Chapter 4 notes Flashcards
In the absence of expressed, constitutional, statutory, or other prohibitions, the corporation has the implied power to perform all acts reasonably necessary to accomplish its corporate purpose.
True
Arianna is an officer of New Stage, a theater production company. Without asking any other officers, she decides that New Stage should sell gardening tools over the Internet. She makes contracts with suppliers and an order-fulfillment company. The only action that may NOT be taken is that:
she can file a lawsuit against the corporation if it refuses to reimburse her for her expenses
Choose which of the following is the correct order of priority used if a conflict arises among the various documents involving a corporation:
- US Constitution
- State Constitution
- State Statues
- Artilces of Incorp.
- Bylaws
- Resolution of the BOD
Acts of a corporation that are beyond its expressed or implied powers are
Ultra Vires
De Jure Corporations
A corporation in good standing under the law of the state in which it has been incorp.
De Facto Corporations
A compnay acting as a corporation without having completed all of the legal steps necccessary to be incorp.
Why do typical articles of incorporation authorize many more shares of stock than will be initially issued?
This allows for the raising of addtl capital in the future
If you use a business name that is the same or deceptively similar to another’s, you may be liable for trade name infringement.
True
Today, what is the most important step to take before securing the corporate name?
b. Checking available domain names on the Internet.
One of the first steps in corporation process is:
Deciding in which state to incorporate
Acme Company has just completed the incorporation process and received its articles of incorporation from the state. At the first organizational meeting of the new company, the officers’ most important task is to:
Adopt Bylaws
A corporation is a legal entity:
Created & recognized by state law in most situations
Today most state corporate statutes are at least partially based on the
Revised Model Business Corporate Act ( RMBCA)
A corporation is an artificial being, existing only in law and neither tangible nor visible.
True
Do corporations enjoy many of the same rights and privileges under state and federal law that U.S. citizens enjoyr
Yes, b/c they are recognized as persons
Owners of corporations may be natural persons or other businesses.
True
the two actions that a corporation can undertake with respect to profits earne
- Pass them on to shareholders as dividends
2. Keep profits as r/e
One main disadvantages of the corporate form of business organization is
double taxation of distributed corporate profits
Foreign Corp.
In a given state, a corp. that does business in the state w/o being incorp. there
Alien Corp.
A designation in the US for a corp formed in another country but doing business in the US
Domestic Corp.
In a given state, a corp. that does business in, and is organized under the laws of the state
Rena incorporates her business in her home state of Maryland. She wants to expand to sell her wares in Virginia. In Virginia, her company will be considered:
a foreign corporation and she may have to obtain a certificate of authority.
There is no difference between a public corporation and a publicly held corporation.
False
Most corporate enterprises in the U.S. fall into the category of close corporation.
True
Close corporations are referred to as all of the following EXCEPT:
a. closely held corporations.
b. family corporations.
c. privately held corporations.
d. unprofitable corporations.
Management of a close corporation resembles that of a sole proprietorship or a partnership.
Control of a close corporation can be stabilized through the use of a shareholder agreement .
A close corporation may require that more than a simple majority of the directors approve any important action taken by the board.
When a majority shareholder of a close corporation misappropriates company funds, the injured minority shareholders can have their shares appraised and be paid the fair-market value for them.
Stay on front
A corporation will automatically be taxed under subchapter C unless it elects S corporation.
True
What allows an S corporation to avoid the double taxation imposed on regular corporations
Being taxed like a partnership
A benefit corporation is a for-profit corporation that seeks to have a materially positive impact on society and on the environment.
True
