Question 1

A business that holds itself out as being a corporation may not be able to deny corporate status,even if it makes no attempt to incorporate.

Accepted Answer

A) True 
 B)False  True

Question 2

Florence and Grady pool their money and talents to form Happy Home Builders,Inc.They are the firm's only shareholders,directors,and officers.After five years of declining home prices,they decide to cease business.Can they simply dissolve their corporation at will? If so,what are the steps in the process?

Accepted Answer

In the problem,Florence and Grady can dissolve their corporation at will acting as directors or,in some states,as shareholders.The process will include notifying the state and the firm's creditors,liquidating the firm's assets,and making distributions.Procedures for voluntary dissolution vary in different states.Generally,the directors can vote to submit a proposal of dissolution to the shareholders for a vote at a shareholders' meeting,or in some states shareholders act ing unanimously can vote to initiate dissolution proceedings for a corpora tion.The corporation must file articles of dissolution with the state and notify its creditors of the dissolution.Under the Revised Model Business Corporation Act,the firm must also set a date at least 120 days after the date of dissolution by which all creditors' claims must be received.The directors act as trustees of the corporate assets in winding up the firm's affairs for the benefit of the creditors and shareholders.In this problem,the directors and shareholders are the same persons,but they may be held accountable for any breach of a trustee's fiduciary duty to the creditors.The corporation's assets will be liquidated (converted into cash)and distributed among its creditors and shareholders.

Question 3

After a merger,a disappearing corporation's preexisting rights disappear.

Accepted Answer

A) True 
 B)False  False

Question 4

Appraisal rights are normally available in sales of substantially all corporate assets not in the ordinary course of business.

Accepted Answer

A) True 
 B)False

Question 5

"Piercing the corporate veil" means revealing to shareholders the internal rules of corporate management.

Accepted Answer

A) True 
 B)False

Question 6

In most cases,merging corporations' officers and employees do not need to approve the merger.

Accepted Answer

A) True 
 B)False

Question 7

Starr Cardio,Inc.,is a small business.Ted,Uma,and eleven other members of the Starr family own all of its stock.Currently,Starr's income is taxed at the corporate level and,after being distributed to the family members,at the shareholder level.Can Starr retain its corporate status but otherwise avoid this double taxation? If so,how?

Accepted Answer

Starr can re-form as an S corporation to

Question 8

Realty Credit Company and Second Mortgage Corporation plan to consolidate.Most likely,the articles of consolidation will be filed with

Accepted Answer

A)  the county recording office. 
B)  the Securities and Exchange Commission. 
C)  the state's secretary of state. 
D)  the U.S. Department of Justice. 
A)  the county recording office. 
B)  the Securities and Exchange Commission. 
C)  the state's secretary of state. 
D)  the U.S. Department of Justice.

Question 9

Salt Corporation wants to acquire or merge with Pepper Corporation.The board and the shareholders of Pepper are resisting.Salt should

Accepted Answer

A)  file a plan of merger with the secretary of state. 
B)  file an article of merger with Pepper. 
C)  make a tender offer to the shareholders of Pepper. 
D)  make a tender offer to the shareholders of Salt. 
A)  file a plan of merger with the secretary of state. 
B)  file an article of merger with Pepper. 
C)  make a tender offer to the shareholders of Pepper. 
D)  make a tender offer to the shareholders of Salt.

Question 10

A firm named Scientific Discovery Corporation (SDC)makes an attempt to incorporate for a purpose other than making a profit.SDC is

Accepted Answer

A)  a foreign corporation. 
B)  an alien corporation. 
C)  a nonprofit corporation. 
D)  not a corporation. 
A)  a foreign corporation. 
B)  an alien corporation. 
C)  a nonprofit corporation. 
D)  not a corporation.

Question 11

Eager Beaver Corporation fails to adopt bylaws.Under this circumstance,Eager Beaver is most likely

Accepted Answer

A)  a corporation by estoppel. 
B)  a de facto corporation. 
C)  a de jure corporation. 
D)  ultra vires. 
A)  a corporation by estoppel. 
B)  a de facto corporation. 
C)  a de jure corporation. 
D)  ultra vires.

Question 12

Corporate officers hire corporate directors.

Accepted Answer

A) True 
 B)False

Question 13

Candy Corporation has a right of action against Dina.Candy merges with Eats,Inc.,with Eats absorbing Candy.After the merger,Candy's right of action against Dina can be exercised by

Accepted Answer

A)  Candy. 
B)  Dina. 
C)  Eats. 
D)  no one. 
A)  Candy. 
B)  Dina. 
C)  Eats. 
D)  no one.

