Exam 22: Corporations: Formation and Organization

Generally,a quorum of shareholders exists when shareholders representing more than ________ percent of the outstanding shares are present at a shareholder meeting.

Self-Centered President.Tina is the new president of "We Manage You," a corporation set up to manage physician practices.Tina has never been very concerned with minority shareholders because she does not believe that they have any influence over the company because they cannot even elect a director.She is told,however,that the corporation has a practice of cumulative voting.An election is coming up in which 10 directors will be elected.Minority shareholders own 2,000 shares while majority shareholders own 8,000 shares.Tina tells her vice president,George,that she wants to ignore minority shareholders and focus her interests on majority shareholders and the directors.She also tells George that she wants to be particularly conscientious toward directors because the directors appoint officers,and she does not believe that she owes any actual duties to shareholders.She further orders George to destroy some documents subpoenaed in a criminal investigation against the company for illegal tax evasion.When George protests,Tina tells him not to worry because officers cannot be held responsible for criminal actions so long as the actions are done as part of the officer's duties.She explains to him that only the corporation can be charged with liability in such cases.Is Tina accurate that she owes no duties to shareholders?

Which of the following is a false statement regarding corporations?

Nails.Mona and her friends Jack and Bobby,all United States citizens,want to open a nail salon in Tennessee.They would all like to avoid personal liability for debts of the business and for wrongful acts of each other.They would also like to avoid taxation as much as possible.Mona is in favor of a corporation and asks if there is any problem with that form of business.Jack and Bobby say that they want to receive profit distributions and that they are concerned about excessive taxation with a corporation.Jack and Bobby urged the formation of a partnership even in the face of personal liability.Mona did some research and suggested an S corporation to Jack and Bobby.Are Jack and Bobby correct that tax liability will likely be greater with a corporate form of business (not an S corporate form)and why?

________ may be redeemed for a certain number of shares at a specified price within a given time period.

According to the "responsible person" doctrine,directors and officers are not liable for decisions that harm the corporation if they were acting in good faith at the time of the decision.

A certificate of incorporation is a document issued by a resident district court judge certifying that the corporation is incorporated in the state and is authorized to conduct business.

Hostile takeovers are takeovers to which the management of the target corporation objects.

Which of the following are rights of corporate directors?

In which of the following types of attempted corporate takeovers does an aggressor offer to pay cash to targeted shareholders?

Kite Sales.Wendy is president of ABC Kites,a business that manufactures kites.Her company's kites are sold to large toy stores.After Wendy learned a great deal about kites,she started to make kites at home and to promote them to large toy stores.She also started selling kites to friends.Some of the directors learned about her kite sales and accused her of wrongdoing.Wendy denied any wrongdoing.In which of the following objectionable activities,if any,was Wendy involved in selling and marketing the kites?

Which of the following terms refers to a corporation that has not substantially met the requirements of the state incorporation statute,but courts nevertheless recognize it as a corporation for most purposes to avoid unfairness to third parties who believed it was properly incorporated?

State incorporation statutes typically grant the following implied powers to corporations: the power to have perpetual existence,the power to sue and be sued in the corporation's name,the power to acquire property,the power to make contracts and borrow money,the power to lend money,the power to make charitable donations,and the power to establish rules for managing the corporation.

Courts are likely to pierce the corporate veil when shareholders' personal interests and corporate interests are commingled such that the corporation has no separate identity.

Decisions of courts in ________ have a significant impact on issues involving matters such as shareholder rights because more than one-half of all publicly traded corporations in the United States are incorporated there.

Shaky Bicycles.Rhonda,an incorporator who filed the articles of incorporation for ABC Corporation,a corporation set up to sell bicycles,listed the correct town and street but incorrectly put the wrong street number in the document.Helen,a manufacturer of bicycle parts,had sold a number of parts to ABC Corporation.Unfortunately,the corporation was not making any profit,and Helen was not paid in a timely manner.Rhonda told her that the corporation was not liable because it was not validly formed due to the address mistake.Bernice,another creditor of ABC Corporation,also claimed that a shareholder of Shaky Bicycles,Slick,was personally liable to her.Bernice alleged that Slick committed fraud against her when he told her that ABC Corporation was making large amounts of money,that if she would only lend $50,000 to the corporation he would marry her,and that the corporation would make so much money that she would be wealthy in six months.She made the loan,but the corporation has been unable to repay her.Slick told her that he is sorry,but that her only avenue of recovery is through the corporation.Which of the following would a court likely rule regarding the status of ABC Corporation as a corporation?

Which of the following is a term for a requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid?

Which of the following was the result on appeal in Campbell,Kesser,and Williams v.Pothas Corporation,the case in the textbook in which the defendant alleged that golden parachute agreements were not enforceable because they violated public policy?

A corporation is a ________ corporation in the state in which it is incorporated.

________ own(s)the corporation.