Comm Law Ch 38
Identify the ways by which a shareholder can profit if the value of a public corporation increases.
By selling their shares, Through dividends
What is the term used when a court refuses to allow a corporation to claim it does not exist?
Corporation by estoppel
Where is an alien corporation incorporated?
In a country other than the United States
Which of the following is implied power that a corporation is typically granted?
Power given in the statement of corporate purpose in the articles of incorporation
What limitations exist when professionals, like doctors, form a corporation?
Professionals cannot escape personal liability based on the theory of malpractice.
Who raises capital for corporations when they first form?
Promoters
_______ is the term used when the state challenges the legality of a de facto corporation.
Quo warranto
Who establishes the requirements for corporate formation?
State incorporation statutes
Who issues a certificate of incorporation?
The Secretary of State
Who appoints officers to manage the day-to-day business of a corporation?
The board of directors
Who is liable when agents of a corporation commit torts and crimes?
The corporation is liable for the actions of its agents.
What are some requirements that must be met by a S corporation?
The corporation must be a domestic corporation. The corporation cannot have more than 100 shareholders.
If a corporation makes a profit, then who pays the taxes on that profit?
The corporation will be taxed by the state and federal authorities.
If all the shareholders of a corporation die, then what happens to the corporation?
The corporation will continue to exist; the passing of its owners will not affect the life of a corporation.
Who creates a public corporation?
The government -- either a state or federal governmental entity
In the context of corporations, subscribers are the people who ______.
agree to purchase stock in a new corporation
For S corporations, no shareholder can be a nonresident ______.
alien
Loans to a corporation from another party are called ______.
bonds
In the United States, the courts have extended ______ rights to corporations because the courts see them as "legal persons".
constitutional
When are the courts likely to pierce the corporate veil and deny the shareholders the protection of limited liability?
corp lacked adequate capital when it initially formed, a corp did not follow statutory mandates regarding corporate business, shareholders' personal interests and corporate interest are commingled such that the corp has no separate identity, shareholders attempt to commit fraud through a corp
If a corporation were to commit a civil wrong that made it liable to a third party, the third party should sue the: _______.
corporation, as it is the legal entity that committed the legal wrong
All states recognize which of the following words as an indication of incorporation?
corporation, company, limited, incorporated
A corporation that has not substantially met the requirements of the state incorporation statute, but courts recognize it as a corporation for most purposes to avoid unfairness to third parties who believed it was properly incorporated is called a ______.
de facto corporation
A corporation whose incorporation process included an error or omission is called a ______.
defective corporation
Which state has more than half of the Fortune 500 companies choosing to incorporate there?
delaware
Shareholders own part of the company through the purchase of stock called: _______.
equity securities
What type of securities give the purchaser a part ownership in the corporation?
equity securities
A(n) ____ is an individual who applies to the state for incorporation on behalf of a corporation.
incorporator
What is the term that describes when corporations withhold profits to reinvest within the corporation?
retained earnings
At the first organizational meeting for a corporation, who adopts a set of bylaws that govern the corporation's internal management?
shareholders
The only source for the existence and authority of a corporation exists in the corporation's articles of incorporation and in ______ statutes.
state incorporation
Closely held corporations generally do not offer _____ to the general public, and are usually run by family members and friends.
stock
Nonprofit corporations do not issue: ________.
stocks
A corporation is called a domestic corporation in the state that
the corporation is incorporated in.
The articles of incorporation must include ______.
the name of registered agent
Articles of Incorporation should include:
the name of the corp, the address of the registered office, the name of the registered agent, the names and addresses of the incorporators
Which of the following is true of common stockholders?
They are entitled to corporate dividends in proportion to the number of shares they own. They own a portion of a corporation.
Identify the true statements about corporations
They assume responsibility for corporate actions They are legal entities.
Which of the following is true of retained earnings?
They can increase the stock price of a corporation. They are reinvested in a corporation.
Where are Articles of Incorporation filed?
With the state entity, typically the Secretary of State's office
What is the term for substituting a third party for one of the two original parties in a contract?
novation
An S corporation enjoys the tax status of ______.
partnerships
What class of stockholder receives preferences in the distribution of assets and dividends of a corporation?
preferred stock shareholders
A corporation that is created by private persons and does not have government duties is called a(n) .
private corporation
The general public can invest in publicly held corporations by
purchasing stock in the corporation.
