Business and Personal Law Test Chapter 17

When two or more companies join together and form a new company.

Consolidation

Group of people that set the broad policies for the corporation and are responsible for seeing that the corporation acts within its power.

Corporate directors

Group of people who implement the policies of the directors by carrying out the day-to-day operations of the corporation.

Corporate officers

A corporation's financial inability to take advantage of a business opportunity provides an exception to the

Corporate opportunity doctrine

When an individual or corporation buys enough stock in another corporation to take over control of it.

Stock acquisition

A corporation that grants a franchise benefits by expanding its business without building new stores.

True

A person who owns stock in a corporation has the right to receive a stock certificate.

True

The government can terminate a corporate for failure to pay taxes or file annual reports.

True

The dissolution of a corporation can come about

by a unanimous vote of the shareholders

Corporations raise money

by selling stock

Name three shareholder rights

1. Receive a stock certificate 2. Receive dividends 3. Sue

Corporate officers are chosen by the __________.

Board of directors

Shareholders may bring a(n) __________ against a corporation if they believe they have been denied their rights as shareholders.

Direct suit

When a corporation makes a profit, they may decide to declare a(n) __________ to be distributed to the shareholders.

Dividend

The profits distributed to shareholders are called

Dividends

A corporation may not finance its business activities through bonds.

False

People who own preferred stock having voting rights in the corporation.

False

Unlike partners in a partnerships, directors of a corporation are not subject to the duty of care or the duty of loyalty.

False

Insider trading is legally considered a(n)

Felony crime

A license that a company grants to a business for the right to use its name and sell its products or services.

Franchise

Unlike corporate stock, corporate bonds earn

Interest

When two companies join together and one keeps its identity while the other loses it.

Merger

A shareholder's right to purchase stock before it is offered to the public is known as his or her __________.

Preemptive right

The right to vote on behalf of other shareholders is called a

Proxy vote

The __________ has developed rules regarding insider trading.

Securities and Exchange Commission