Exam 38: Corporations: Formation and Financing

Convertible bonds allow shareholders to exchange their bonds for shares of company stock.

Corporate ______ are rules and regulations that govern the corporation's internal management.

Which of the following is not required in a corporation's articles of incorporation under the Revised Model Business Corporation Act?

A court may hold that a defective corporation is a[n] ______ in order to prevent it from claiming it is not a corporate entity in order to escape liability to a third party.

Which of the following adopts corporate bylaws?

If the incorporator or promoters make an error or omission during the incorporation process, courts may rule that the organization is not a corporation, in which case the organization may be ruled a[n] ______ corporation.

"Horse Tracks." Martha, Greg, and Prudence decided to form a corporation called Horse Tracks to raise horses. They all began the corporate creation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Martha, Greg, and Prudence had entered into while organizing the corporation. Belinda, the seller of the feed claimed that she had not been fully paid and threatened to sue the corporation. The contract Martha, Greg, and Prudence had with Belinda did not reference liability after the new corporation came into legal existence. Martha, Greg, and Prudence asked for a novation, but were uncertain as to whether that would occur. -Which of the following describes the friends who agreed to buy stock?

Which of the following is false regarding corporations?

List the six express corporate powers set forth in the text.

Corporations have only those powers that states grant them.

Which of the following is false regarding requirements needed for a business to qualify as an S corporation?

A corporation is a[n] ______ corporation in the state in which it is incorporated.

A corporation is a[n] ______ corporation in states in which it conducts business but is not incorporated.

In what two ways do courts interpret subscription agreements?

A corporation must be dissolved if over 50% of the shareholders die.

"Horse Tracks." Martha, Greg, and Prudence decided to form a corporation called Horse Tracks to raise horses. They all began the corporate creation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Martha, Greg, and Prudence had entered into while organizing the corporation. Belinda, the seller of the feed claimed that she had not been fully paid and threatened to sue the corporation. The contract Martha, Greg, and Prudence had with Belinda did not reference liability after the new corporation came into legal existence. Martha, Greg, and Prudence asked for a novation, but were uncertain as to whether that would occur. -What were Martha, Greg, and Prudence seeking by requesting a novation in regards to the lawsuit threatened by Belinda?

"Horse Tracks." Martha, Greg, and Prudence decided to form a corporation called Horse Tracks to raise horses. They all began the corporate creation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Martha, Greg, and Prudence had entered into while organizing the corporation. Belinda, the seller of the feed claimed that she had not been fully paid and threatened to sue the corporation. The contract Martha, Greg, and Prudence had with Belinda did not reference liability after the new corporation came into legal existence. Martha, Greg, and Prudence asked for a novation, but were uncertain as to whether that would occur. -Which of the following is a term used to identify Martha, Greg, and Prudence in their arranging for necessary capital and financing for the corporation?

Corporations have implied powers.

Which of the following is a term for profits kept by a corporation for reinvestment?

A ______ corporation is a corporation created by the government to help administer law.