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Exam 33: Corporate Formation and Financing

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Question 31

True/False

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When a shareholder commingles personal and corporate interests so that the firm has no separate identity, the shareholder may be held liable for the firm's debts.

A) True
B) False

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Question 32

Multiple Choice

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To bring a corporation into existence requires securing a corporate name that is

A) the same or deceptively similar to the name of an existing corporation.
B) selected by the state of incorporation, for convenience and cost.
C) promises to attract financial support from investors.
D) available as a domain name, subject to state approval.

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

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Question 33

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

Corporate bonds

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. Adapt is

Corporate resolutions of the corporation's board of directors provide guidelines but cannot grant or restrict corporate powers.

Masonry Inc.'s stated purpose is to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely

To prevent a majority shareholder from dominating the management and operation of a close corporation, the firm should

Under the doctrine of respondeat superior, a corporation can be held liable for

Sweetwater Corporation is incorporated in Texas. Outside that state, within the United States, the firm is

Cattle Ranch Inc. is a for-profit corporation that is owned by six shareholders who are members of the same family. Cattle Ranch is

A corporation whose shares are held by relatively few persons is a close corporation.

Because bonds do not represent debt, they need never be repaid.

Funds invested in an existing corporation to buy and reorganize it, and possibly sell shares in the reorganized company in an initial public offering, are known as

The primary document needed to incorporate a business is the bylaws-the primary source of guidelines for the firm's management and operation.

A business firm whose shares are held by a single person may be a sole proprietorship, but it cannot be a corporation.

Because a close corporation is one whose shares are held by a relatively small group of persons, the firm often operates like a partnership.

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

Limited liability business forms, such as LLCs, LPs, and LLPs, offer tax advantages that are similar to those offered by

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.