Exam 7: Methods of Carrying on Business

ABC Ltd.is a closely held corporation.Two of the shareholders serve as directors.As directors,they voted to issue themselves more shares to increase their voting control of the corporation.Which of the following provisions would aid the other shareholders?

If three partners set out a term in their partnership agreement that John would only be responsible for 10 percent of any losses,yet he has to pay 100 percent of a claim because the other partners have no funds,John could seek contributions from the other partners according to the partnership agreement.

Mrs.Marine was a director of a major investment corporation.In the course of her normal work,she identified a land development investment opportunity that she felt would be good for the company and passed along the information to the board of directors.The board rejected the opportunity and told Mrs.Marine she could pursue it on her own.Mrs.Marine is trying to decide if she should take advantage of the investment opportunity.What advice would you offer to her?

Explain the power of a minority shareholder in decision-making situations.

Explain why the law of partnership poses a danger to people carrying on joint business activities.

Distinguish between a partnership and a corporation.

If a person wants to invest in a partnership but avoid the obligations associated with partnership,what can she do?

A corporation is considered to be a separate legal entity from the shareholders who make it up.

John and two friends incorporated a closely held corporation.Each bought an equal number of common shares in the corporation.Each became a director,an officer,and an authorized agent of the corporation.Which of the following is true?

Which of the following is correct with respect to limited partnerships?

In a franchise arrangement,one business enters into a contract with another to sell its product exclusively.Which of the following is true with respect to a franchise?

Shareholders in a closely held corporation can control the rights and responsibilities they have to each other through a shareholders' agreement.

Which of the following statements is correct with respect to the Partnership Act?

Which of the following is a fiduciary relationship?

A shareholder has an obligation not to compete with the corporation.

A director can be held responsible for unpaid taxes,wages,and environmental harm.

Which one of the following situations will result in a partnership existing? Assume that no corporation has been created.

Explain how a person's status as a limited partner could be lost.

Directors owe a fiduciary duty to the shareholders.

Joe is an environmental activist and he acquired shares in MacMillan Bloedel (a forestry corporation),only for the purpose of undermining MacMillan Bloedel,speaking against its practices at annual shareholders' meetings,and getting access to confidential information.Joe spoke against MacMillan Bloedel at every opportunity.Explain his legal obligations to the corporation under these circumstances.