Corporations Background

Question 1

Elements of a Corporation

Answer 1

1) Legal person with indefinite life (rights and obligations)
(2) limited liability for investors
(3) free transferability of shares as the default
(4) centralized management
(5) free incorporation

Question 2

Entities can legal personhood through ___

Answer 2

registering (act of the State)

Question 3

____ are the origin of the modern corporate form

Answer 3

Dutch/East India Companies

Question 4

Incorporation is beneficial because it allows directors to ____ and protects from creditors by __

Answer 4

shield personal assets, diversify risk by separating assets

Question 5

Limited liability means that investors may ___

Answer 5

lose assets invested in the corporation but nothing further

Question 6

Rationale of limited liability

Answer 6

(1) encourage investment
(2) make more capital available for risky ventures

Question 7

Free transferability of shares permits __

Answer 7

development of large capital markets (equity/stock)

Question 8

Legal fiction of a person reduces the _____ of contracting

Answer 8

cost

Question 9

Commerce clause means one state ___

Answer 9

can’t deny recognition to the corporations of another

Question 10

The association of two or more persons to ___ forms a partnership whether or not -___

Answer 10

co-own business for profit, intended to form partnership `

Question 11

Unless contracted around all partners have ___ partnership debt

Answer 11

unlimited liability

Question 12

Unless contracted around all partners have ___ management

Answer 12

equal rights to participate in

Question 13

Unless contracted around any partner may ___

Answer 13

demand dissolution

Question 14

Unless contracted around partnership interests are not ___

Answer 14

transferable

Question 15

In DE, BOD members are appointed for ___

Answer 15

1 year and must be re-elected

Question 16

Purpose of dual-class stock

Answer 16

give SHs different voting rights

Question 17

What is preferred stock?

Answer 17

Exchange voting rights to be first in line when dividends paid out or when creditors come calling

Question 18

If you defraud at the IPO stage, ___

Answer 18

you are strictly liable under Securities Act of 1933

Question 19

Under SEA 1934, SH voting is accomplished ___

Answer 19

via Proxy

Question 20

Corporations are chartered by __ but ___

Answer 20

the sovereign, funded by private capital