Chapter 4 notes

Question 1

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.

Answer 1

True

Question 2

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:

Answer 2

she can file a lawsuit against the corporation if it refuses to reimburse her for her expenses

Question 3

Choose which of the following is the correct order of priority used if a conflict arises among the various documents involving a corporation:

Answer 3

1. US Constitution
2. State Constitution
3. State Statues
4. Artilces of Incorp.
5. Bylaws
6. Resolution of the BOD

Question 4

Acts of a corporation that are beyond its expressed or implied powers are

Answer 4

Ultra Vires

Question 5

De Jure Corporations

Answer 5

A corporation in good standing under the law of the state in which it has been incorp.

Question 6

De Facto Corporations

Answer 6

A compnay acting as a corporation without having completed all of the legal steps necccessary to be incorp.

Question 7

Why do typical articles of incorporation authorize many more shares of stock than will be initially issued?

Answer 7

This allows for the raising of addtl capital in the future

Question 8

If you use a business name that is the same or deceptively similar to another’s, you may be liable for trade name infringement.

Answer 8

True

Question 9

Today, what is the most important step to take before securing the corporate name?

Answer 9

b. Checking available domain names on the Internet.

Question 10

One of the first steps in corporation process is:

Answer 10

Deciding in which state to incorporate

Question 11

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:

Answer 11

Adopt Bylaws

Question 12

A corporation is a legal entity:

Answer 12

Created & recognized by state law in most situations

Question 13

Today most state corporate statutes are at least partially based on the

Answer 13

Revised Model Business Corporate Act ( RMBCA)

Question 14

A corporation is an artificial being, existing only in law and neither tangible nor visible.

Answer 14

True

Question 15

Do corporations enjoy many of the same rights and privileges under state and federal law that U.S. citizens enjoyr

Answer 15

Yes, b/c they are recognized as persons

Question 16

Owners of corporations may be natural persons or other businesses.

Answer 16

True

Question 17

the two actions that a corporation can undertake with respect to profits earne

Answer 17

1. Pass them on to shareholders as dividends

2. Keep profits as r/e

Question 18

One main disadvantages of the corporate form of business organization is

Answer 18

double taxation of distributed corporate profits

Question 19

Foreign Corp.

Answer 19

In a given state, a corp. that does business in the state w/o being incorp. there

Question 20

Alien Corp.

Answer 20

A designation in the US for a corp formed in another country but doing business in the US

Question 21

Domestic Corp.

Answer 21

In a given state, a corp. that does business in, and is organized under the laws of the state

Question 22

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:

Answer 22

a foreign corporation and she may have to obtain a certificate of authority.

Question 23

There is no difference between a public corporation and a publicly held corporation.

Answer 23

False

Question 24

Most corporate enterprises in the U.S. fall into the category of close corporation.

Answer 24

True

Question 25

Close corporations are referred to as all of the following EXCEPT:

Answer 25

a. closely held corporations.
b. family corporations.
c. privately held corporations.
d. unprofitable corporations.

Question 26

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.

Answer 26

Stay on front

Question 27

A corporation will automatically be taxed under subchapter C unless it elects S corporation.

Answer 27

True

Question 28

What allows an S corporation to avoid the double taxation imposed on regular corporations

Answer 28

Being taxed like a partnership

Question 29

A benefit corporation is a for-profit corporation that seeks to have a materially positive impact on society and on the environment.

Answer 29

True