decisions of directors. 
D) Shares are easily transferred. 
E) Shareholders owe a duty to the corporation. 
A) Shareholders are liable for debts of the corporation. 
B) There are no tax advantages as compared to a sole proprietorship. 
C) Shareholders can veto decisions of directors. 
D) Shares are easily transferred. 
E) Shareholders owe a duty to the corporation.

Question 20

Explain under what circumstances a shareholder's right to sue against oppression arises.

Accepted Answer

Where the directors of the corporation m

How is incorporation effected in a registration jurisdiction?

Indicate three advantages to incorporation.

To what does "franchising" refer?

The promoter of a corporation,called Seymour Holdings Ltd.,contracted for $4000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation.After incorporation,the new directors want to ensure that the corporation is bound.They will be able to do so if

Distinguish between a bond and a share.

Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships.

A corporation does not die but may be dissolved.

The corporation can also borrow funds,thereby accumulating

When a closely held corporation is involved,it is common to include no restrictions on the transfer or sale of the shares.

When lending money to a closely held corporation,what will a bank usually insist on from the major shareholders or other principals?

A securities commission is a provincial agency that serves as watchdog on issuance and trading of shares.

Where a corporation borrows money,only the corporation is responsible for that debt,not the shareholders.

Another term commonly used where a bond is involved is

To whom does the director owe the duty to be careful?

What have been the three distinct methods that are used for the creation of small companies and corporations in Canada?

The corporation typically makes a debt commitment to a ________,who then issues shares in the indebtedness to individual bondholders.

Mr.A is the sole shareholder of X Ltd.,and is also a director of Y Ltd.Y Ltd.is negotiating to buy property from X Ltd.Which of the following is false?

Which of the following is an advantage of incorporation?

Explain under what circumstances a shareholder's right to sue against oppression arises.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: The Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence,Professional Liability,and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Agency and Partnership

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

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Exam 11: Corporations

How is incorporation effected in a registration jurisdiction?

Indicate three advantages to incorporation.

To what does "franchising" refer?

The promoter of a corporation,called Seymour Holdings Ltd.,contracted for $4000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation.After incorporation,the new directors want to ensure that the corporation is bound.They will be able to do so if

Distinguish between a bond and a share.

Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships.

A corporation does not die but may be dissolved.

The corporation can also borrow funds,thereby accumulating

When a closely held corporation is involved,it is common to include no restrictions on the transfer or sale of the shares.

When lending money to a closely held corporation,what will a bank usually insist on from the major shareholders or other principals?

A securities commission is a provincial agency that serves as watchdog on issuance and trading of shares.

Where a corporation borrows money,only the corporation is responsible for that debt,not the shareholders.

Another term commonly used where a bond is involved is

To whom does the director owe the duty to be careful?

What have been the three distinct methods that are used for the creation of small companies and corporations in Canada?

The corporation typically makes a debt commitment to a ________,who then issues shares in the indebtedness to individual bondholders.

Mr.A is the sole shareholder of X Ltd.,and is also a director of Y Ltd.Y Ltd.is negotiating to buy property from X Ltd.Which of the following is false?

Which of the following is an advantage of incorporation?

Explain under what circumstances a shareholder's right to sue against oppression arises.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: The Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence,Professional Liability,and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Agency and Partnership

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters