Deck 29: Corporate Formation, merger, and Termination

Question 1

The choice of a corporate name is subject to state approval.

Answer 1

True

Question 2

Generally,there is a uniform body of national corporate law.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

Any person who buys common stock acquires voting rights in a corporation.

Question 5

Corporate officers hire corporate directors.

Question 6

A business incorporated in one state has an automatic right to do business in any other state.

Question 7

A shareholder in a professional corporation can be liable for malpractice arising from the rendering of professional services.

Question 8

Express powers of a corporation can be found in the corporate bylaws.

Question 9

A state constitution may resolve a conflict among documents involving a corporation.

Question 10

A corporation has perpetual existence in most states unless the ar?ti?cles of incorporation state otherwise.

Question 11

A close corporation cannot operate as an S corporation.

Question 12

A corporation cannot be formed without a profit-making purpose.

Question 13

A foreign corporation is a corporation formed in another country.

Question 14

A corporation's internal management structure is described in its articles or bylaws.

Question 15

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

Question 16

Express powers of a corporation can be found in the law of the state of incorporation.

Question 17

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.

Question 18

Promoters,not incorporators,must execute the articles of incorporation.

Question 19

A corporate director is an "owner" of the corporation.

Question 20

A corporation whose shares are held by relatively few persons is a partnership.

Question 21

In a merger,only the surviving corporation's shareholders are enti?tled to ap?praisal rights.

Question 22

A sale of all of a corporation's assets requires the approval of the state.

Question 23

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

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 24

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

Question 25

Shareholder approval is required when a corporation buys all of the as?sets of an?other company.

Question 26

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

Question 27

In a consolidation,the consolidating corporations become subsidiaries of the new corporation.

Question 28

Appraisal rights are often the only recourse for shareholders who object to a parent-subsidiary merger.

Question 29

Only a board of directors can initiate the dissolution of a corporation.

Question 30

Appraisal rights are normally available in sales of sub?stan?tially all corporate assets not in the ordinary course of business.

Question 31

When a sale of assets amounts to what in effect is a consolidation,the ac?quiring corporation does not inherit the selling corporation's liabilities.

Question 32

In a short-form merger,neither corporation's shareholders need to approve the merger.

Question 33

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

Question 34

In a share exchange,neither corporation's directors need to approve the exchange.

Question 35

Finn and Glenda want to form and do business as Hobby Crafts Corporation.A corporation is a legal entity created and recognized by

A) a central federal administrative agency.
B) a city or county clerk's office.
C) an artificial legal person.
D) state law.

Question 36

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation.Lily and Moe are Kleen's officers.As in other corporations,the responsibility for the overall management of Kleen rests with

A) the board of directors.
B) the officers.
C) the owners.
D) the shareholders.

Question 37

Pola and Quincey want to form and do business as River Tours Corporation.A corporation can consist of

A) no natural persons.
B) one natural person but not more.
C) one or more natural persons.
D) only more than one natural person.

Question 38

After a consolidation,there is only one surviving corporation.

Question 39

A court can dissolve a corporation for mismanagement.

Question 40

Raw Resources Corporation authorizes Stefan,its employee,to oversee its mining operation.In the course of this employment,Stefan disposes of the mine's waste illegally.Liability for this crime most likely rests with

A) neither Raw Resources nor Stefan.
B) Raw Resources and Stefan.
C) Raw Resources but not Stefan.
D) Stefan but not Raw Resources.

Question 41

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

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 42

Eye Appliance Company and Fast Courier,Inc.,wish to combine all of their assets,stock,and personnel into a new firm to be called Glasses2Go Corporation.This is

A) a consolidation.
B) a merger.
C) an exchange of assets.
D) a takeover.

Question 43

A merger between Frosted Confections,Inc.,and Great Brewing Company,in which Frosted absorbs Great Brewing,can be expressed as Frosted Confections + Great Brewing =

A) Frosted Confections.
B) Hot Coffee Corporation.
C) Hot Coffee Corporation + Iced Pastries Corporation.
D) Iced Pastries Corporation.

Question 44

Stan incorporates his scientific products business as Tech Supply,Inc.Unless the articles of incorporation state otherwise,Tech Supply most likely has

A) a finite, yet-to-be-determined existence.
B) a one-year, nonrenewable existence.
C) a one-year, renewable existence.
D) perpetual existence.

Question 45

Eagle Financial Corporation merges with First Bank Corporation,with Eagle Financial absorbing First Bank.After the merger

A) a different, new corporation is the surviving corporation.
B) Eagle Financial and First Bank are both surviving corporations.
C) Eagle Financial is the surviving corporation.
D) First Bank is the surviving corporation.

