Deck 10: Corporate Law and White-Collar Crime

Question 1

What is the minimum amount of shares of a public corporation that might give activist shareholders effective control of the corporation?

A)51%
B)49%
C)25%
D)10%
E)30 %

Answer 1

D

Question 2

Seven college friends decide to incorporate their business. The business's financial position steadily deteriorates and it soon becomes unable to pay its debts. In total, the company owes its creditors $500,000 but has assets of only $10,000. Who or what can the creditors successfully recover against?

A)The shareholders of the company
B)the directors of the company.
C)both the company and its owners
D)the corporation
E)the managers of the company

Answer 2

D

Question 3

Under what circumstances does a shareholder have a right to share in the profits of the company?

A)Upon the presentation of a creditor's petition for the winding up of the company
B)When the company has been wound up and there are assets remaining after all creditors have been paid
C)When the directors declare a dividend
D)When all monies owed to the company has been repaid
E)When the company has been dissolved

Answer 3

C

Question 4

The Management of Warrenco Limited has just circulated a notice convening the annual general meeting of the company to all shareholders. Harry Jessup, a major shareholder of the company is out of the country on vacation and will not be able to attend the meeting. Harry however wishes to exercise his voting rights at the meeting as he is very dissatisfied with the manner in which the affairs of the company are being conducted. Which of the following actions can Harry reasonably take?

A)Appoint a proxy
B)Appoint a lawyer to represent him at the meeting.
C)Ask the directors to delay voting on all important matters until he returns
D)Obtain a copy of the agenda and submit his vote on relevant matters in advance of the meeting.
E)Obtain an injunction stopping the directors from convening the meeting.

Question 5

Which of the following is a characteristic of common shares?

A)They have voting rights for directors
B)They carry a preferential right to distribution of assets on breakup.
C)They carry veto rights in annual general meetings of the company
D)They allow for the payment of lower rates of withholding tax on declared dividends
E)They attract a greater amount of dividend

Question 6

Under what circumstances can a shareholder share in the assets of the company?

A)When the company has been dissolved
B)When all monies owed to the company has been repaid
C)When the directors declare a dividend.
D)When the company has been wound up and there are assets remaining after all creditors have been paid
E)Upon the presentation of a creditor's petition for the winding up of the company

Question 7

Which of the following is a criterion for a court piercing the corporate veil?

A)There is a judgment against the corporation that remains unpaid
B)The company is a mere sham of another entity and fraud or conduct similar to fraud is involved.
C)Unless this is done, creditors of the company will suffer hardship
D)The shareholders of the company have been adjudged bankrupt.
E)The corporation has refused to pay a debt

Question 8

Under which of the following circumstances is it permissible for a company to make default in the repayment of monies due on bonds that it has issued?

A)When the company is unprofitable
B)When the directors have been unable to declare a divided
C)When an annual general meeting has not been held within the timeframe required by law.
D)All of the above
E)None of the above

Question 9

Joshua is a shareholder in Great Lakes Limited, a company that manufactures sporting equipment. At the company's last annual general meeting, Joshua and the other shareholders were informed about some of the company's plans to expand its operations in a new product line. Armed with this information, Joshua started his own company which manufactured and sold the same products that great Lakes had planned to commence manufacturing. Which of the following statements is correct?

A)By starting his own company on the basis of information learnt at the annual general meeting, Joshua has breached a fiduciary duty owed to Great Lakes.
B)Joshua has not breached any duty owed to Great Lakes.
C)Great Lakes can obtain an injunction stopping Joshua from further acting on the information he learnt in the meeting.
D)By starting his own company in order to compete with Great Lakes, Joshua has breached a fiduciary duty owed to Great Lakes.
E)Great Lakes can obtain damages against Joshua for breach of a duty owed to it

Question 10

Which of the following is NOT a right of shareholders a corporation?

A)To call special meetings to deal with particular problems when the Board of Directors refuse to call one.
B)To vote at shareholders meeting
C)To attend annual general meetings of the company
D)To receive information from the directors about the daily business of the company.
E)To assign voting rights to a proxy.

