Quiz #5

[liliana.cavalheiro]

Hi Everyone,

 

Please see my quiz #5. I hope this helps you. Now onto studying for the exam. (Yikkeeesss...not looking forward to it)

 

Question 1

0.5 out of 0.5 points

	Which of the following statements correctly describes the effect of the indoor management rule on corporate behaviour? Answer
	Selected Answer: According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and avoid responsibility for the actions of its officers. Correct Answer: According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and avoid responsibility for the actions of its officers. Answer Feedback: You are correct! According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and thus avoid responsibility for the actions of its agents. As long as the agent is acting within the scope of its apparent authority and the third party has no notice of any irregularity, there is no need for the third party to enquire further if the authority appears to be in order. (Topic 10.4)

• Question 2

  0.5 out of 0.5 points

  	Which one of the following statements about the separate legal existence of a corporation is true? Answer
  	Selected Answer: The corporation has a legal existence separate from its shareholders, directors, and managers or officers. The shareholders enjoy the financial advantage of limited liability to the extent of their capital contribution only. Shareholders may be held responsible for the debts of the corporation in exceptional circumstances. Correct Answer: The corporation has a legal existence separate from its shareholders, directors, and managers or officers. The shareholders enjoy the financial advantage of limited liability to the extent of their capital contribution only. Shareholders may be held responsible for the debts of the corporation in exceptional circumstances. Answer Feedback: You are correct! Shareholders may be responsible for the debts of the corporation when the corporation is used to perpetuate a fraud. The courts will then lift the corporate veil in order to prevent abuse of the concept of corporation. (Topic 10.3)

• Question 3

  0.5 out of 0.5 points

  	One of the fundamental aspects of corporate law is that the shareholders in a business have limited liability. What is required for a shareholder to become liable to creditors of the corporation? Answer
  	Selected Answer: Lifting of the corporate veil to identify an individual who controls the corporation, used that control to commit a fraud, and caused the plaintiff’s injury through this misconduct. Correct Answer: Lifting of the corporate veil to identify an individual who controls the corporation, used that control to commit a fraud, and caused the plaintiff’s injury through this misconduct. Answer Feedback: You are correct! When the courts lift the corporate veil, they expose individual shareholders to liability. For this to happen, three specific conditions must be met: an individual must control the corporation, that control must have been exercised to commit a fraud, and the misconduct must be the cause of the plaintiff’s injury. (Topic 10.3)

• Question 4

  0 out of 0.5 points

  	What is the role of bylaws and how do they come into effect? Answer
  	Selected Answer: Bylaws are the rules that govern the operation of the corporation and must be approved by the board of directors in order to come into effect. Correct Answer: Bylaws are the rules that govern the operation of the corporation and must be approved by a majority of the shareholders present and voting at a general meeting in order to come into effect. Answer Feedback: Incorrect. The board of directors alone cannot approve bylaws. They must be approved by the majority of shareholders. The correct answer is, bylaws are the rules that govern the operation of the corporation and must be approved by a majority of the shareholders present and voting at a general meeting. (Topic 10.1)

• Question 5

  0.5 out of 0.5 points

  	Which one of these is true? Answer
  	Selected Answer: A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. Correct Answer: A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. Answer Feedback: You are correct! A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. (Topic 10.4)

• Question 6

  0 out of 0.5 points

  	Which of the following does a shareholder bringing a derivative action need to show? Answer
  	Selected Answer: That the directors are acting in bad faith Correct Answer: That the directors will not bring the action Answer Feedback: Incorrect. The shareholder must show that the shareholders are acting in good faith, not that the directors are acting in bad faith. The correct answer is, a derivative action occurs when shareholders bring an action, with permission of the courts, in the name of a corporation in respect of a wrong done to the corporation. In order to obtain permission for a derivative action, the shareholders must prove 1) that the directors will not bring an action; 2) that the shareholders are acting in good faith; and 3) that the action is in the best interests of the corporation or shareholders. (Topic 10.7)

• Question 7

  0.5 out of 0.5 points

  	Which of the following statements accurately describes the rights of shareholders? Answer
  	Selected Answer: The shareholders have the right to elect the members of the board of directors, and to certain information about the corporation. Correct Answer: The shareholders have the right to elect the members of the board of directors, and to certain information about the corporation. Answer Feedback: You are correct! The shareholders have the right to elect the members of the board of directors and to certain information about the corporation (Topic 10.6).

• Question 8

  0.5 out of 0.5 points

  	Forget Me Not Co. is a nursery business. The majority shareholders decide to sell the inventory and not to replace it. What remedy is available to the minority shareholders? Answer
  	Selected Answer: File a dissent Correct Answer: File a dissent Answer Feedback: You are correct! If a decision by the majority of the shareholders has a negative impact on the minority shareholders, the dissenting shareholders can, with the approval of the courts, force the majority to purchase their shares at a fair price. (Topic 10.7)

• Question 9

  0.5 out of 0.5 points

  	With regard to company law, which one of the following is true? Answer
  	Selected Answer: A creditor of a company could sue if the directors of the company voted for a resolution to pay a dividend when the company was insolvent. Correct Answer: A creditor of a company could sue if the directors of the company voted for a resolution to pay a dividend when the company was insolvent. Answer Feedback: You are correct! Directors will be personally liable to creditors of the corporation for any amounts paid out as dividends if the corporation is insolvent. (Topic 10.3) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 20, page 496. ISBN: 0-13-088202-X

• Question 10

  0.5 out of 0.5 points

  	What is meant when shareholders have pre-emptive rights? Answer
  	Selected Answer: Rights to retain their proportionate holdings in a corporation Correct Answer: Rights to retain their proportionate holdings in a corporation Answer Feedback: You are correct! Pre-emptive rights mean that shareholders have the right to retain their proportionate holdings in a corporation. (Topic 10.6)

• Question 11

  0.5 out of 0.5 points

  	Which one of the following is true with regard to the shareholders of a corporation? Answer
  	Selected Answer: The shareholders of a corporation have limited liability for its debts. Correct Answer: The shareholders of a corporation have limited liability for its debts. Answer Feedback: You are correct! Shareholders are only liable for the amount of their initial investment in the corporation. (Topic 10.3)

• Question 12

  0.5 out of 0.5 points

  	A corporation may be created in which of the following manners? Answer
  	Selected Answer: Articles of incorporation, letters patent, and memorandum of association Correct Answer: Articles of incorporation, letters patent, and memorandum of association Answer Feedback: You are correct! Corporations may be created by statute, memorandum of association, letters patent or articles of incorporation. (Topic 10.1)

[Lori Roberts]

Here's my quiz #5. Good luck on the exam everyone!

