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Mgmt 429 > Chapter 43 > Flashcards

Chapter 43 Flashcards

Corporation Formation

1
Q

A _____________ is an artificial being created by government grant, which for many purposes is treated as a natural person.

A

Corporation

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2
Q

Written approval from the state or national government for a corporation to be formed.

A

Certificate of incorporation

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3
Q

A corporation is formed by obtaining approval of a certificate of incorporation, _________ of _______, or a charter from the state or national government.

A

Articles of incorporation (same definition as certificate of incorporation)

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4
Q

Grant of authority from a government to exist as a corporation. Generally replaced today by a certificate of incorporation approving the articles of incorporation. This is known as a?

A

Charter

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5
Q

Corporations may be classified in terms of their? (three things)

A

Classifications of Corporations:

  • Relationship to the public
  • The source of their authority
  • The nature of their activities
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6
Q

A public corporation is a corporation that has been established for?

A

Governmental purposes and for the administration of public affairs.

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7
Q

A private corporation is a corporation organized for?

A

Charitable and benevolent purposes or for purposes of finance, industry, and commerce.

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8
Q

Quasi-public corporations are private corporations that

A

Furnish services on which the public is particularly dependent, for example, a gas and electric company.

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9
Q

Corporations formed by government that have been incorporated by the state in question as opposed to incorporation by another state are known as?

A

Authorities

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10
Q

A corporation that has been incorporated by the state in question as opposed to incorporation by another state is known as a?

A

Domestic corporation

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11
Q

A foreign corporation is a corporation that has been?

A

Incorporated under the laws of another state

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12
Q

Close corporations are corporations whose shares are held by?

A

A single shareholder or a small group of shareholders

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13
Q

Eleemosynary corporations are corporations organized for?

A

A charitable or benevolent purpose

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14
Q

A benefit corporation (B-corporation) is a?

A

For-profit corporation that sets a goal to create a public benefit while still providing economic returns to its investors

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15
Q

The power to govern; the power to adopt laws for the protection of the public health, welfare, safety and morals is known as?

A

Police Power

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16
Q

General corporation code

A

State’s code listing certain requirements for creation of a corporation

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17
Q

Is there such thing as “uniform” corporation act?

A

NO!

Most states have a general corporation code but no “uniform” corporation act.

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18
Q

The American Bar Association (ABA) published a?

A

Model Business Corporation Act (MBCA), to assist legislative bodies in the modernization of state corporation laws

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19
Q

Bylaws are?

A

Rules and regulations enacted by a corporation to govern the affairs of the corporation and its shareholders, directors, and officers.

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20
Q

Corporate stock that the corporation has reacquired is called

A

Treasury stock

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21
Q

Ultra vires is defined as a(n)?

A

Act or contract that the corporation does not have authority to do or make

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22
Q

A promoter is a person who

A

Plans the formation of the corporation and sells or promotes the idea to others

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23
Q

An incorporator is?

A

One or more natural persons or corporations who sign and file appropriate incorporation forms with a designated government official.

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24
Q

A corporation de jure is a corporation with?

A

A legal right to exist by virtue of law

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25
Q

When the association is called a de facto corporation it is

A

Existing in fact as distinguished from as of right, as in the case of an officer or a corporation purporting to act as such without being elected to the office or having been properly incorporated

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26
Q

Corporation by estoppel is

A

A corporation that comes about when parties estop themselves from denying that the corporation exists.

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27
Q

The combining of two or more corporations in which the corporate existence of each one ceases and a new corporation is created is known as?

A

Consolidation (of corporations)

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28
Q

Merger (of corporations) takes place when the

A

Combining of corporations by which one absorbs the other and continues to exist, preserving its original charter and identity while the other corporation ceases to exist.

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29
Q

The relationship of a parent corporation to subsidiary corporations engaged in diversified fields of activity unrelated to the field of activity of the parent corporation describes a?

A

Conglomerate

30
Q

Can corporations be sued?

A

Yes! Corporations can sue and be sued, but shareholders enjoy limited liability.

31
Q

What must be obtained first before a corporation is formed?

A

Corporations are formed by obtaining (1) certificate of incorporation (2) articles of incorporation or a (3) charter
from the government.

32
Q

Public authorities are corporations formed by?

A

The government, they mainly provide public services

33
Q

A corporation is domestic in its state of incorporation; making them?

A

Foreign in all other states

34
Q

Transportation, banking, insurance and savings and loans are all services provided by?

A

Special service corporations

35
Q

A corporation with a single shareholder or a small group of shareholders is called a?