Question 11

Joshua is a Director of Great Lakes Limited, a company that manufactures sporting equipment. At one meeting of the Board of Directors, Joshua was informed about some of the company's plans to expand its operations in a new product line. Armed with this information, Joshua started his own company which manufactured and sold the same products that Great Lakes had planned to commence manufacturing thereby capturing the initial market. Which of the following statements is correct?

A)Joshua does not owe any duties to Great Lakes
B)Joshua has not breached any duty owed to Great Lakes as any person is free to take advantage of a new business opportunity.
C)By starting his own company on the basis of information learnt at the meeting, Joshua has breached a fiduciary duty owed to Great Lakes.
D)As Joshua did not steal the information from confidential files, he is free to use it.
E)Simply by starting his own company in order compete with Great Lakes; Joshua has breached a fiduciary duty owed to Great Lakes.

Question 12

Which of the following is a characteristic of preference shares?

A)They carry multiple voting rights
B)They attract a greater amount of dividend
C)They allow for the payment of lower rates of withholding tax on declared dividends
D)They have priority over common shareholders in the corporation's assets when the company is dissolved.
E)All of the above.

Question 13

Which of the following persons is not termed an "officer" of the company?

A)chief executive officer
B)president
C)vice president
D)shareholder
E)chief operating officer

Question 14

Which of the following terms is NOT typically found in a shareholder's agreement? Terms

A)conferring a right of first refusal to existing shareholders to buy the shares of other shareholders before outsiders can purchase the shares
B)that determine the value of shares
C)that each shareholder will be on the board of directors
D)that outline the rights to buy shares if there are dissident shareholders
E)all of the above are typically found in shareholders agreements.

Question 15

Which of the following terms refers to the maximum number or value of shares that a corporation is permitted by its charter to issue?

A)amortized share capital.
B)authorized share capital
C)regulated share capital
D)chartered share capital
E)aggregate share capital

Question 16

Under which of the following circumstances would a court exercise powers conferred by the oppression remedy given in the Canada Business Corporations Act?

A)When the company is being dissolved
B)When there is a takeover bid
C)When one shareholder has taken advantage of another
D)When there is an application to pierce the corporate veil
E)In cases where the directors have breached a fiduciary duty owed to the company

Question 17

Which, of the following, if any, would be oppression in the context of shareholder remedies?

A)An attempt by one group of shareholders to take advantage of a single shareholder or group of shareholders
B)An attempt by the shareholders to take unfair advantage of the officers of a corporation
C)An attempt by the shareholders to take unfair advantage of the directors
D)A failure of the corporation to declare dividends in a profitable years
E)All of the above would be examples of oppression

Question 18

What is the standard of care of directors under the Canada Business Corporations Act? To exercise the care, diligence and skill that

A)an experienced professional would exercise in comparable circumstances.
B)a reasonably prudent person would exercise in comparable circumstances.
C)a reasonable professional would exercise in comparable circumstances.
D)an experienced director would exercise in comparable circumstances.
E)the ordinary qualified director would exercise in comparable circumstances.

Question 19

Which of the following falls within the scope of the fiduciary duty of a director?

A)To disclose any indirect interest in contracts made with the corporation.
B)To disclose any direct interest in contracts made with the corporation.
C)To refrain from voting on any matter concerning a contract made with the corporation
D)B and C
E)All of the above.

Question 20

Which of the following statements most accurately describes the legal principle established in the case of Solomon v. Solomon?

A)In the case of fraud, the owners of a company may be personally liable for all debts incurred by it.
B)Directors must act in good faith and exercise their powers in the best interests of the company
C)Directors owe fiduciary duties to the company
D)A company has a separate legal existence from its owners
E)A company may survive the death of its members

Question 21

Which of the following is NOT considered a legal person?

A)A private corporation
B)A public corporation
C)A partnership
D)An individual
E)All but D

Question 22

A bond is:

A)The equivalent of a charge on its assets
B)A debt of the corporation
C)An equity interest in the corporation
D)Both A and C
E)All of the above

Question 23

Which of the following is TRUE?

A)The shareholder has an automatic right to a dividend if a profit is made by the corporation.
B)A shareholder has a right to share in the corporation's assets upon its winding up.
C)A shareholder is always entitled to one vote per one share owned.
D)A shareholder is entitled to use the assets of the company
E)Both A and C

Question 24

Dirk Davis purchases a piece of industrial wasteland. He knows that there is contamination in the soil, but he also knows that it is buried very deep and believes that it won't become known for at least 20 years. He incorporates Florida Condos Ltd, builds a condominium tower, and sells all the units - without, of course, disclosing the contamination. He then has the corporation, of which he is sole shareholder and director, distribute all the profits to him as dividend. The contamination "surfaces" within 12 months and the condo owners want to sue. Florida Condos has no assets, however, so they want to sue Dirk personally. Which of the following is FALSE?

A)It is generally very difficult to persuade a court to pierce the corporate veil.
B)It is not enough that it be just and equitable to pierce the corporate veil.
C)Since Dirk knew of the contamination, his conduct was tantamount to fraud and justifies piecing the corporate veil.
D)Dirk will not be liable personally because it was corporation that sold the condos not him personally
E)The court could hold Dirk personally liable for financial losses as well as punitive damages

Question 25

What is the right of a shareholder to permit another to vote her share called?

A)A convertible share
B)A proxy right
C)A voting right
D)A preference right
E)An election

Question 26

Moe, Larry, and Carl form a corporation, Stooges Ltd. They are the only shareholders. They die together in a plane crash. David Addison, a creditor of Stooges Ltd., brings an action against the corporation, but does not obtain judgment until after the three shareholders die. He is advised by his lawyer that Stooges Ltd. is now insolvent. Which of the following is true?

A)Addison may enforce his judgment against the estates of Moe, Larry, and Carl, or any of them.
B)Addison may bring a fresh action against estates of Moe, Larry, and Carl, or any of them.
C)Addison is stuck with his worthless judgment against the corporation.
D)Stooges Ltd. ceased to exist upon the death of its only shareholders.
E)Both A and D

Question 27

The most common document used to incorporate a corporation in Canada is called

A)Articles of Incorporation
B)Letters Patent
C)Memorandum of association
D)Shareholders agreement
E)Incorporation agreement

Question 28

The term that refers to the way a corporation is internally and managed to meet both its internal and external responsibilities is called

A)auditors liability
B)directors liability
C)shareholders agreement
D)corporate governance
E)corporate organization

Question 29

If a corporation issues a security that gives a right to share in its profits, if any, what is that security called?

A)a share
B)a bond
C)a debenture
D)capital
E)a dividend

Question 30

If the assets in an insolvent business are not sufficient to satisfy the business's debts, what can the creditors of the business seize?

A)The personal assets of shareholders if the business is a corporation.
B)The assets of one shareholder and ignore the assets of the other shareholders if the business is a corporation.
C)The personal assets of the owner if the business is a sole proprietorship.
D)Both B and C
E)All of the above

Question 31

What is issued share capital?

A)The number of shares a corporation is authorized to issue by its charter
B)The number of shares of all types a corporation has actually issued
C)The number of voting shares a corporation can issue
D)The number of voting shares a corporation has actually issued
E)The total value of all shares of a corporation

Question 32

Kim Phu and Joey Pantalone form a partnership. Kim and Andy Tortellini form a corporation. Kim dies. Which of the following is TRUE?

A)Only the partnership is dissolved
B)Only the corporation is dissolved
C)Both the corporation and the partnership are dissolved
D)Neither the corporation nor the partnership is dissolved
E)Andy and Joey become partners.

Question 33

Mel Fastman starts up an appliance business as a corporation, Nobody Inc., of which he is the sole shareholder. Fastman purchases the inventory, sells it to Nobody, and takes back a chattel mortgage. The business fails. There are a number of creditors of Nobody, all of whom are unsecured. Which of the following is TRUE?

A)The claims of the creditors rank ahead of any claims Fastman has against Nobody.
B)In this situation, the creditors will sue Fastman personally and collect from him.
C)Fastman's chattel mortgage takes priority over the claims of the creditors.
D)Fastman's scheme is fraudulent, or akin to fraud, and the corporate veil will be pierced.
E)Both A and D

Question 34

You purchase 50 of the 50,000 issued shares of Trainco Ltd, for $100. The company goes bankrupt. Creditors claim $5,000,000. How much is your liability?

A)All you lose is the $100 investment you made
B)$5,000
C)$5,000,000
D)It depends on whether the creditors decide to sue you.
E)Zero, since your investment is a first claim on the assets of the corporation.

Question 35

Which of the following statements about bonds of a corporation is TRUE?

A)All bonds have a right to share in the profits of a corporation
B)Bonds usually require regular payments as loans do
C)Bonds always have voting rights
D)All bonds can be converted to shares
E)Both A and D

Question 36

Which of the following statements about shares of a corporation is TRUE?

A)All shares issued by a corporation must have voting rights.
B)All shares can be voted by proxy
C)All shares must be equal, none can have a preference
D)All shares can be converted into bonds
E)Both C and D

Question 37

When a private corporation decides to sell its shares to the public for the first time it is called

A)a prospectus
B)an IPO (initial public offering)
C)a share transfer
D)share capital
E)insider trading

Question 38

Which of the following right does a shareholder in a corporation possess?

A)The automatic right to a dividend if the corporation makes a profit that year.
B)The right to a dividend only if the board of directors declare a dividend
C)The right to attend the corporation's annual general meeting
D)Both B and C
E)Both A and C

Question 39

Ali Khan has a plan to make his business "judgement proof". He incorporates a holding company called Khanco Ltd., which owns all the shares of a subsidiary; Khanex Inc. Khanex operates his business. As Khanex makes profits, they are distributed in full by dividends to Khanco. Khanco then lends the money back to Khanex for purchasing assets, and registers a security interest in those assets. If Khanex runs into financial difficulty, which of the following is true?

A)This is a perfectly legitimate (or at least legal)scheme
B)Khanco's security interests takes priority over the claims of any unsecured creditors of Khanex, even though Khanex is subsidiary to Khanco.
C)Before extending credit to Khanex, its creditors should have checked to see if there were any registered security interests attaching to its assets.
D)Both A and B
E)All of the above

Question 40

Lisa Larue operated a beauty parlour under the name You Look Marvelous. Initially it was a sole proprietorship, but after being in business for a year, Lisa decided to incorporate as YLM Ltd. The bank with which she had been dealing for the past year demanded that she now sign a demand promissory note, which she did, as "Lisa Larue". When the note was not paid by YLM, the bank sued Lisa personally. Which of the following is TRUE?

A)Lisa is not liable. The whole point of incorporating was to obtain limited liability.
B)Lisa is liable because she did not make clear in the note that she was signing on behalf of YLM Ltd.
C)Lisa is not liable because the bank knew that Lisa had incorporated and therefore intended not to assume personal liability for the business's debts.
D)Lisa is liable because she is the sole shareholder
E)Lisa is not liable as the promissory note is void due to mistake

Question 41

Which of the following is a breach of fiduciary duty by a director of The Hudson's Bay Co.?

A)Opening a rival department store
B)Opening a law firm
C)Accepting a position as a director of a bank
D)All of the above
E)None of the above

Question 42

Which of the following is TRUE?

A)A director must take orders from the president of the company.
B)A director is involved in the day to day running of the company
C)A director is automatically a CEO (Chief Executive Officer)of a corporation.
D)A director may be personally liable for torts that she commits on behalf of the corporation.
E)Both B and D

Question 43

A public corporation must have at least three directors, two of whom are outside directors. An outside director is someone who is:

A)Not an officer
B)Not an employee
C)Neither an officer nor an employee
D)Not a shareholder
E)Also a director of another corporation

Question 44

Malcolm Obrien was asked by Theresa Cho to be a director of her company. Malcolm agreed, but apart from accepting the title of director he had no idea what was going on in the business. There were never any formal board of directors meetings. The business went bankrupt and Revenue Canada sued Malcolm for $10,000 for income tax withheld by the company from employee wages but not remitted. The money was used to try to keep the business afloat. The employees are also suing for five months' unpaid wages. Which of the following is true?

A)Malcolm is not liable for either claim as he had no involvement with the business.
B)Malcolm is not liable for the Revenue Canada claim as he didn't receive any of the money personally.
C)Malcolm is liable for the wage claim
D)Malcolm is liable for the Revenue Canada claim.
E)Both C and D

Question 45

A director of Kuolema Publishing Company Ltd. marries a director of a competitor, Finlandia Publishing Ltd. The shareholders of Kuolema Publishing are concerned about confidential information being passed between the two companies. Which of the following is true?

A)There is nothing the shareholders can do as people are free to marry whomever they choose.
B)The marriage is a breach of the fiduciary obligations owed to the corporation.
C)Only a president or senior officer owes a fiduciary duty to the corporation.
D)The mere possibility that the director will share confidential information does not constitute a breach of fiduciary duty.
E)Both A and C

Question 46

Osiris Corporation located a piece of vacant land, which it thought was a good investment for speculative purpose. Tommy Tolles, a director, approached the owner before Osiris Corporation's real estate agent did and bought the property. Tolles later resold the property for a profit. The corporation wants to take action against Tolles. What can it do?

A)Nothing as that is the competitive, free enterprise system
B)Remove Tolles from the board of directors
C)Sue Tolles for the amount of any profit
D)Prohibit Tolles from paying a dividend
E)Both B and C

Question 47

Lars was the director of a corporation that operated as a travel agency. The industry was subject to government regulations and the maintenance of trust funds on behalf of travelers who paid for their tickets. Lars left the operation of the corporation to the officers and never informed himself of the obligations which the corporation had within the travel industry. Consequently, it came as a surprise to him when the corporation's licence to operate as a travel agency was suspended for non-compliance with government regulations. The corporation had to shut down its business, and faced severe penalties from the government for non-compliance. Which of the following is TRUE?

A)The shareholders could successfully sue Lars in tort for breaching his duty to exercise the skill of a reasonable person.
B)The shareholders could successfully sue Lars for breach of his fiduciary duty to act honestly and in good faith.
C)The shareholders' only remedy is to have Lars removed as a director of the corporation.
D)The shareholders have no remedy against Lars, only against the officers of the corporation who did not comply with the government regulations
E)Both A and B

Question 48

Which of the following information of the corporation can a shareholder obtain by right?

A)The original accounting books and records that support the financial statements.
B)The salary and bonus of the president of the corporation
C)Research regarding new product development
D)Both A and B
E)None of the above

Question 49

Marcel Lepine and Charles Aucoin are the two equal shareholders of a corporation that runs a clothing business. They begin to fight to the extent that they won't speak to each other even to manage the business. Marcel brings a court application under the shareholder oppression remedy to get a court order that the corporation buy his shares. The corporation has the money to do so, but Charles won't agree to the purchase. Which of the following is TRUE?

A)Marcel will not be successful on the court application because there has merely been a deadlock and no oppression.
B)Deadlock between shareholders is sufficient grounds for an order under the shareholder oppression remedy.
C)The court will only order a sale to strangers and not order the corporation to purchase Marcel's shares.
D)This is a common situation and not serious enough to justify any of the oppression remedies.
E)The court cannot order Charles to agree to the purchase.

Question 50

In which of the following is there NOT a fiduciary duty owed?

A)Officer of a corporation to the corporation
B)Agent to her principal
C)Director of a corporation to the corporation
D)Partners to each other
E)Shareholder of a corporation to the corporation

Question 51

Cynthia Rattle is a shareholder in the Sunrise Corporation, holding 25% of its shares. She hears a rumour that Sunrise is developing a new product. She may want to buy more shares if this is so, but first wants to learn more details about the product. The CEO refuses to tell her anything about it. What are her rights as a shareholder?

A)She has a right on her own to call a special shareholders' meeting.
B)She has the right to attend the annual general meeting
C)She has the right to information about the development of the product and to force the company officers to answer question about it at the annual general meeting
D)Both A and B
E)None of the above

Question 52

Jill Nolte is a director of Accucomp Limited. It becomes insolvent. For which of the following would Nolte be personally liable?

A)Amounts due from failure to pay for goods ordered by Accucomp
B)For injury to a customer caused by the negligence of an Accucomp employee
C)For income tax deducted from employee wages but not sent to the government.
D)Both A and C
E)All of the above

Question 53

Which of the following is an example of breach of fiduciary duty?