 
Question 1

0.5 out of 0.5 points

	Failed Co. has gone bankrupt. It owes some unpaid wages to its employees. It paid out a dividend just before declaring itself bankrupt. It also owes some money to ABC Credit. It has also breached some environmental laws. Which of the following is true? Answer
	Selected Answer: The directors are liable for the unpaid wages and for the amounts paid out as dividends, and potentially liable for breach of the environmental laws. Correct Answer: The directors are liable for the unpaid wages and for the amounts paid out as dividends, and potentially liable for breach of the environmental laws. Answer Feedback: You are correct! The directors are liable for the unpaid wages (up to $2,000 for each employee) and for the amounts paid out as dividends when the corporation was insolvent, and potentially liable for breach of the environmental laws. (Topic 10.5)

• Question 2

  0.5 out of 0.5 points

• 	Which of the following most accurately describes a duty of a director of a corporation and a duty of a shareholder? Answer
  	Selected Answer: A shareholder and a director cannot use insider information for their own purposes. Correct Answer: A shareholder and a director cannot use insider information for their own purposes. Answer Feedback: You are correct! A shareholder who has been classified as an insider has the same obligation as a director not to use insider information for his or her own benefit or for the benefit of friends or relatives. (Topics 10.3 and 10.5)

• Question 3

  0.5 out of 0.5 points

• With regard to company law, which one of the following is true? Answer

• Selected Answer: A creditor of a company could sue if the directors of the company voted for a resolution to pay a dividend when the company was insolvent. Correct Answer: A creditor of a company could sue if the directors of the company voted for a resolution to pay a dividend when the company was insolvent. Answer Feedback: You are correct! Directors will be personally liable to creditors of the corporation for any amounts paid out as dividends if the corporation is insolvent. (Topic 10.3) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 20, page 496. ISBN: 0-13-088202-X

• Question 4

• 0.5 out of 0.5 points

• 	Because the director of a closely-held company breached his duties to the company, the company lost $15,000. Despite the urging of the shareholders, the board of directors refused to begin an action on behalf of the company. Which one of the following provisions of the Company Act would aid the shareholders? Answer
  	Selected Answer: Derivative action Correct Answer: Derivative action Answer Feedback: You are correct! A derivative action gives shareholders the right to sue directors on behalf of the company when the directors have done something actionable and the board will not act. (Topic 10.7). Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 1, page 489. ISBN: 0-13-088202-X

• Question 5

  0.5 out of 0.5 points

• 	Ruth Sullivan, an employee of Zoltron Ltd., was authorized by the board of directors to purchase lot A from Stone Bros. Ltd. Although there were no restrictions set out in the incorporating documents, there were several internal rules for such sales. Contrary to these rules, she used Form 3 instead of Form 5 and obtained the signature of the president instead of the secretary when she entered into the contract on behalf of the company for lot A. Which one of the following is true? Answer
  	Selected Answer: The company would be bound if Stone Bros. Ltd. did not know of the irregularity and could not reasonably have known of it. Correct Answer: The company would be bound if Stone Bros. Ltd. did not know of the irregularity and could not reasonably have known of it. Answer Feedback: You are correct! According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and thus avoid responsibility for the actions of its agents. As long as the agent is acting within the scope of its apparent authority and the third party has no notice of any irregularity, there is no need for the third party to enquire further if the authority appears to be in order. (Topic 10.4) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 49, page 509. ISBN: 0-13-088202-X

• Question 6

• 0.5 out of 0.5 points

• 	What information do shareholders have the right to obtain? Answer
  	Selected Answer: Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements Correct Answer: Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements Answer Feedback: You are correct! Shareholders have a right to obtain certain information: documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements. (Topic 10.6)

• Question 7

  0.5 out of 0.5 points

• 	The shareholders are the owners of the corporation. Which of the following statements is true? Answer
  	Selected Answer: Shareholders do not own the assets of the corporation. They do not have the power to bind the corporation. Correct Answer: Shareholders do not own the assets of the corporation. They do not have the power to bind the corporation. Answer Feedback: You are correct! The corporation owns its assets. Directors and officers have the power to bind the corporation. (Topic 10.3)

• Question 8

  0.5 out of 0.5 points

• Which of the following statements correctly describes the effect of the indoor management rule on corporate behaviour? Answer

• Selected Answer: According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and avoid responsibility for the actions of its officers. Correct Answer: According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and avoid responsibility for the actions of its officers. Answer Feedback: You are correct! According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and thus avoid responsibility for the actions of its agents. As long as the agent is acting within the scope of its apparent authority and the third party has no notice of any irregularity, there is no need for the third party to enquire further if the authority appears to be in order. (Topic 10.4)

• Question 9

  0.5 out of 0.5 points

• 	TV Network is negotiating a contract with Indie Productions for Indie to produce a new television cooking series that TV would broadcast. The negotiations fail because TV is not ready to meet Indie’s asking price to produce the series. Albert resigns his position as president of Indie and forms a new corporation, New Co. New Co. successfully negotiates a contract with TV to produce a new television cooking show. Which of the following statements is correct? Answer
  	Selected Answer: Albert has a fiduciary duty to Indie which survives his resignation from Indie. Correct Answer: Albert has a fiduciary duty to Indie which survives his resignation from Indie. Answer Feedback: You are correct! Albert had been an executive of Indie Co., so he owes a fiduciary duty to the corporation even though he has resigned. He must not take personal advantage of corporate opportunities. (Topic 10.5)

• Question 10

  0.5 out of 0.5 points

• 	What is the standard of care that a director owes to the corporation? Answer
  	Selected Answer: A director is liable for harm caused in the exercise of his or her duties if his or her behaviour does not meet the standard of a reasonably prudent person. Correct Answer: A director is liable for harm caused in the exercise of his or her duties if his or her behaviour does not meet the standard of a reasonably prudent person. Answer Feedback: You are correct! A director is liable for harm caused in the exercise of his or her duties if his or her behaviour falls below the standard of a reasonably prudent person. (Topic 10.5)

