BLAW FINAL!!
minority stockholders can bring two kinds of shareholder lawsuits. what are they?
1) Minority Shareholders Suits 2) Shareholder Derivative Suits
The _____________________ and ________________ are non corporate business organizations that provide limited liability for their owners.
1. LLCs 2. LLPs
List 3 advantages of using a corporation as your business form.
1. Not personally liable 2. Perpetual Life 3. Easy to raise capital by issuing stock or selling bonds
_______________ and ____________ owe fiduciary duties to the corporation, but shareholders do not.
1. Officers 2. Directors
What are the 3 major rights of shareholders?
1. Vote 2. Receive dividends (if declared) 3. Inspect the books at reasonable times and places
Which of the following statements is not true of common stock?
It is ordinarily nonvoting
the owners of a limited liability company are known as:
Members
Dividends are payable in:
Money
which of the following will affect the perpetual life of a corporation?
NEITHER A NOR B a) a change in stock ownership b) the death of a shareholder
in addition to the corporation itself, which of the following parties are ordinarily responsible for corporate debts?
NONE OF THE ABOVE: 1. directors 2. officers 3. directors and officers
a corporation is considered a person for purposes of the due process clause of the United States constitution.
True
a corporation may be judicially dissolved when its management is deadlocked and the deadlock cannot be broken by shareholders.
True
a director is disqualified from taking part in corporate action with respect to a matter in which the director has an undisclosed conflicting interest.
True
a general partner within a limited partnership may be a corporation
True
a partner has the authority to do those acts that are customary for a member of a partnership conducting the particular business of that partnership.
True
a partnership is organized for the profits of its members.
True
a partnership may occur even though the parties did not label their relationship a partnership.
True
creditors of a firm have first claims on the assets of the partnership.
True
debts of a corporation are not the debts of the persons running the corporation or owning shares of stock in it.
True
each partner is an agent of the partnership.
True
electing directors who most reflect the shareholders interests and attitudes is the most effective form of shareholder control.
True
in dealing with the corporation, directors act in a fiduciary capacity.
True
it is possible for a limited partner to be subject to the debts of the firm if the limited partner participates in the control of the business.
True
limited partners may contribute cash or property as their capital contributions.
True
officers and directors may be criminally liable for failure to prevent the commission of a crime if they are found to be the responsible corporate officers.
True
preferred stock is ordinarily non-voting stock.
True
shareholders have the right to bring a derivative action on behalf of a corporation that refuses to exercise its right to bring such action.
True
shares of stocks that have been issued to stockholders in a corporation are said to be outstanding.
True
the corporate form of business continues regardless of changes in stock ownership
True
the fact that parties share profits and losses is strong evidence of the existence of a partnership.
True
the limited liability company combines the tax advantage of the partnership with the limited liability feature of the corporate form of organization.
True
the sale of corporate assets outside the regular course of a corporations business would require the vote of the shareholders.
True
the two most common instruments used to provide the capital structure of a corporation are stocks and bonds.
True
A shareholder can sue to stop a corporation from acting ______________ when the corporation is attempting to exceed its powers.
Ultra Vires
Which of the following is an effective means of notice to purchasers of shares that there are restrictions on the sale?
notation of the stock certificate
in the absence of a provision in the agreement on the sharing of profits, partners share profits:
on an equal basis without regard to capital or services contributed
a valid meeting of the voting shareholders of a corporation requires the presence of a:
quorum
a limited liability company may be classified as a partnership for tax purposes if:
such an election is made in the operating agreement
which of the following is a correct statement concerning the incorporation process?
the incorporation process is essentially a matter of filing the correct papers and fees to the designated government official
in determining the rights of partner Dewy in the firm of Dewey, Cheatham, and Howe, the most important reference is:
the partnership agreement
each limited partner in a limited partnership is entitled to which of the following?
the right to sue the general partner to protect the limited partners interest
which of the following is an incorrect statement about officers?
