Class 9, Corporate Power And Purpose; Corporate Stock And Debt.

Question 1

Ultra vires

Answer 1

• Beyond the powers; act of a corporation done without legal authority

→board personally liable for losses corporation sustained as a result of ultra vires activities
→ court on request of a shareholder can enjoin ultra vires activities
→ corporation cannot rescind contracts made ultra vires

Question 2

Intra vires

Answer 2

Within the powers; done with legal authority

Question 3

Types of corporate securities

Answer 3

① equity
→ common
→ preferred

② debt
→ bond
→ debenture

Question 4

Rights and powers of the shareholder (equity)

Question 5

Dividend rights

Answer 5

① generally: dividends only paid when declared by board

② variation:
→ cumulative: dividends accumulate each year they are not paid
→ noncumulative: unpaid dividends do not accumulate
→ participating: shares with a preference share in any distribution made on common shares
→ nonparticipating: shares with a preference do not share in any distribution made on common shares.