Exam 4 Blaw practice Qs

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 • only if the agent was expressly authorized to perform the act • only if the agents act was a crime • only if the agents act was based on an intent to benefit the corporation

To the same extent as a natural person would be liable

Outstanding stock purchased by the issuing company is called ________________

Treasury Stock

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 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

Each partner is an agent of the partnership

True

The sale of corporate assets outside the regular course of a corporations business would require the vote of the shareholder

True

Dividends are payable in _________

money, products manufactures, shares of other corporation held by the corporation.......All the above

A ______________ corp is taxed like a partnership

Subchapter S

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 • an error in business judgment, assuming no other reasonable corporation would have committed such an error • operating without a corporate charter if the corporation has never sought a charter from the secretary of states office, or if its directors and or officers either knew of or should've known that the secretary of states office had revoked the charter • none of the above; a corporation itself is not subject to criminal prosecution and conviction

A

. a stockholder approved amendment to the certificate of incorporation may indemnify directors who: • acted in bad faith • acted negligently • breached their duty of loyalty • gained an improper personal benefit

Acted in bad faith

Which of the following is an effective means of notice to purchasers of shares that there are restrictions on the sale? • notation in the bylaws • resolution of the shareholders at a shareholders meeting • notation of the stock certificate • resolution of the directors at a directors meeting

C

which of the following is an incorrect statement about officers? • their duties are generally set forth in the corporations bylaws • they have a fiduciary obligation to the corporation • they are agents of the corporation • their authorities as agents is increased if they are shareholders

D

Regarding distribution of assets upon winding up a partnership, who is paid first?

Debts of outside creditors

43. 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: • withdrawn • died • been expelled • all of the above

Died

a corporation that does business in the state in which it was created is called a(n)

Domestic corporation

"conglomerate" describes the relationship of equal companies engaged in similar fields of business activity

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

Even limited partners are completely liable for debts of the business

False

Limited liability companies are formed without filing formal articles of organization with the secretary of state, in this sense, LLCs are easier to create than corporations

False

Shareholders exercise direct control over their corporation

False

Subchapter S corporations have the benefits of a limited liability as in partnerships and are taxed as corporations

False

The officers of a corporation are liable for errors of judgement the cause a loss to the stockholder

False

The shares of a closed corporation are always held by a single individual

False

Voting trusts are usually illegal

False

a limited liability company is identical to a subchapter s corporation

False

a limited partner can never lose money

False

directors jobs do not include evaluating performance of managers

False

each shareholder owns a proportionate share of the property of the corporation

False

in a merger, the surviving corp has all the rights and property of the corp with which it merged, but none of the debts and liabilities

False

the courts have traditionally viewed it as their responsibility to sit in judgement on the wisdom of decisions made by corporate directors

False

Persons who are in partnerships are called _________ partners

General

The partners who manage the limited partnership and are personally liable for the firms debts are _________ partners

General Partners

_________ and __________ owe fiduciary duties to the corporation, but shareholders do not

Officers, Directors

Which of the following statements is not true of common stock? • it is ordinary stock that has no preferences • it entitles the holder to share in corporate profits in the form of dividends • it entitles the holder to participate in the distribution of capital upon dissolution • it is ordinarily nonvoting

Ordinarily nonvoting

the spread of limited liability corporation statutes resulted from...

Wyoming supreme court decision

members of a LLC share profits....

according to the terms of the operating agreement

dissolution of a partnership

all of the above

a limited partnership can be formed by 1 or more _________ partners and 1 or more ________ partners

general, Limited

in the absence of a provision in the agreement of the sharing of profits, partners share profits....

in proportion to their capital contribution

the owners of a LLC are known as....

members

in addition to the corporation itself, which of the following parties are ordinarily responsible for corporate debts?

not directors, not officers, not directors and officers, so.......None of the above

In a limited partnership, the most limited partners can lose is.....

their investment

Minority stockholders can bring two kinds of shareholder lawsuits...what are they?

1. Minority shareholder suits 2. Shareholder Derivative Suit

List 3 advantages of using corporation as your business form

1. Perpetual Life 2. Limited Liability 3. Easy to transfer Ownership

3 major rights of shareholders

1. Vote 2. Inspect books 3. receive dividends

where a corporation is properly formed, is called a corporation ____________

De Jure

a valid meeting of the voting shareholders of a corporation requires the presence of a __________

Quorum

The net assets of a corporation may be referred to as

capital

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

a corporation is considered a person for the 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 which the director has an undisclosed conflicting interest

True

a general partner within a limited partnership may be a corporation

True

a partnership is organized for the profits of its members

True

in dealing with the corporation, directors act in a fiduciary capacity

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 corp is attempting to exceed its powers

Ultra Viries

A shareholder has a right to inspect the books of the shareholders corporation if: • the request is made in good faith • the request is made with proper motives • the inspection takes place at a reasonable time and place • all of the above

All of the above

a third person should recognize that a partner has limited or no authority if.....

All the above

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 • altered states • puppeteer • invisible hand

Alter Ego

the __________ rule allows management immunity from liability for corporate acts where there is a reasonable indication that the acts were made in good faith.

Business Judgement

Which of the following is not a factor that may lead to "piercing the corporate well" and imposing liability on corporate owners (shareholders)? • grossly inadequate capitalization of the corporation • formation of the corporation to avoid personal liability for business obligations • formation of the corporation to perpetuate a fraud or conceal illegality • shareholder diversion of corporate funds or assets

B

_______ of a corporation may occur when management is deadlocked and the deadlock cannot be broken by the shareholders

Judicial Dissolution

the __________ and _________________ are non corporate business organizations that provide limited liability for their owners

LP, LLC

Debts of a corporation are not the debts of the persons running the corporation or owning shares of stock in it

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 commission of a crime if they are found to be the responsible corporate officers

True

Preferred stock is ordinarily non-voting stock

True

Restrictions on the transfer of stock are valid if they are not unreasonable

True

In determining the rights of the partner the most important reference is.....

the partnership agreement