A

Close Corporation

36
Q

Corporations that allow the shareholders to be treated as partners for tax purposes and retain the benefit of limited liability under the corporate form are known as?

A

Subchapter-S Corporations

37
Q

Is there a limit on the number of shareholders allowed in a Subchapter S corporation?

A

Yes, a subchapter s corporation is limited to 100 shareholders.

38
Q

A corporation where the shareholders are taxed as partners is called

A

a subchapter s corporation

39
Q

In a professional corporation all officers, directors and shareholders must be?

A

Members of the profession

40
Q

Is there a shield of protection from personal liability for officers, directors and shareholders of a professional corporation?

A

NO! There is not a shield from personal liability.

41
Q

Organized for charitable or benevolent purposes describes which type of corporation?

A

Nonprofit Corporations

42
Q

For-profit corporations that set a goal to create a public benefit while providing economic returns to investors are known as?

A

Benefit Corporations

43
Q

A state by virtue of its police power may create any kind of corporation for any purpose. This relates to?

A

The power to create

44
Q

States have a __________ corporate code.

A

general

45
Q

Under the laws of the United States, the power to regulate is given to corporations because?

A

The corporation is looked at as a natural being so there is “Protection of the Corporation as a Person”

46
Q

“Protection of the Corporation as a citizen” relating to the power to regulate says

A

The protection of the corporation as a citizen is covered by to the state of incorporation and the state where it has a principal place of business

47
Q

Corporations are given the particular power of perpetual life, what does that mean?

A

Perpetual life gives corporations the power to continue forever

48
Q

What is required for corporate identification?

A

Corporate name

49
Q

What is optional for corporate identification? (unless required by statute or natural person in the same business)

A

Corporate Seal

50
Q

The written rules and regulations enacted by corporations to govern its affairs and shareholders, directors, and officers are known as

A

Bylaws

51
Q

Other “particular powers” given to corporations mentioned in the text:

A 
stock
making contracts
borrowing money
executing negotiable instruments
issuing bonds
transferring property
acquiring property
paying employee benefits
charitable contributions
52
Q

Corporations are allowed to buy back their own stock, this stock is now called

A

treasury stock

53
Q

Corporations are allowed to do business in another state but…

A

The corporation MUST satisfy valid restrictions of the foreign state in which it seeks to do business

54
Q

Participating in an enterprise

A

Generally, corporations can participate in an enterprise to the same extent as any other individual

55
Q

What is it called when a corporation acts beyond the scope of its powers?

A

Ultra Vires Acts (modern corporations have broad powers, so this is rare)

56
Q

Can more than one person act as an incorporator?

A

Yes

57
Q

What are the four components included in setting up an application for incorporation?

A

(1) Name
(2) Number of shares of stock authorized to issue
(3) Street address and name of the initial registered agent
(4) Name and address of each incorporator

58
Q

Who generally issues the certificate of incorporation?

A

The secretary of state

59
Q

What is a de facto corporation?

A

It is a corporation who has substantial defect in filing that cannot be ignored.
But there is enough compliance to recognize that there is a corporation in existence.

60
Q

When does a corporation by estoppel come about?

A

Comes about when parties are estopped from denying that the corporation exists because they have dealt with it as if it was a corporation.

The defect may be so great that no corporation exists.

61
Q

When should a corporation go through bankruptcy and reorganization?

A

When a corporation is insolvent

62
Q

The secretary of state may dissolve a corporation (Forfeiture of Charter) if a corporation does not?

A
  • does not pay franchise fees
  • does not file an annual report
  • has no registered agent
63
Q

When can a judicial dissolution be decreed?

A

If management is deadlocked and deadlock cannot be broken by shareholders

64
Q

What laws describe the requirements for voluntary dissolution?

A

State laws describe the requirements

65
Q

Two or more corporations cease to exist and a new corporation with assets of the old corporations comes into being

A

Consolidation

66
Q

One corporation absorbs another. All assets are absorbed into the surviving corporation which is required to pay the fair value of stock to shareholder who objects.

A

Merger

67
Q

Relationship between a parent company and a subsidiary engaged in activities unrelated to that of the parent

A

Conglomerate

68
Q

Consolidations, mergers and asset acquisitions are prohibited by?

A

Federal anti-trust laws when the effect is to lessen competition

69
Q

In mergers and consolidations, surviving corporation acquires?

A

All rights, debts, and property

70
Q

If one corporation purchases another’s assets, then the purchaser is not liable for the seller’s obligations UNLESS?

A

The asset sale was done to avoid liability

Mgmt 429 (3 decks)

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