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

A business has an automatic right to do business in the state where it incorporates. Other states may require the business to obtain a certificate of authority.

A close corporation is one whose shares are:

A close corporation is one whose shares are held by members of a family or by relatively few persons.

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

False

When choosing a state in which to incorporate, which of the following factors should be taken in to account?

How the state taxes corporations The fees involved in incorporating The fees for corporate transactions such as stock transfer fees

An association that is not technically a corporation can never be treated as if it were a corporation.

If a business is holding itself out as a corporation (when it is not a corporation), then a court may declare it a corporation by estoppel and impose liability.

Corporate officers hire the initial corporate directors.

If the board of directors are not identified in the articles of incorporation, the incorporators will elect the directors at the first organizational meeting.

Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its timber operation. In the course of his employment, Niles disposes of the operation's waste illegally. With respect to Mountaintop and Niles, liability for this crime most likely rests with:

Mountaintop and Niles.

Raw Resources Corporation authorizes Stefan, its employee, to oversee its mining operation. In the course of this employment, Stefan commits a tort. Liability for this tort most likely rests with:

Raw Resources and Stefan.

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:

Raw Resources and Stefan.

The articles of incorporation cannot set forth the number of shares a corporation is authorized to issue.

The articles of incorporation MUST include the number of share the corporation is authorized to issue.

A court will not pierce the corporate veil of a corporation that is merely too "thinly" capitalized.

Thin or under-capitalization is a ground for piercing the corporate veil. This means the corporation has insufficient capital to meet debts or potential liabilities.

A close corporation may restrict the right of a shareholder to transfer stock.

True

A corporation has perpetual existence in most states unless the articles of incorporation state otherwise.

True

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

True

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

True

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

True

The law of the state of incorporation may restrict the implied powers of a corporation.

True

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

When a court pierces the corporate veil, it rules that the corporate structure should be ignored and shareholders may be held personally liable.

Tom and Sally operate a sky-diving business and decide to incorporate to avoid personal liability for any harm to clients. However, Tom and Sally give no assets to the corporation, keeping all of the equipment in their personal names and paying all business income to themselves as salaries. If a client is injured and sues, may the judge order Tom and Sally to pay the client with their personal assets?

Yes, because the judge would have grounds to pierce the corporate veil.

The Trapp family has operated its own catering business for years, but has never formed a formal business entity. They realize now they should do this. Their concerns are that they maintain ownership within the family, that they not have too many formalities to deal with in maintaining the entity, and that they can all participate in management of the business, as they have been doing. Of the following choices, what would be the best form of entity for them?

a close corporation

Quik Company claims to be a corporation but it is not. Pam signs a contract with Quik that is not performed. In Pam's suit against Quik, a court will likely recognize the firm as:

a corporation by estoppel.

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

a de facto corporation.

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

a de jure corporation.

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

a de jure corporation.

Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors. A reasonable purpose for a stock transfer restriction in a closely held corporation, like the agreement between Bertram, Claudia, and Dynah, is:

a desire to limit the participation of outsiders in the firm.

A distribution to corporate shareholders of corporate profits or income disbursed in proportion to the number of shares held is:

a dividend.

In a given state, a corporation that does business in and is organized under the law in that state is:

a domestic corp

In a given state, a corporation that does business in and is organized under the law in another U.S. state is:

a foreign corporation.

Micro Chips, Inc., is incorporated in the state of New Jersey and is doing business in the state of New York. In New York, it is properly referred to as:

a foreign corporation.

Hailey and Ike hold the first organizational meeting of Java Kiosk Corporation. Probably the most important function of this meeting is:

adopting Java's bylaws.

This close corporation has met certain requirements set out in the Internal Revenue Code and thus qualifies for special income tax treatment. This type of corporation is taxed the same as a partnership, but its owners enjoy the privilege of limited liability. It is:

an S corporation.

Felicity and Gideon want to form and do business as Home Healthcare Corporation. A corporation is:

an artificial person.

The document filed with the appropriate governmental agency, usually the secretary of state, when a business is incorporated is referred to as its:

articles of incorporation.

The responsibility for the overall management of a corporation belongs to the:

board of directors

Errors in the incorporation procedure might become important if they become known to a third party who is attempting to:

bring suit for a tort injury. enforce a contract.

Corporate bylaws must be approved by the appropriate state official before the corporation's first organizational meeting.

bylaws are internal so they do not need to tell the state whatever

Internal rules of management adopted by a corporation or other organization are:

bylaws.

Putting funds or goods together into one mass so that they are mixed to such a degree that they no longer have separate identities is called:

commingling.

A corporation is a legal entity:

created and recognized by state law in most cases.

If a corporation has substantially complied with all requirements for incorporation, the corporation is said to have:

de jure existence.

In corporate law, when a corporation acts beyond the scope of its authority, it is said to:

engage in ultra vires transactions.

