R8 - Business Structures

Question 1

In a general partnership, how are profits and losses allocated?

Answer 1

Profits are allocated equally amongst the partners (unless otherwise stated) and losses (unless otherwise stated) are allocated the same as profits

Question 2

What must the articles of incorporation of a corporation include?

Answer 2

NAIN
Name
Agent name/address
Incorporators names/addresses
Number of shares authorized

Question 3

When may the corporate veil be pierced?

Answer 3

CIF
Commingling of personal/corporate funds
Inadequately capitalized at formation
Fraud on existing creditors

Question 4

Once a dividend is declared, what is the shareholders’ status in regards to distribution order?

Answer 4

They are treated as unsecured creditors

Question 5

What is a shareholder’s inspection right?

Answer 5

Right to inspect, within 5 days written notice, with a proper purpose

Question 6

What are the fundamental changes in which a shareholder may vote?

Answer 6

DAMS
Dissolution
Amendment to articles of incorporation
Merger
Sale of assets outside ordinary course of business

Question 7

What is a warrant?

Answer 7

A warrant is a contractual right to purchase stock, which constitutes a share of corporate equity

Question 8

What is a preemptive right?

Answer 8

A right to purchase shares in order to maintain proportional voting strength

Question 9

Which entity does not require the approval of the state in which the entity is formed?

Answer 9

General partnership