• Question 11

  0.5 out of 0.5 points

• 	Larkson is a director of Cargate Inc. The company is thinking about buying some land in which Larkson owns part interest. What should Larkson do at the board of directors meeting where this is discussed and voted on? Answer
  	Selected Answer: Disclose his interest in the land and abstain from voting on the matter because this is a potential conflict of interest Correct Answer: Disclose his interest in the land and abstain from voting on the matter because this is a potential conflict of interest Answer Feedback: You are correct! Larkson must not vote on the matter because of the potential conflict of interest, but he must also disclose his interest to the board before it votes on the matter. (Topic 10.4)

• Question 12

  0.5 out of 0.5 points

• 	ABC Co. is a closely-held company. Two of the shareholders serve as directors. As directors, they’ve voted to issue themselves more shares to increase their voting control of the company. Which of the provisions of the Act governing companies, if granted by a shareholder agreement or the incorporating documents, would aid the other shareholders? Answer
  	Selected Answer: Preemptive right Correct Answer: Preemptive right Answer Feedback: You are correct! A preemptive right is the right to purchase a portion of any new share offering proportionately equal to a shareholder’s present holding in order to allow the shareholder to maintain its percentage of ownership. (Topic 10.7) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 2, page 489. N: 0-13-088202-X

Sunday, August 12, 2012 8:27:06 PM EDT

OK

 

---

Date: Sun, 12 Aug 2012 12:56:35 -0700
From: liliana.c...@gmail.com
To: lw1-s...@googlegroups.com
Subject: {LW1 Summer} Quiz #5

--
 
 
 

[Maryam Jan Mohammadi]

Got it from a friend. Not done with mine yet :(

-----Original Message-----
From: lw1-s...@googlegroups.com on behalf of Lori Roberts
Sent: Sun 8/12/2012 8:35 PM
To: lw1-s...@googlegroups.com
Subject: RE: {LW1 Summer} Quiz #5


Here's my quiz #5. Good luck on the exam everyone! Question 1

0.5 out of 0.5 points

Failed Co. has gone
bankrupt. It owes some unpaid wages to its employees. It paid out a dividend
just before declaring itself bankrupt. It also owes some money to ABC Credit. It
has also breached some environmental laws. Which of the following is
true?Answer





Selected Answer:

The directors are liable for the
unpaid wages and for the amounts paid out as dividends, and potentially liable
for breach of the environmental laws.

Correct Answer:

The directors are liable for the
unpaid wages and for the amounts paid out as dividends, and potentially liable
for breach of the environmental laws.

Answer Feedback:

You are correct! The directors
are liable for the unpaid wages (up to $2,000 for each employee) and for the
amounts paid out as dividends when the corporation was insolvent, and
potentially liable for breach of the environmental laws. (Topic
10.5)

Question 2

0.5 out of 0.5 points

Which of the
following most accurately describes a duty of a director of a corporation
and a duty of a shareholder?Answer





Selected Answer:

A shareholder and a director
cannot use insider information for their own purposes.

Correct Answer:

A shareholder and a director
cannot use insider information for their own purposes.

Answer Feedback:

You are correct! A shareholder
who has been classified as an insider has the same obligation as a director not
to use insider information for his or her own benefit or for the benefit of
friends or relatives. (Topics 10.3 and
10.5)

Question 3

0.5 out of 0.5 points

With regard to
company law, which one of the following is true?Answer





Selected Answer:

A creditor of a company could sue
if the directors of the company voted for a resolution to pay a dividend when
the company was insolvent.

Correct Answer:

A creditor of a company could sue
if the directors of the company voted for a resolution to pay a dividend when
the company was insolvent.

Answer Feedback:

You are correct! Directors will
be personally liable to creditors of the corporation for any amounts paid out as
dividends if the corporation is insolvent. (Topic 10.3)
Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition
(Prentice Hall, 2002), Question 20, page 496. ISBN:
0-13-088202-X

Question 4

0.5 out of 0.5 points

Because the
director of a closely-held company breached his duties to the company, the
company lost $15,000. Despite the urging of the shareholders, the board of
directors refused to begin an action on behalf of the company. Which one of the
following provisions of the Company Act would aid the
shareholders?Answer





Selected Answer:

Derivative action

Correct Answer:

Derivative action

Answer Feedback:

You are correct! A derivative
action gives shareholders the right to sue directors on behalf of the company
when the directors have done something actionable and the board will not act.
(Topic 10.7).
Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition
(Prentice Hall, 2002), Question 1, page 489. ISBN:
0-13-088202-X

Question 5

0.5 out of 0.5 points

Ruth Sullivan, an
employee of Zoltron Ltd., was authorized by the board of directors to purchase
lot A from Stone Bros. Ltd. Although there were no restrictions set out in the
incorporating documents, there were several internal rules for such sales.
Contrary to these rules, she used Form 3 instead of Form 5 and obtained the
signature of the president instead of the secretary when she entered into the
contract on behalf of the company for lot A. Which one of the following is
true?Answer





Selected Answer:

The company would be bound if
Stone Bros. Ltd. did not know of the irregularity and could not reasonably have
known of it.

Correct Answer:

The company would be bound if
Stone Bros. Ltd. did not know of the irregularity and could not reasonably have
known of it.

Answer Feedback:

You are correct! According to the
indoor management rule, a corporation cannot claim that it has not followed its
own rules and procedures and thus avoid responsibility for the actions of its
agents. As long as the agent is acting within the scope of its apparent
authority and the third party has no notice of any irregularity, there is no
need for the third party to enquire further if the authority appears to be in
order. (Topic 10.4)
Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition
(Prentice Hall, 2002), Question 49, page 509. ISBN:
0-13-088202-X

Question 6

0.5 out of 0.5 points

What information do
shareholders have the right to obtain?Answer





Selected Answer:

Documents of incorporation, lists
of all shareholders, lists of officers and directors, and audited financial
statements

Correct Answer:

Documents of incorporation, lists
of all shareholders, lists of officers and directors, and audited financial
statements

Answer Feedback:

You are correct! Shareholders
have a right to obtain certain information: documents of incorporation, lists of
all shareholders, lists of officers and directors, and audited financial
statements. (Topic
10.6)

Question 7

0.5 out of 0.5 points

The shareholders
are the owners of the corporation. Which of the following statements is
true?Answer





Selected Answer:

Shareholders do not own the
assets of the corporation. They do not have the power to bind the
corporation.

