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Exam 18: Corporations

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Question 1

Multiple Choice

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Apt Adapt Inc. is formed to coordinate the design and delivery of projects and products to help communities cope with the effects of climate change. The stated purpose is to have a material positive impact on society and the environment, and to make a profit. Apt Adapt is

A) a nonprofit corporation.
B) not a corporation.
C) a benefit corporation.
D) a public corporation.

E) C) and D)
F) A) and D)

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Question 2

Multiple Choice

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Welding Corporation makes a good faith attempt to incorporate but there is a defect in its incorporation. Welding undertakes business as a corporation. In this circumstance, the firm's existence may be challenged by

A) any third party.
B) the state.
C) a director, officer, or shareholder.
D) any corporation with which it does business.

E) C) and D)
F) B) and D)

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Question 3

Multiple Choice

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Eton owns Freight Company. He uses the firm's funds to pay his personal expenses, creates Go Trucking Inc. to engage in the same business, transfers Freight's assets to Go Trucking, and petitions Freight into bankruptcy. This most likely warrants

The directors of a benefit corporation must, during the decision-making process, consider the impact of a decision on society and the environment.

AstroStar Inc.'s board of directors consists of three members-Eckhart, Dolan, and Macero. At a regular board meeting, the board selects Galiard as president of the corporation. Later, an audit reveals that during his term as president he has openly embezzled $500,000 from AstroStar. The same audit reveals that the board knew when it selected Galiard that he had been previously convicted of embezzlement. Can the corporation hold directors Eckhart, Dolan, and Macero personally liable?

A foreign corporation that has not obtained a certificate of authority to do business in a state can nevertheless maintain an action in the state's courts.

Corporate shareholders will most likely be held personally liable for the firm's debts if they

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

A key advantage of the corporate form is the unlimited liability of its owners.

Because state corporate laws differ, persons wishing to incorporate may look for the state that offers the most advantageous tax or other provisions.

A corporation is intangible and invisible, and exists only in the contemplation of the law.

The board of directors hires the corporation's officers, but normally can remove them only for cause.

Metro Moving Service holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, the outfit is most likely

Han is a shareholder of Insulation Inc. When the directors fail to undertake an action to redress a wrong suffered by the firm, Han files a suit on its behalf. Any damages recovered by the suit will go to the firm's

A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.

To be certain to transact business in states other than its state of formation with no limitations, Real Estate Investment Trust should choose as its form of business organization

Initiating and negotiating the sale and lease of corporate assets outside the regular course of business is a responsibility of the corporation's

Deb is a director and Erv is an officer of Fast Food Inc. Liability for the firm's intentional disregard of consumer-protection statutes may extend to

Corporate officers have responsibility for all policymaking decisions necessary to the management of corporate affairs.

Afton wants to go into business as Boom! to make and market fireworks. When deciding which form of business organization would be most appropriate, Afton would normally take into account all of the following except