Question 14

Like the bylaws of other corporations,the bylaws of Retail Sales,Inc.,

Accepted Answer

A)  establish the operating name of the corporation. 
B)  establish the value and classes of corporate stock. 
C)  were adopted at its first organizational meeting. 
D)  were submitted for approval to the public official in charge. 
A)  establish the operating name of the corporation. 
B)  establish the value and classes of corporate stock. 
C)  were adopted at its first organizational meeting. 
D)  were submitted for approval to the public official in charge.

Question 15

A close corporation cannot operate as an S corporation.

Accepted Answer

A) True 
 B)False

Question 16

Skyla and Terry want to form and do business as Unique Boutique Corporation.The state statute governing the formation and operation of their corporation is most likely guided by

Accepted Answer

A)  city or county corporate codes. 
B)  the Entrepreneur's Corporate Handbook. 
C)  the federal Administrative Procedure Act. 
D)  the Revised Model Business Corporation Act. 
A)  city or county corporate codes. 
B)  the Entrepreneur's Corporate Handbook. 
C)  the federal Administrative Procedure Act. 
D)  the Revised Model Business Corporation Act.

Question 17

To qualify as a professional corporation,Medical Clinic,P.C.,

Accepted Answer

A)  must be a corporation formed by professionals. 
B)  must grant all shareholders voting rights. 
C)  must have at least thirty-five shareholders. 
D)  all of the choices. 
A)  must be a corporation formed by professionals. 
B)  must grant all shareholders voting rights. 
C)  must have at least thirty-five shareholders. 
D)  all of the choices.

Question 18

Jen files a suit against Kopper Kettle Company.While the suit is pending,Kopper Kettle merges with Luminous Pans,Inc.,with Luminous absorbing Kopper Kettle.Now,liability in the suit,if any,rests with

Accepted Answer

A)  Jen. 
B)  Kopper Kettle. 
C)  Luminous. 
D)  no one. 
A)  Jen. 
B)  Kopper Kettle. 
C)  Luminous. 
D)  no one.

Question 19

Winding up a corporation's affairs can only be performed under court supervision.

Accepted Answer

A) True 
 B)False

Question 20

Superior Home Products,Inc.,is a corporation.Superior's implied powers enable it to

Accepted Answer

A)  amend the articles of incorporation. 
B)  bring a derivative suit. 
C)  declare dividends. 
D)  perform all acts reasonably appropriate and necessary to accomplish its corporate purposes. 
A)  amend the articles of incorporation. 
B)  bring a derivative suit. 
C)  declare dividends. 
D)  perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.

Exam 29: Corporate Formation, merger, and Termination

A business that holds itself out as being a corporation may not be able to deny corporate status,even if it makes no attempt to incorporate.

After a merger,a disappearing corporation's preexisting rights disappear.

Appraisal rights are normally available in sales of substantially all corporate assets not in the ordinary course of business.

"Piercing the corporate veil" means revealing to shareholders the internal rules of corporate management.

In most cases,merging corporations' officers and employees do not need to approve the merger.

Realty Credit Company and Second Mortgage Corporation plan to consolidate.Most likely,the articles of consolidation will be filed with

Salt Corporation wants to acquire or merge with Pepper Corporation.The board and the shareholders of Pepper are resisting.Salt should

A firm named Scientific Discovery Corporation (SDC)makes an attempt to incorporate for a purpose other than making a profit.SDC is

Eager Beaver Corporation fails to adopt bylaws.Under this circumstance,Eager Beaver is most likely

Corporate officers hire corporate directors.

Candy Corporation has a right of action against Dina.Candy merges with Eats,Inc.,with Eats absorbing Candy.After the merger,Candy's right of action against Dina can be exercised by

Like the bylaws of other corporations,the bylaws of Retail Sales,Inc.,

A close corporation cannot operate as an S corporation.

Skyla and Terry want to form and do business as Unique Boutique Corporation.The state statute governing the formation and operation of their corporation is most likely guided by

To qualify as a professional corporation,Medical Clinic,P.C.,

Jen files a suit against Kopper Kettle Company.While the suit is pending,Kopper Kettle merges with Luminous Pans,Inc.,with Luminous absorbing Kopper Kettle.Now,liability in the suit,if any,rests with

Winding up a corporation's affairs can only be performed under court supervision.

Superior Home Products,Inc.,is a corporation.Superior's implied powers enable it to

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