A)The directors of a corporation refuse to give a pay raise to the employees although they have not received one for five years.
B)A director makes a profit of $120,000 from a contract between the corporation and a firm in which he has an interest after he has made full disclosure of his interest to the board of directors and abstained from the vote on the contract.
C)An officer of a corporation learns of a business opportunity intended for the company and intercepts it for his own benefit
D)The directors refuse to declare dividend contrary to a request by its preferred shareholders.
E)A shareholder owning 2% of the outstanding shares starts a business in direct competition with a corporation in which he holds shares.

Question 54

Marcel Provost is a shareholder of Armstrong Realty Corp. He is not engaged in the management of the company. The other shareholders are Baun and Brewer, and they run the business. Armstrong Realty purchases a piece of land from Baun and Brewer for $100,000. Provost learns that the land is worth only $50,000. Which of the following is true?

A)The corporation has acted in a way that unfairly disregarded Marcel's right as a shareholder.
B)The court could set aside the contract between Baun and Brewer and Armstrong Realty.
C)The court could order Armstrong to purchase Provost's shares
D)Both A and C
E)All of the above

Question 55

As a favour to a friend, Jane Monroe became a director of Urban Attitudes, Inc. It went bankrupt and didn't send income tax money deducted from wages to the government, but used the money in a fruitless attempt to save the business. Jane did not attend any board meetings and didn't know of the failure to send the money to the government. Which of the following is true?

A)Jane is not liable to pay the taxes because she didn't know of the failure to send in the money.
B)Jane is not liable to pay the taxes because she was not personally involved in the failure to send in the taxes.
C)Jane is liable merely because she was a director at the time the corporation failed to send in the money.
D)Jane is not liable to pay the taxes because she was not paid for being a director.
E)Both A and B

Question 56

Which of the following statements concerning shareholders is FALSE? Shareholders

A)have a right to receive notice of and attend the corporation's annual general meeting.
B)have a right to see the daily accounting books and corporate business files.
C)have a right to call special meetings of the corporation in particular situations where the Board of Directors refuses to call one.
D)that have voting rights have the rights to elect directors of the corporation.
E)have a right to seek a remedy if they have been unfairly treated by other shareholders.

Question 57

Which of the following does NOT belong in this group?

A)employees
B)common shareholders
C)directors
D)officers
E)preferred shareholders

Question 58

Ron Sanyo is a director of Tippet industries, a business that imports clothing. Ron learns of a good deal on clothes from Cuba and wants to start his own company to take the Cuba deal. If he does so, he will have breached which, if any, of the following?

A)Director's negligence
B)Shareholder oppression
C)Fiduciary duty
D)Both A and B
E)All of the above

Question 59

Which of the following has ultimate control of a corporation?

A)the government minister responsible for corporations.
B)the shareholders
C)the officers
D)the directors
E)senior management

Question 60

Smith, Jones, and Brown incorporated a company called Yakima Ltd. The three were the only shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the company, but they disliked his personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and employee and raised their own salaries as employees. They then voted Smith out as a director at the next shareholders' meeting. Which of the following provisions of the Corporations Act would aid Smith?

A)Shareholder oppression
B)Pre-emptive rights
C)Indoor management rule
D)Derivative action
E)Dissent procedures

Question 61

Shareholders elect directors of a corporation and directors elect the officers.

Question 62

Which of the following statements is FALSE?

A)Over a third of Canada's largest 100 companies report being the victims of white collar crime most years
B)most white collar criminals who are convicted of multiple offences serve their jail terms consecutively not concurrently
C)the typical person who commits a white collar crime is a middle manager with about 10 years of experience
D)many large corporations are asked to pay bribes even though it is illegal
E)the maximum prison term for fraud in the Criminal Code is 14 years in jail

Question 63

Andy works for a bank in mergers and acquisitions. Andy knows that Airfax Inc. will be taken over in a few weeks and he tells his friend Dan that if he buys shares in Airfax right now he will make lots of money when the takeover is announced. That day Dan then purchased $100,000 worth of Airfax shares. Two months later when the takeover bid was announced, Dan sold his Airfax shares for $180,000, a profit of $80,000. As a result which of the following statements is FALSE?