Piercing the corporate veil means that a court will ignore the corporate structure and:

expose the shareholders to personal liability.

A shareholder is not an "owner" of a corporation.

false

Any change in shareholders affects the continued existence of a corporation.

false

Only acts that fall within the express powers of a corporation are ultra vires.

false

A public corporation is also known as a publicly held corporation.

false, public corporation is for gov't use publicly held is people who are trading the shares of stock

Professionals such as accountants and attorneys can avoid liability for their acts of malpractice simply by incorporating as a professional corporation.

false, they recieve less protection then would say a traditional way

A corporation has the constitutional protection of:

freedom of speech. freedom from unreasonable searches and seizures. due process.

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

generally allowed to restrict the transfer of its stock.

S Corporations are required to:

have no shareholder who is a nonresident alien and have shareholders who are individuals, estates, or certain trusts.

Articles of incorporation contain:

information about the corporation, including its organization and functions.

A holding company (parent company):

is a company whose business activity consist of holding shares in another company. typically is established in a low-tax or no-tax jurisdiction. are used to reduce or defer U.S. income taxes.

Jim and Kiley are architects and shareholders of J&K, P.C., a professional corporation. Jim supervises Luc, an employee of the firm. As a shareholder, Jim:

may be personally liable for malpractice committed by Luc.

Digitech is a foreign corporation, which means that Digitech:

may be required to obtain a certificate of authority to do business.

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

must be a corporation formed by professionals.

Motor Parts Maker, Inc. (MPM), is a corporation. Norm is an MPM officer. If a criminal case is brought against MPM and its corporate records are sought, their production can be refused on the assertion of the U.S. Constitution's Fifth Amendment privilege against self-incrimination by:

neither MPM nor Norm.

Preferred shares normally have a fixed maturity date on which the firm must pay them off.

no

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

no states have their own laws sometimes

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

partnerships.

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

perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.

Wild & Scenic River Tours, Inc., is a corporation. Wild & Scenic has the implied power to:

perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.

An action in which a court disregards the corporate entity and holds the shareholders personally liable for corporate debts and obligations is:

piercing the corporate veil.

A financing method by which a company sells equity in an existing business to a private or institutional investor is called:

private equity capital.

Stan is a registered agent for Transport, Inc., which incorporated in Utah. As a registered agent, Stan:

receives legal documents on behalf of Transport

Sullivan and Taylor want to form a corporation to provide catering services. The first step in the incorporation procedure is to:

select the state in which to incorporate

The basic steps for incorporation include:

selecting the aggregate number of authorized shares for issuance.

John Provenza is President and CEO of Abalthus, Inc., but there is a limit to what he can do. For example, he does not have the authority to:

sell substantial corporate assets.

If a court decides to pierce the corporate veil, the result is:

shareholders may be personally liable for corporate debts.

Courts will:

sometimes attribute corporate status to an improperly formed corporation to prevent injustice.

Mountaintop Clearview Corporation authorizes Niles, its employee, to oversee its timber operation. In the course of his employment, Niles disposes of the operation's waste illegally. Orson is a Mountaintop shareholder. Liability for Niles's act most likely rests with Orson to:

the amount of Orson's investment in the firm.

For a business organization that wants to expand, incorporation may be:

the best choice because a corporation can obtain more capital by issuing shares of stock.

Mitch owns a corporation with his family. They have a lot of money and so agree that if the company has any losses, they will cover it, so they do not buy insurance. If a court pierces the corporate veil when the company loses a lawsuit, it is most likely because:

the corporation was too thinly capitalized.

The constitutional rights enjoyed by corporations are:

the same as many of those held by natural persons.

For de facto status to be obtained:

there must be a state statute under which the corporation can be validly incorporated.

When individuals purchase shares of stock in a corporation:

they can sue the corporation or the corp can sue them

Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors. Later, Bertram dies. With respect to the stock transfer restriction agreement, Bertram's death most likely:

triggers the division provision.

Articles of incorporation can state generally that the corporation is organized to conduct "any legal business."

true

Common stock provides a proportionate interest in the corporation with regard to control.

true

Common stock provides a proportionate interest in the corporation with regard to net assets.

true

Corporations are entitled to freedom of speech.

true

If shareholders of a close corporation do not follow the laws of the state regarding corporate formalities, the shareholders risk being personally liable for debts of the corporation.

true

The law of the state of incorporation may restrict the express powers of a corporation.

true

To pierce the corporate veil means to ignore the corporate structure, exposing the shareholders to personal liability.

true

When the corporate privilege is abused for personal benefit, the courts will require the owners to assume personal liability.

true

In simple terms, an S corporation can be defined as a corporation:

whose shareholders have limited liability but avoid corporate income taxes.

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

yes

A promoter is not personally liable for a preincorporation contract.

yes he isssss

A court will not pierce the corporate veil of a corporation that is formed merely to evade an existing legal obligation.

yes they will false