their authorities as agents is increased if they are shareholders
in a limited partnership, the most limited partners can lose is:
their investment in the limited partnership
a corporation is liable to a third person for the act of its agent:
to the same extent as a natural person would be liable
restrictions on the transfer of stock are valid if they are not unreasonable. (CHECK ANSWER)
(TRUE)
an enterprise that conducts business following a merger or consolidation succeeds to :
ALL OF THE ABOVE: 1. all the rights of the predecessor 2. all of the property of the predecessor 3. all of the debts and liabilities of the predecessor
dissolution of a partnership:
ALL OF THE ABOVE: 1. ends the right of the partnership to exist as a going concern 2. is followed by a winding up period 3. reduces the authority of the partners
a third person should recognize that a partner has limited or no authority if:
ALL OF THE ABOVE: 1. the partner seeks to act for the partnership concerning a matter not within the usual business of the firm 2. the third person knows that the partnership has been terminated 3. the partner seeks to pay a personal obligation by issuing a promissory note in the name of the firm
A shareholder has a right to inspect the books of the shareholders corporation if:
ALL OF THE ABOVE: 1. the request is made in good faith 2. the request is made with proper motives 3. the inspection takes place at a reasonable time and place
in the absence of an express agreement permitting continuation of the business by the surviving partners, they must wind up the business and account for the share of any partner who has:
ALL OF THE ABOVE: 1. withdrawn 2. died 3. been expelled
the partners who manage the limited partnership and are personally liable for the firm debts are ----------- partners.
Active
Pursuant to the -------- theory, when a corporation is so dominated and controlled by shareholders, officers, and/or directorsthat the separate personalities of the individuals and the corporation no longer exist and there is wrongful use of that control, the courts will disregard the corporate entity so as not to sanction a fraud or injustice.
Alter ego
the net assets of a corporation may be referred to as:
Capital
"conglomerate" describes the relationship of equal companies engaged in similar fields of business activity.
False
In a merger, the surviving corporation has all the rights and property of the corporation with which it merged, but none of the debts and liabilities.
False
a board of directors oversight responsibilities for its companies business affairs do not include evaluating managements performance, approving the hiring of executives and approving executive compensation plans, instead such responsibilities are for the shareholders to assume at either regular or special shareholder meetings.
False
a limited liability company is identical to a subchapters corporation.
False
a limited partner can never lose money.
False
a partner admitted as a partner into an existing partnership has unlimited liability for all obligations of the partnership arising before such admission.
False
bankruptcy of only one of the partners does not cause dissolution of the firm.
False
each shareholder owns a proportionate share of the property of the corporation.
False
even limited partners are completely liable for debts of the business.
False
shareholders exercise direct control over their corporation.
False
subchapter s corporations have the benefits of limited liability as in partnerships and are taxed as corporations.
False
the courts have traditionally viewed it as their responsibility to sit in judgment on the wisdom of decisions made by corporate directors.
False
the officers of a corporation are liable for errors of judgment that cause a loss to the stockholders
False
the shares of a close corporation are always held by a single individual.
False
voting trusts are usually illegal.
False
limited liability companies are formed without filing formal articles of organization with the secretary of state, in this sense, limited liability companies are easier to create than corporations. (CHECK ANSWER)
False (CHECK ANSWER)
A _______________________ corporation is taxed like a partnership.
S Corporation
Outstanding stock purchased by the issuing company is called _______________.
Treasury Stock
a public corporation is:
a corporation established for governmental purposes and for the administration of public affairs
a corporation may be prosecuted and convicted of:
a criminal offense if its agent committed the offense while acting within the scope of the agents authority
A shareholder has:
a right to dividends when declared
members of a limited liability company share profits:
according to the terms of the operating agreement
a stockholder approved amendment to the certificate of incorporation may indemnify directors who:
acted negligently
the spread of limited liability corporation statutes resulted from:
an internal revenue service ruling
Beatrice withdrew from a partnership but failed to notify any of the other partners except Tom, who did not have an opportunity to notify the other partners. Simultaneous to Beatrice's notifying Tom, Susan, another member of the partnership, made an authorized contract with a third party. Regarding that contract made by Susan, Beatrice is:
bound because she failed to notify Susan of her withdrawal
the -------- rule allows management immunity from liability for corporate acts where there is a reasonable indication that the acts were made in good faith and with due care.
business judgment
if there is a consolidation of corporations A B and C:
corporations A B and C cease to exist, and a new corporation with the property and assets of the old corporation comes into being
Which of the following is an incorrect statement about directors?
courts will interfere with the boards discretion when they disagree with its actions
where a corporation is properly formed, it is called a corporation:
de jure
regarding distribution of assets upon winding up a partnership, who is paid first?
debts to outside creditors
a corporation that does business in the state in which it was created is called a(n):
domestic corporation
Which of the following is not a factor that may lead to "piercing the corporate well" and imposing liability on corporate owners (shareholders)?
formation of the corporation to avoid personal liability for business obligations
persons who are in partnerships are called ------------ partners.
general
a limited partnership can be formed by 1 or more -------- partners and 1 or more --------- partners.
general, limited
------- of a corporation may occur when management is deadlocked and the deadlock cannot be broken by the shareholders.
judicial dissolution