Correct Answer:

Shareholders do not own the
assets of the corporation. They do not have the power to bind the
corporation.

Answer Feedback:

You are correct! The corporation
owns its assets. Directors and officers have the power to bind the corporation.
(Topic 10.3)

Question 8

0.5 out of 0.5 points

Which of the
following statements correctly describes the effect of the indoor management
rule on corporate behaviour?Answer





Selected Answer:

According to the indoor
management rule, a corporation cannot claim that it has not followed its own
rules and procedures and avoid responsibility for the actions of its
officers.

Correct Answer:

According to the indoor
management rule, a corporation cannot claim that it has not followed its own
rules and procedures and avoid responsibility for the actions of its
officers.

Answer Feedback:

You are correct! According to the
indoor management rule, a corporation cannot claim that it has not followed its
own rules and procedures and thus avoid responsibility for the actions of its
agents. As long as the agent is acting within the scope of its apparent
authority and the third party has no notice of any irregularity, there is no
need for the third party to enquire further if the authority appears to be in
order. (Topic
10.4)

Question 9

0.5 out of 0.5 points

TV Network is
negotiating a contract with Indie Productions for Indie to produce a new
television cooking series that TV would broadcast. The negotiations fail because
TV is not ready to meet Indie's asking price to produce the series. Albert
resigns his position as president of Indie and forms a new corporation, New Co.
New Co. successfully negotiates a contract with TV to produce a new television
cooking show. Which of the following statements is correct?Answer





Selected Answer:

Albert has a fiduciary duty to
Indie which survives his resignation from Indie.

Correct Answer:

Albert has a fiduciary duty to
Indie which survives his resignation from Indie.

Answer Feedback:

You are correct! Albert had been
an executive of Indie Co., so he owes a fiduciary duty to the corporation even
though he has resigned. He must not take personal advantage of corporate
opportunities. (Topic
10.5)

Question 10

0.5 out of 0.5 points

What is the
standard of care that a director owes to the corporation?Answer





Selected Answer:

A director is liable for harm
caused in the exercise of his or her duties if his or her behaviour does not
meet the standard of a reasonably prudent person.

Correct Answer:

A director is liable for harm
caused in the exercise of his or her duties if his or her behaviour does not
meet the standard of a reasonably prudent person.

Answer Feedback:

You are correct! A director is
liable for harm caused in the exercise of his or her duties if his or her
behaviour falls below the standard of a reasonably prudent person. (Topic
10.5)

Question 11

0.5 out of 0.5 points

Larkson is a
director of Cargate Inc. The company is thinking about buying some land in which
Larkson owns part interest. What should Larkson do at the board of directors
meeting where this is discussed and voted on?Answer





Selected Answer:

Disclose his interest in the land
and abstain from voting on the matter because this is a potential conflict of
interest

Correct Answer:

Disclose his interest in the land
and abstain from voting on the matter because this is a potential conflict of
interest

Answer Feedback:

You are correct! Larkson must not
vote on the matter because of the potential conflict of interest, but he must
also disclose his interest to the board before it votes on the matter. (Topic
10.4)

Question 12

0.5 out of 0.5 points

ABC Co. is a
closely-held company. Two of the shareholders serve as directors. As directors,
they've voted to issue themselves more shares to increase their voting control
of the company. Which of the provisions of the Act governing companies, if
granted by a shareholder agreement or the incorporating documents, would aid the
other shareholders?Answer





Selected Answer:

Preemptive right

Correct Answer:

Preemptive right

Answer Feedback:

You are correct! A preemptive
right is the right to purchase a portion of any new share offering
proportionately equal to a shareholder's present holding in order to allow the
shareholder to maintain its percentage of ownership. (Topic 10.7)
Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition
(Prentice Hall, 2002), Question 2, page 489. N:
0-13-088202-X

Sunday, August 12, 2012 8:27:06 PM EDT
OK

Date: Sun, 12 Aug 2012 12:56:35 -0700
From: liliana.c...@gmail.com
To: lw1-s...@googlegroups.com
Subject: {LW1 Summer} Quiz #5

Hi Everyone, Please see my quiz #5. I hope this helps you. Now onto studying for the exam. (Yikkeeesss...not looking forward to it) Question 1

0.5 out of 0.5 points

Which of the
following statements correctly describes the effect of the indoor management
rule on corporate behaviour?Answer





Selected Answer:

According to the indoor
management rule, a corporation cannot claim that it has not followed its own
rules and procedures and avoid responsibility for the actions of its
officers.

Correct Answer:

According to the indoor
management rule, a corporation cannot claim that it has not followed its own
rules and procedures and avoid responsibility for the actions of its
officers.

Answer Feedback:

You are correct! According to the
indoor management rule, a corporation cannot claim that it has not followed its
own rules and procedures and thus avoid responsibility for the actions of its
agents. As long as the agent is acting within the scope of its apparent
authority and the third party has no notice of any irregularity, there is no
need for the third party to enquire further if the authority appears to be in
order. (Topic
10.4)

Question 2

0.5 out of 0.5 points

Which one of the
following statements about the separate legal existence of a corporation is
true?Answer





Selected Answer:

The corporation has a legal
existence separate from its shareholders, directors, and managers or officers.
The shareholders enjoy the financial advantage of limited liability to the
extent of their capital contribution only. Shareholders may be held responsible
for the debts of the corporation in exceptional circumstances.

Correct Answer:

The corporation has a legal
existence separate from its shareholders, directors, and managers or officers.
The shareholders enjoy the financial advantage of limited liability to the
extent of their capital contribution only. Shareholders may be held responsible
for the debts of the corporation in exceptional circumstances.

Answer Feedback:

You are correct! Shareholders may
be responsible for the debts of the corporation when the corporation is used to
perpetuate a fraud. The courts will then lift the corporate veil in order to
prevent abuse of the concept of corporation. (Topic
10.3)

Question 3

0.5 out of 0.5 points

One of the
fundamental aspects of corporate law is that the shareholders in a business have
limited liability. What is required for a shareholder to become liable to
creditors of the corporation?Answer





Selected Answer:

Lifting of the corporate veil to
identify an individual who controls the corporation, used that control to commit
a fraud, and caused the plaintiff's injury through this
misconduct.

