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Exam 22: Corporations: Formation and Organization

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Question 51

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A leveraged buyout (LBO)occurs when a group within a corporation buys all the outstanding corporate stock held by the public.

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Question 52

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While ordinary corporate decisions made by directors require a ________ vote,more important decisions sometimes require a ________ vote.

A) majority; two-thirds
B) majority; three-fourths
C) two-thirds; three-fourths
D) one-third; majority
E) majority; unanimous

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Question 53

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When the government or private parties get a court order to dissolve a corporation,it is a(n) ________.

A(n) ________ is an individual who applies to the state for incorporation on behalf of a corporation.

In order to prevent a defective corporation from escaping corporate responsibility,a court may hold that the entity is a(n) ________.

Which of the following is available to Garrett,a major shareholder in ABC Corporation who believes that the corporation has wrongfully failed to declare a dividend to shareholders?

In a hostile takeover,what does the term "going private" reference?

The Securities and Exchange Commission has established that any shareholder who owns more than ________ worth of stock in the corporation can submit proposals to be included in proxy materials.

Warren was the president of a corporation whose articles of incorporation specified that the corporation's purpose was to market dairy products.Warren,however,convinced the board of directors to support him in opening a furniture store.Warren proceeded to enter into contracts with furniture suppliers.When some of the shareholders discovered that the corporation was going into the furniture business,they wanted the furniture venture ended.Unfortunately,the corporation had already entered into a contract for upholstery supplies that had been delivered.What is the term for acts of a corporation beyond its express and implied powers,and what remedies does the Revised Model Business Corporation Act provide when a corporation commits such act? What is the most likely result if the supplier of the upholstery supplies sues for payment?

Dividends are profits that corporations keep.

What are the requirements for being a director? Must a director own stock in the corporation?

In a tender offer,the aggressor offers target shareholders a price below the current market value of the stock.

Which of the following are debt securities?

In which of the following situations would a court likely to pierce the corporate veil?

Machine Malfunction.Bruno,the president of a corporation operating workout facilities,convinced the board of directors to approve a large purchase of a type of fitness machine called "Perfect Body." Bruno had carefully investigated the machine and did a presentation to the board on its purported benefits.Unfortunately,after the purchase,it was announced that "Perfect Body" was actually a very dangerous machine that should not be used.The manufacturer of "Perfect Body" went bankrupt,and the corporation lost $200,000 on the purchase of the machines.The shareholders are furious and want to sue Bruno and the directors.The board of directors agrees to allow Frances,the ringleader of the shareholders,to purchase stock of the company at below its fair market value.She purchases a considerable amount of stock on that basis,but says that the shareholders plan to continue with an action against Bruno and the board members.Under which of the following should Bruno and the board of directors defend themselves in an action brought by shareholders for harming the corporation?

According to the Revised Model Business Corporation Act,which of the following should the articles of incorporation include?

Which of the following is a correct statement regarding law governing the incorporation process and corporate taxation?

Who begins the corporate creation and organization process by arranging for necessary capital,financing,and licenses?

Self-Centered President.Tina is the new president of "We Manage You," a corporation set up to manage physician practices.Tina has never been very concerned with minority shareholders because she does not believe that they have any influence over the company because they cannot even elect a director.She is told,however,that the corporation has a practice of cumulative voting.An election is coming up in which 10 directors will be elected.Minority shareholders own 2,000 shares while majority shareholders own 8,000 shares.Tina tells her vice president,George,that she wants to ignore minority shareholders and focus her interests on majority shareholders and the directors.She also tells George that she wants to be particularly conscientious toward directors because the directors appoint officers,and she does not believe that she owes any actual duties to shareholders.She further orders George to destroy some documents subpoenaed in a criminal investigation against the company for illegal tax evasion.When George protests,Tina tells him not to worry because officers cannot be held responsible for criminal actions so long as the actions are done as part of the officer's duties.She explains to him that only the corporation can be charged with liability in such cases.How many votes will the minority shareholders have in the election?

Which of the following is a false statement regarding a nonprofit corporation?