Question 46

Vacation Destination,Inc.,and Wonder Resort Corporation plan to merge.Most likely,the ar?ticles of merger will be filed with

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 47

Boutique Corporation would like to change its corporate status to avoid in?come taxes at the corporate level.To qualify,the shareholders must not be

A) corporations.
B) estates.
C) individuals.
D) partnerships.

Question 48

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

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

Question 49

Ruby Red Corporation has six shareholders,four of whom are members of the same family.All of Ruby's shareholders agree in writing to operate without shareholders' meetings.Under the Revised Model Business Corporation Act,this most likely warrants

A) no penalties or sanctions.
B) the imposition of a fine on Ruby.
C) the imprisonment of Ruby's shareholders.
D) the piercing of Ruby's corporate veil.

Question 50

Niki owns O.K.Oil Corporation.Niki uses O.K.'s funds to pay her personal expenses,creates Pure Fuel Corporation to engage in the same business as O.K.,transfers O.K.'s assets to Pure Fuel,and petitions O.K.into bankruptcy.This most likely warrants

A) a bonus to Niki for financial maneuvers.
B) a discharge for O.K. in bankruptcy.
C) a piercing of O.K.'s corporate veil.
D) a review of Pure Fuel's articles of incorporation.

Question 51

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

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

Question 52

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

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

Question 53

Caffeine Café,Inc.,files its articles of incorporation with the appropriate government agency.Least likely to appear in the articles is the name of

A) each of the corporation's incorporators.
B) each of the corporation's shareholders.
C) the corporation.
D) the corporation's initial registered agent.

Question 54

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

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 55

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

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

Question 56

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

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

Question 57

Convenience Mart,Inc.,is a close corporation.Convenience Mart is

A) eligible to make public offerings of securities.
B) exempt from filing a certificate of incorporation.
C) generally allowed to restrict the transfer of its stock.
D) taxed in the same manner as a partnership.

Question 58

The abbreviation "P.A." in the name "Painless Dental,P.A." means that this organization is

A) a private association.
B) a professional association.
C) a public association.
D) a publicly administered corporation.

Question 59

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

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 60

Stable Foundation Construction Corporation's articles list an incorrect address for its incorporator.Under this circumstance,Stable is most likely

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

Question 61

Through a certain transaction,Corporate Properties,Inc.,acquires all of the shares of Downtown Realty Corporation for some of Corporate's shares.Both Corporate and Downtown continue to exist.This is

A) a consolidation.
B) a share exchange.
C) a short-form merger.
D) a termination.

Question 62

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 oth?er?wise avoid this double taxation? If so,how?

Question 63

Raven is a shareholder of Quantum Mechanix Corporation.Raven could normally ex?er?cise appraisal rights if Quantum participated in

A) a consolidation.
B) a dissolution.
C) a takeover.
D) a winding up.

Question 64

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

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 65

Precise Device Corporation and Quality Instruments,Inc.,decide to merge.This corporate combination does not require the approval of

A) Precise and Quality's directors.
B) Precise and Quality's officers and employees.
C) Precise's shareholders.
D) Quality's shareholders.

Question 66

Pink Boutique Company and Purple Kiosk Company decide to consolidate.This corporate combination does not require the approval of

A) Pink and Purple's directors.
B) Pink and Purple's officers and employees.
C) Pink's shareholders.
D) Purple's shareholders.

Question 67

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.Mall Stores combines with Niche Retail,but only Mall Stores continues to exist.This transaction was

A) a consolidation.
B) a share exchange.
C) a short-form merger.
D) a termination.

Question 68

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 de?cide to cease business.Can they simply dis?solve their corporation at will? If so,what are the steps in the process?

Question 69

Ruff Games,Inc.,wishes to ac?quire a controlling interest in Smart Toy Com?pany by buying its stock.A public offer by Ruff Games to Smart Toy share?holders is

A) a buyout notice.
B) a golden parachute.
C) an acquisition call.
D) a tender offer.

Question 70

Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation.With respect to Heavy Hydraulics's liabilities,Giant Lift is

A) automatically responsible.
B) not responsible under any circumstances.
C) responsible if Heavy Hydraulics is a competitor of Giant Lift.
D) responsible if the sale is actually a merger or consolidation.

Question 71

Standard Business Corporation can be compelled to dissolve by

A) its creditors only.
B) itself, through its shareholders and directors, only.
C) itself, through its shareholders and directors, or the state.
D) the state only.

Question 72

Like other corporations,Workaday Personnel Corporation can expand its operations through

A) a liquidation and distribution of its assets.
B) a purchase of a controlling interest in another corporation.
C) articles of dissolution filed voluntarily with the state.
D) a purchase of raw materials to be converted into finished goods.