Correct Answer:

Lifting of the corporate veil to
identify an individual who controls the corporation, used that control to commit
a fraud, and caused the plaintiff's injury through this
misconduct.

Answer Feedback:

You are correct! When the courts
lift the corporate veil, they expose individual shareholders to liability. For
this to happen, three specific conditions must be met: an individual must
control the corporation, that control must have been exercised to commit a
fraud, and the misconduct must be the cause of the plaintiff's injury. (Topic
10.3)

Question 4

0 out of 0.5 points

What is the role of
bylaws and how do they come into effect?Answer





Selected Answer:

Bylaws are the rules that govern
the operation of the corporation and must be approved by the board of directors
in order to come into effect.

Correct Answer:

Bylaws are the rules that govern
the operation of the corporation and must be approved by a majority of the
shareholders present and voting at a general meeting in order to come into
effect.

Answer Feedback:

Incorrect. The board of directors
alone cannot approve bylaws. They must be approved by the majority of
shareholders. The correct answer is, bylaws are the rules that govern the
operation of the corporation and must be approved by a majority of the
shareholders present and voting at a general meeting. (Topic
10.1)

Question 5

0.5 out of 0.5 points

Which one of these
is true?Answer





Selected Answer:

A corporation is bound by the
acts of its officers as long as they are acting within the scope of their
apparent authority.

Correct Answer:

A corporation is bound by the
acts of its officers as long as they are acting within the scope of their
apparent authority.

Answer Feedback:

You are correct! A corporation is
bound by the acts of its officers as long as they are acting within the scope of
their apparent authority. (Topic
10.4)

Question 6

0 out of 0.5 points

Which of the
following does a shareholder bringing a derivative action need to
show?Answer





Selected Answer:

That the directors are acting in
bad faith

Correct Answer:

That the directors will not bring
the action

Answer Feedback:

Incorrect. The shareholder must
show that the shareholders are acting in good faith, not that the directors are
acting in bad faith. The correct answer is, a derivative action occurs when
shareholders bring an action, with permission of the courts, in the name of a
corporation in respect of a wrong done to the corporation. In order to obtain
permission for a derivative action, the shareholders must prove 1) that the
directors will not bring an action; 2) that the shareholders are acting in good
faith; and 3) that the action is in the best interests of the corporation or
shareholders. (Topic
10.7)

Question 7

0.5 out of 0.5 points

Which of the
following statements accurately describes the rights of
shareholders?Answer





Selected Answer:

The shareholders have the right
to elect the members of the board of directors, and to certain information about
the corporation.

Correct Answer:

The shareholders have the right
to elect the members of the board of directors, and to certain information about
the corporation.

Answer Feedback:

You are correct! The shareholders
have the right to elect the members of the board of directors and to certain
information about the corporation (Topic
10.6).

Question 8

0.5 out of 0.5 points

Forget Me Not Co.
is a nursery business. The majority shareholders decide to sell the inventory
and not to replace it. What remedy is available to the minority
shareholders?Answer





Selected Answer:

File a dissent

Correct Answer:

File a dissent

Answer Feedback:

You are correct! If a decision by
the majority of the shareholders has a negative impact on the minority
shareholders, the dissenting shareholders can, with the approval of the courts,
force the majority to purchase their shares at a fair price. (Topic
10.7)

Question 9

0.5 out of 0.5 points

With regard to
company law, which one of the following is true?Answer





Selected Answer:

A creditor of a company could sue
if the directors of the company voted for a resolution to pay a dividend when
the company was insolvent.

Correct Answer:

A creditor of a company could sue
if the directors of the company voted for a resolution to pay a dividend when
the company was insolvent.

Answer Feedback:

You are correct! Directors will
be personally liable to creditors of the corporation for any amounts paid out as
dividends if the corporation is insolvent. (Topic 10.3)
Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition
(Prentice Hall, 2002), Question 20, page 496. ISBN:
0-13-088202-X

Question 10

0.5 out of 0.5 points

What is meant when
shareholders have pre-emptive rights?Answer





Selected Answer:

Rights to retain their
proportionate holdings in a corporation

Correct Answer:

Rights to retain their
proportionate holdings in a corporation

Answer Feedback:

You are correct! Pre-emptive
rights mean that shareholders have the right to retain their proportionate
holdings in a corporation. (Topic
10.6)

Question 11

0.5 out of 0.5 points

Which one of the
following is true with regard to the shareholders of a
corporation?Answer





Selected Answer:

The shareholders of a corporation
have limited liability for its debts.

Correct Answer:

The shareholders of a corporation
have limited liability for its debts.

Answer Feedback:

You are correct! Shareholders are
only liable for the amount of their initial investment in the corporation.
(Topic 10.3)

Question 12

0.5 out of 0.5 points

A corporation may
be created in which of the following manners?Answer





Selected Answer:

Articles of incorporation,
letters patent, and memorandum of association

Correct Answer:

Articles of incorporation,
letters patent, and memorandum of association

Answer Feedback:

You are correct! Corporations may
be created by statute, memorandum of association, letters patent or articles of
incorporation. (Topic 10.1)



--

--

[Maryam Jan Mohammadi]

Attached is my Quiz 5. Good luck to everyone in Final exam, and thanks to all of you for the great support :)

--

[Dee S]

Here is mine.
Good luck everyone!

 
Question 1

0.5 out of 0.5 points

	Which of the following statements correctly describes the effect of the indoor management rule on corporate behaviour? Answer

Selected Answer:

According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and avoid responsibility for the actions of its officers.

Correct Answer:

According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and avoid responsibility for the actions of its officers.