A)Dan is guilty of insider trading
B)Andy is guilty of tipping
C)Andy is guilty of insider trading
D)both Dan and Andy could potentially face significant fines
E)both Dan and Andy could potentially face jail time of up to 10 years

Question 64

Tony was a lawyer who practised in Ottawa and he stole a total of $6,200,000 from over 80 of his clients. Based on what happens in most cases where lawyers are caught stealing from their clients, which of the following statements is TRUE?

A)Tony will probably serve many years in jail for his actions
B)the Law Society can permanently prevent him from practising law again
C)the Law Society has to report Tony's illegal actions to the police
D)most of Tony's clients will pursue criminal charges against him and sue him in civil court as well
E)all of the above are true

Question 65

The Court will pierce the corporate veil in all cases in where it is just and equitable to do so.

Question 66

A private company does not need to have any directors.

Question 67

Canada has a poor record when it comes to white collar crime because

A)there is no national securities regulator in Canada only many provincial regulators
B)the RCMP lacks the money and manpower to prosecute many major cases
C)it is difficult to meet the criminal burden of proof to get a conviction
D)the risk of being caught is worth the reward of large illegal profits
E)all of the above

Question 68

If a subsidiary is guilty of fraud the parent company is not guilty unless it knew of or participated in the fraud.

Question 69

A major disadvantage of a company issuing bonds is that the bondholders may exercise their voting rights and take over the company.

Question 70

Benny Ripoff is a con artist who offers investors great returns on their money. He funds early investors' returns by taking money from later investors and there is little or no legitimate revenue generating investments at all. Benny shows fraudulent statements that falsely report non-existent assets. This type of activity is called

A)insider trading
B)tipping
C)insurance fraud
D)a Ponzi scheme
E)a shotgun agreement
TRUE/FALSE QUESTIONS

Question 71

IMET is the organization designed to

A)target white collar crime and was set up by the RCMP
B)compensate investors who are victims of fraud schemes
C)promote ethical business practices in Canada
D)protect minority shareholder interests
E)put pressure on corporations to pay executives reasonable salaries in comparison to the average worker

Question 72

Preferred shareholders have the right to receive dividends before common shareholders but do not control who the directors of the corporation will be.

Question 73

The incorporation of a company means that its common shareholders will be personally responsible for any debts it incurs.

Question 74

Which of the following statements is TRUE?

A)Canada has a reputation of being soft on white collar crime
B)Most victims of fraud receive full compensation from the government
C)Most people convicted of fraud receive lengthy jail terms
D)Most people convicted of white collar crimes are out on parole quite soon and do not serve the full jail time they were sentenced to
E)Both A and D

Question 75

As owners of the company, shareholders have an unrestricted right to corporate information.

Question 76

Which of the following statements is FALSE? Executive compensation for large public corporations

A)is set by the directors of the corporation
B)is usually only very large if the corporation has been very profitable
C)is disclosed to the public
D)often includes salary, stock options and bonuses
E)is often excessively out of proportion to the income of the average worker in their company

Question 77

Buying or selling a security of a public company with knowledge about material information about the company that has not been publicly disclosed is

A)tipping
B)insider trading
C)fraud
D)conspiracy
E)legal if you work for the company

Question 78

Neera agreed to be a director of the corporation at which she worked. Apart from accepting the title of director, she had no idea what was going on in the business. There were never any formal directors' meetings. The business went bankrupt and Revenue Canada sued her for $10,000 for income tax withheld by the Corporation from employee wages but not sent to Revenue Canada. The money was used to try and keep the business afloat. The employees are also suing for 5 months unpaid wages. Which of the following is (are)true?

A)Neera is not liable for either claim as she had no involvement with the business
B)She is not liable for the Revenue Canada claim as she didn't receive any of the money personally
C)She is liable for the Revenue Canada claim only
D)She is liable for the unpaid employee wages claim only
E)She is liable for both the Revenue Canada in the unpaid wages claim

Question 79

An IPO occurs when a private corporation decides to first sell its shares to the public.

Question 80

Executive compensation for the largest public corporations is excessively out of proportion to the wages of the average worker.