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Exam 18: Corporations

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Question 41

Multiple Choice

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Health Food Inc.coordinates the purchase,sale,and delivery of organic products.The stated corporate purpose is to make a profit and to have a material positive impact on society and the environment.Health Food is

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

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

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Question 42

Multiple Choice

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AI Medical,Inc. ,is a private,for-profit corporation that is owned by six shareholders who are not members of the same family but are personally known to one another.They also serve as the directors and officers.To prevent a majority shareholder from dominating the firm,the corporation may

A) require more than a majority of directors approve any board action.
B) depart from all formalities required by traditional corporate law.
C) reorganize into a sole proprietorship or partnership.
D) hold special shareholders' or directors' meetings on an annual basis.

E) C) and D)
F) None of the above

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Question 43

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

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.

Global Enterprises Inc.competes in many product,service,and geographic markets.Global's board consists of a large number of directors.The firm faces myriad complex business issues.To avoid its governance from becoming unwieldy,the company can delegate some of its functions to

If the procedures for incorporation are not followed precisely,others may be able to challenge the existence of the corporation.

Erin,a shareholder of Finance Inc. ,demands the right to inspect corporate books and records to determine whether management has engaged in self-dealing that impacts the company.The firm refuses the request.On Erin's challenge,a court is most likely to hold that her request constitutes

A shareholder's right to transfer his or her shares to another party can be subject to restrictions set out in the bylaws or a shareholder agreement.

Roy is a director of Sales Service Inc.Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest.Roy must

Paul is a director on the board of Quality Tire Corporation.As a director,Paul may not

To prevent errors in business judgment,when directors transact business and vote on issues affecting the corporation,ordinary matters generally require a greater-than-majority vote.

When deciding which form of business organization to choose,businesspersons normally take into account tax considerations.