Answer Feedback: You are correct! According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and thus avoid responsibility for the actions of its agents. As long as the agent is acting within the scope of its apparent authority and the third party has no notice of any irregularity, there is no need for the third party to enquire further if the authority appears to be in order. (Topic 10.4)

• Question 2

• 0.5 out of 0.5 points

• 	What is the difference between a broadly-held corporation and a closely-held corporation? Answer
  	Selected Answer: There are no restrictions on the transfer of shares of a broadly-held corporation, while there are restrictions on the transfer of shares of a closely-held corporation. Correct Answer: There are no restrictions on the transfer of shares of a broadly-held corporation, while there are restrictions on the transfer of shares of a closely-held corporation. Answer Feedback: You are correct! There are no restrictions on the transfer of shares of a broadly-held corporation while there are restrictions on the transfer of shares of a closely-held corporation. (Topic 10.2)

• Question 3

• 0.5 out of 0.5 points

• What is meant when shareholders have pre-emptive rights? Answer

• Selected Answer:

• Rights to retain their proportionate holdings in a corporation

• Correct Answer:

• Rights to retain their proportionate holdings in a corporation

• Answer Feedback: You are correct! Pre-emptive rights mean that shareholders have the right to retain their proportionate holdings in a corporation. (Topic 10.6)

• Question 4

• 0.5 out of 0.5 points

• What is the standard of care that a director owes to the corporation? Answer

• Selected Answer:

• A director is liable for harm caused in the exercise of his or her duties if his or her behaviour does not meet the standard of a reasonably prudent person.

• Correct Answer:

• A director is liable for harm caused in the exercise of his or her duties if his or her behaviour does not meet the standard of a reasonably prudent person.

• Answer Feedback: You are correct! A director is liable for harm caused in the exercise of his or her duties if his or her behaviour falls below the standard of a reasonably prudent person. (Topic 10.5)

• Question 5

• 0.5 out of 0.5 points

• What information do shareholders have the right to obtain? Answer

• Selected Answer:

• Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements

• Correct Answer:

• Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements

• Answer Feedback: You are correct! Shareholders have a right to obtain certain information: documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements. (Topic 10.6)

• Question 6

• 0.5 out of 0.5 points

• 	Art Raskle was an officer, director, and employee of a large reporting company. At a directors’ meeting, he was surprised but pleased to learn that the company was discussing a resolution to contract with the firm of Fielding’s Office Supply for $200 worth of office equipment. He and Patricia Eastern recently bought that business; Raskle has a 45% interest. Raskle voted for the contract and the resolution passed without discussion by a vote of 6-0. Several months after completion of the purchase, the other directors learned of Raskle’s interest in Fielding’s Office Supply and called on him to account to the company for any profit made. He admitted the ownership and a profit but referred to a provision in the articles of the company and also in his employment contract that provided that he, like the other directors, was relieved from his fiduciary duty to the company. Which one of the following is true? Answer
  	Selected Answer: Raskle must account for any profit made as a director because he failed to disclose his interest and voted on the question. Correct Answer: Raskle must account for any profit made as a director because he failed to disclose his interest and voted on the question. Answer Feedback: You are correct! Directors must disclose to the other directors the fact that they stand to benefit from a contract with the corporation and must account for any profit from the impugned transaction. (Topic 10.5) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 34, page 503. ISBN: 0-13-088202-X

• Question 7

• 0.5 out of 0.5 points

• 	Wolfgang is a dog breeder and the owner of Canine Co. He is also a director of Guard Co. which provides guard-dog services to various corporations. Guard Co. wants a steady and reliable supply of dogs for training and negotiates with various kennels. It also negotiates with Canine Co. Which of the following is true? Answer
  	Selected Answer: Wolfgang cannot vote as a director of Guard Co. on the proposed contract with Canine Co. Correct Answer: Wolfgang cannot vote as a director of Guard Co. on the proposed contract with Canine Co. Answer Feedback: You are correct! A director has a fiduciary duty to the corporation and must disclose to the corporation that he or she stands to benefit from a contract with the corporation, and is not allowed to vote. (Topic 10.5)

• Question 8

• 0.5 out of 0.5 points

• 	How can the relief from oppression remedy best be described? Answer
  	Selected Answer: The right of a shareholder to have the court appoint a receiver to take control of the company or to provide for its dissolution if it feels that the shareholder’s complaint is justified. Correct Answer: The right of a shareholder to have the court appoint a receiver to take control of the company or to provide for its dissolution if it feels that the shareholder’s complaint is justified. Answer Feedback: You are correct! The relief from oppression remedy gives a shareholder the right to go to court when, for example, the directors arrange for the sale of shares just to weaken the voting position of a particular shareholder, or fire an employee-shareholder to force the sale of the shares. The court may appoint a receiver to take control of the company or to provide for its dissolution if it feels that the shareholder’s complaint is justified. (Topic 10.7)

• Question 9

• 0.5 out of 0.5 points

• 	Which one of the following is an example of breach of fiduciary duty? Answer
  	Selected Answer: An officer of the company learned of a business opportunity intended for the company and intercepted it for his own benefit. Correct Answer: An officer of the company learned of a business opportunity intended for the company and intercepted it for his own benefit. Answer Feedback: You are correct! Directors cannot take personal advantage of corporate opportunities. (Topic 10.5) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 12, page 493. ISBN: 0-13-088202-X

• Question 10

• 0.5 out of 0.5 points

• Because the director of a closely-held company breached his duties to the company, the company lost $15,000. Despite the urging of the shareholders, the board of directors refused to begin an action on behalf of the company. Which one of the following provisions of the Company Act would aid the shareholders? Answer

• Selected Answer: Derivative action

• Correct Answer: Derivative action

• Answer Feedback: You are correct! A derivative action gives shareholders the right to sue directors on behalf of the company when the directors have done something actionable and the board will not act. (Topic 10.7). Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 1, page 489. ISBN: 0-13-088202-X

• Question 11

• 0.5 out of 0.5 points

• Failed Co. has gone bankrupt. It owes some unpaid wages to its employees. It paid out a dividend just before declaring itself bankrupt. It also owes some money to ABC Credit. It has also breached some environmental laws. Which of the following is true? Answer

• Selected Answer:

• The directors are liable for the unpaid wages and for the amounts paid out as dividends, and potentially liable for breach of the environmental laws.

• Correct Answer:

• The directors are liable for the unpaid wages and for the amounts paid out as dividends, and potentially liable for breach of the environmental laws.

