Business law topic 4 Flashcards
What is a fundamental consideration when deciding to set up a capital company?
a) The color scheme of the company’s logo.
b) The regime of responsibilities of the members.
c) The number of employees at the time of incorporation.
d) The company’s projected stock market value.
Answer: b) The regime of responsibilities of the members.
Explanation: The decision on the type of capital company to establish, such as an SA (PLC) or an SRL (Ltd), significantly depends on how member responsibilities are structured, especially regarding liability for company debts.
For the deed of incorporation of a capital company, what is NOT required?
a) Identification of the founding members.
b) The personal hobbies of the founding members.
c) Determination of the disbursement regime.
d) Articles of Association (Company by-laws).
Answer: b) The personal hobbies of the founding members.
Explanation: While the deed of incorporation requires essential details like member identification, disbursement regime, and company by-laws, personal hobbies of the founding members are irrelevant to the legal incorporation process
Which statement accurately describes the liability regime in capital companies?
a) Members do NOT take responsibility with their personal assets for company obligations.
b) Members must use their personal assets for any legal disputes.
c) Personal assets of members are considered part of the company capital.
d) Liability is solely determined by the company’s annual profit.
Answer: a) Members do NOT take responsibility with their personal assets for company obligations.
Explanation: In capital companies, unlike partnerships, members’ liability for company debts is limited, meaning they are not personally liable with their assets.
What accurately describes the requirement for non-monetary contributions in a Sociedad Anónima (S.A.)?
a) No contributions are allowed beyond monetary.
b) An independent expert report on valuation is required.
c) Non-monetary contributions are converted to monetary equivalents by the company secretary.
d) Only tangible assets like real estate and machinery are accepted.
Answer: b) An independent expert report on valuation is required.
Explanation: For non-monetary contributions in an S.A., an independent expert’s valuation report is necessary to assess the value of assets like real estate or intellectual property.
How is the ‘Book Value’ of shares or stakes in a capital company determined?
a) By multiplying the total number of shares by their nominal value.
b) Based on the company’s market share.
c) From the company’s equity value divided by the total shares or stakes.
d) It is arbitrarily set by the company’s board annually.
Answer: c) From the company’s equity value divided by the total shares or stakes.
Explanation: The Book Value of each share or stake is calculated by dividing the company’s total equity by the number of shares or stakes, reflecting the company’s financial health.
What happens if a capital company is not registered in the Commercial Register?
a) It receives a bonus for late registration.
b) It is considered an ‘irregular’ company, affecting member liability.
c) The company automatically dissolves after 30 days.
d) Registration in the Commercial Register is purely optional.
Answer: b) It is considered an ‘irregular’ company, affecting member liability.
Explanation: Failure to register a capital company in the Commercial Register leads to its status as ‘irregular,’ impacting the liability of its managers and members, even transforming the liability regime similar to that of a partnership.
Which is NOT a basic type of commercial company?
a) Sociedad Anónima (S.A.)
b) Sociedad de Responsabilidad Limitada (S.R.L.)
c) Sociedad Regular Colectiva
d) Sociedad Internacional Cosmopolita
Answer: d) Sociedad Internacional Cosmopolita
Explanation: While S.A., S.R.L., and Sociedad Regular Colectiva are established types of commercial companies, Sociedad Internacional Cosmopolita is a fictitious term and not recognized as a basic type of commercial company.
In a Sociedad Comanditaria (Limited Partnership), what distinguishes limited partners from general partners?
a) Limited partners have liability restricted to their contribution.
b) Limited partners are the only ones who can act as directors.
c) General partners are not allowed to participate in management.
d) Limited partners cannot invest in other companies.
Answer: a) Limited partners have liability restricted to their contribution.
Explanation: The key difference in a Sociedad Comanditaria is that limited partners’ liability for company debts is limited to the amount they have contributed, unlike general partners who have unlimited liability.