• Answer Feedback: You are correct! The directors are liable for the unpaid wages (up to $2,000 for each employee) and for the amounts paid out as dividends when the corporation was insolvent, and potentially liable for breach of the environmental laws. (Topic 10.5)

• Question 12

• 0.5 out of 0.5 points

• ABC Co. is a closely-held company. Two of the shareholders serve as directors. As directors, they’ve voted to issue themselves more shares to increase their voting control of the company. Which of the provisions of the Act governing companies, if granted by a shareholder agreement or the incorporating documents, would aid the other shareholders? Answer

• Selected Answer: Preemptive right

• Correct Answer: Preemptive right

• Answer Feedback: You are correct! A preemptive right is the right to purchase a portion of any new share offering proportionately equal to a shareholder’s present holding in order to allow the shareholder to maintain its percentage of ownership. (Topic 10.7) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 2, page 489. N: 0-13-088202-X

> Subject: RE: {LW1 Summer} Quiz #5

> Date: Sun, 12 Aug 2012 22:14:48 -0400
> From: mar...@dmsproperty.com
> To: lw1-s...@googlegroups.com; lw1-s...@googlegroups.com; lw1-s...@googlegroups.com

> --
>
>
>

[Darryl, Donna, Brianna & Mackenzie Eckhardt]

Hi All – here are my answers

Good luck all

 

·         Question 1

0.5 out of 0.5 points

	Which one of the following attracts the dissent procedure, which can result in the company being forced to buy the shares of a shareholder at market value? Answer
	Selected Answer: When a decision by the majority of the shareholders will create major changes that will adversely affect one group of shareholders Correct Answer: When a decision by the majority of the shareholders will create major changes that will adversely affect one group of shareholders Answer Feedback:

You are correct! If a decision by the majority of the shareholders has a negative impact on the minority shareholders, the dissenting shareholders can, with the approval of the courts, force the majority to purchase their shares at a fair price. (Topic 10.7)

Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 13, page 493. ISBN: 0-13-088202-X

·         Question 2

0.5 out of 0.5 points

	Which of the following is true about the so-called or illusory benefits of a corporation? Answer
	Selected Answer: Shareholders may become personally liable for the corporation’s debts if they provide a personal guarantee. Correct Answer: Shareholders may become personally liable for the corporation’s debts if they provide a personal guarantee. Answer Feedback: You are correct! Lenders want security for the funds advanced to the corporation and often will not be satisfied with the corporation’s promise of repayment because they do not have confidence in the corporation’s ability to meet its obligations. (Topic 10.2)

·         Question 3

0 out of 0.5 points

	One of the fundamental aspects of corporate law is that the shareholders in a business have limited liability. What is required for a shareholder to become liable to creditors of the corporation? Answer
	Selected Answer: Shareholders can never become liable to creditors. Correct Answer:

Lifting of the corporate veil to identify an individual who controls the corporation, used that control to commit a fraud, and caused the plaintiff’s injury through this misconduct.

Answer Feedback: Incorrect. Under very limited circumstances, shareholders can become liable to creditors. The correct answer is, when the courts lift the corporate veil, they expose individual shareholders to liability. For this to happen, three specific conditions must be met: an individual must control the corporation, that control must have been exercised to commit a fraud, and the misconduct must be the cause of the plaintiff’s injury. (Topic 10.3)

·         Question 4

0.5 out of 0.5 points

	Failed Co. has gone bankrupt. It owes some unpaid wages to its employees. It paid out a dividend just before declaring itself bankrupt. It also owes some money to ABC Credit. It has also breached some environmental laws. Which of the following is true? Answer
	Selected Answer:

The directors are liable for the unpaid wages and for the amounts paid out as dividends, and potentially liable for breach of the environmental laws.

Correct Answer:

The directors are liable for the unpaid wages and for the amounts paid out as dividends, and potentially liable for breach of the environmental laws.

Answer Feedback: You are correct! The directors are liable for the unpaid wages (up to $2,000 for each employee) and for the amounts paid out as dividends when the corporation was insolvent, and potentially liable for breach of the environmental laws. (Topic 10.5)

·         Question 5

0.5 out of 0.5 points

	What is the standard of care that a director owes to the corporation? Answer
	Selected Answer:

A director is liable for harm caused in the exercise of his or her duties if his or her behaviour does not meet the standard of a reasonably prudent person.

Correct Answer:

A director is liable for harm caused in the exercise of his or her duties if his or her behaviour does not meet the standard of a reasonably prudent person.

Answer Feedback: You are correct! A director is liable for harm caused in the exercise of his or her duties if his or her behaviour falls below the standard of a reasonably prudent person. (Topic 10.5)

·         Question 6

0.5 out of 0.5 points

	Wolfgang is a dog breeder and the owner of Canine Co. He is also a director of Guard Co. which provides guard-dog services to various corporations. Guard Co. wants a steady and reliable supply of dogs for training and negotiates with various kennels. It also negotiates with Canine Co. Which of the following is true? Answer
	Selected Answer:

Wolfgang cannot vote as a director of Guard Co. on the proposed contract with Canine Co.

Correct Answer:

Wolfgang cannot vote as a director of Guard Co. on the proposed contract with Canine Co.

Answer Feedback: You are correct! A director has a fiduciary duty to the corporation and must disclose to the corporation that he or she stands to benefit from a contract with the corporation, and is not allowed to vote. (Topic 10.5)

·         Question 7

0.5 out of 0.5 points

	Forget Me Not Co. is a nursery business. The majority shareholders decide to sell the inventory and not to replace it. What remedy is available to the minority shareholders? Answer
	Selected Answer: File a dissent Correct Answer: File a dissent

Answer Feedback: You are correct! If a decision by the majority of the shareholders has a negative impact on the minority shareholders, the dissenting shareholders can, with the approval of the courts, force the majority to purchase their shares at a fair price. (Topic 10.7)

·         Question 8

0.5 out of 0.5 points

	Which one of the following is true with regard to the rights of shareholders? Answer
	Selected Answer: Shareholders have the right to request a court-appointed inspector to examine the auditing process. Correct Answer: Shareholders have the right to request a court-appointed inspector to examine the auditing process. Answer Feedback: You are correct! Upon application, the courts may appoint an inspector if a prima facie case establishes the probability of serious mismanagement. (Topic 10.6)

·         Question 9

0.5 out of 0.5 points

	What information do shareholders have the right to obtain? Answer
	Selected Answer:

Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements

Correct Answer:

Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements

Answer Feedback: You are correct! Shareholders have a right to obtain certain information: documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements. (Topic 10.6)

·         Question 10

0.5 out of 0.5 points

	Which of the following statements most accurately describes the difference between a broadly held and a closely held corporation? Answer
	Selected Answer: A broadly held corporation issues shares to the general public and a closely held corporation does not. Correct Answer: A broadly held corporation issues shares to the general public and a closely held corporation does not. Answer Feedback: You are correct! Broadly held corporations issue their shares to the general public and are normally listed on a stock exchange. (Topic 10.2)

·         Question 11

0.5 out of 0.5 points

	Which of the following statements best describes the liabilities of the sole shareholder in a closely held corporation? Answer
	Selected Answer: The sole shareholder has no personal liability for the contractual obligations entered into by the corporation. Correct Answer: The sole shareholder has no personal liability for the contractual obligations entered into by the corporation. Answer Feedback: You are correct! The sole shareholder in a closely held corporation has no personal liability for the contractual obligations entered into by the corporation. (Topic 10.2)

·         Question 12

0.5 out of 0.5 points

	How can the relief from oppression remedy best be described? Answer
	Selected Answer:

The right of a shareholder to have the court appoint a receiver to take control of the company or to provide for its dissolution if it feels that the shareholder’s complaint is justified.

Correct Answer:

--
 
 
 

[gursewak sidhu]

Thanks everyone who post quiz #5.  It is very helpful.

---

From: deck...@bellaliant.net

To: lw1-s...@googlegroups.com
Subject: RE: {LW1 Summer} Quiz #5

Date: Mon, 13 Aug 2012 18:55:40 -0300

--
 
 
 

[Elena Tcherkassky]

Thank you everyone for your help and support!!!!

Good luck on the exam!!!!

--
 
 
 

[worrywort27]

I squeaked in right under the deadline, but here is my quiz for everyone:

• Question 1

  0.5 out of 0.5 points

• TV Network is negotiating a contract with Indie Productions for Indie to produce a new television cooking series that TV would broadcast. The negotiations fail because TV is not ready to meet Indie’s asking price to produce the series. Albert resigns his position as president of Indie and forms a new corporation, New Co. New Co. successfully negotiates a contract with TV to produce a new television cooking show. Which of the following statements is correct? Answer

• Selected Answer:

• Albert has a fiduciary duty to Indie which survives his resignation from Indie.

• Correct Answer:

• Albert has a fiduciary duty to Indie which survives his resignation from Indie.

• Answer Feedback:

• You are correct! Albert had been an executive of Indie Co., so he owes a fiduciary duty to the corporation even though he has resigned. He must not take personal advantage of corporate opportunities. (Topic 10.5)

• Question 2

  0.5 out of 0.5 points

• 	Which one of the following is true with regard to the rights of shareholders? Answer
  	Selected Answer:

• Shareholders have the right to request a court-appointed inspector to examine the auditing process.

• Correct Answer:

• Shareholders have the right to request a court-appointed inspector to examine the auditing process.

• Answer Feedback:

• You are correct! Upon application, the courts may appoint an inspector if a prima facie case establishes the probability of serious mismanagement. (Topic 10.6)

• Question 3

  0.5 out of 0.5 points

• Which of the following does a shareholder bringing a derivative action need to show? Answer

• Selected Answer:

• That the directors will not bring the action

• Correct Answer:    That the directors will not bring the action

• Answer Feedback: You are correct! A derivative action occurs when shareholders bring an action, with permission of the courts, in the name of a corporation in respect of a wrong done to the corporation. In order to obtain permission for a derivative action, the shareholders must prove 1) that the directors will not bring an action; 2) that the shareholders are acting in good faith; and 3) that the action is in the best interests of the corporation or shareholders. (Topic 10.7)

• Question 4

• 0.5 out of 0.5 points

• What information do shareholders have the right to obtain? Answer

• Selected Answer:    Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements Correct Answer:    Documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements

• Answer Feedback:

• You are correct! Shareholders have a right to obtain certain information: documents of incorporation, lists of all shareholders, lists of officers and directors, and audited financial statements. (Topic 10.6)

• Question 5

  0.5 out of 0.5 points

• What is meant when shareholders have pre-emptive rights? Answer

• Selected Answer:    Rights to retain their proportionate holdings in a corporation Correct Answer:    Rights to retain their proportionate holdings in a corporation Answer Feedback: You are correct! Pre-emptive rights mean that shareholders have the right to retain their proportionate holdings in a corporation. (Topic 10.6)

• Question 6

• 0.5 out of 0.5 points

• 	Which of the following statements best describes the liabilities of the sole shareholder in a closely held corporation? Answer
  	Selected Answer:    The sole shareholder has no personal liability for the contractual obligations entered into by the corporation. Correct Answer:    The sole shareholder has no personal liability for the contractual obligations entered into by the corporation. Answer Feedback:

• You are correct! The sole shareholder in a closely held corporation has no personal liability for the contractual obligations entered into by the corporation. (Topic 10.2)

• Question 7

  0.5 out of 0.5 points

• With regard to company law, which one of the following is true? Answer

• Selected Answer:    A creditor of a company could sue if the directors of the company voted for a resolution to pay a dividend when the company was insolvent. Correct Answer:    A creditor of a company could sue if the directors of the company voted for a resolution to pay a dividend when the company was insolvent. Answer Feedback: You are correct! Directors will be personally liable to creditors of the corporation for any amounts paid out as dividends if the corporation is insolvent. (Topic 10.3) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 20, page 496. ISBN: 0-13-088202-X

• Question 8

• 0.5 out of 0.5 points

• 	The most important disclosure by a corporation is its financial statements. According to statute, whom do the shareholders appoint to analyze and evaluate the annual financial statements? Answer
  	Selected Answer:    An independent inspector Correct Answer:    An independent inspector Answer Feedback: You are correct! The statutes provide the shareholders with the right to have an independent inspector appointed, to give an opinion on the corporation’s annual financial statements. (Topic 10.6)

• Question 9

  0.5 out of 0.5 points

• Larkson is a director of Cargate Inc. The company is thinking about buying some land in which Larkson owns part interest. What should Larkson do at the board of directors meeting where this is discussed and voted on? Answer

• Selected Answer:

• Disclose his interest in the land and abstain from voting on the matter because this is a potential conflict of interest

• Correct Answer:

• Disclose his interest in the land and abstain from voting on the matter because this is a potential conflict of interest

• Answer Feedback:

• You are correct! Larkson must not vote on the matter because of the potential conflict of interest, but he must also disclose his interest to the board before it votes on the matter. (Topic 10.4)

• Question 10

  0.5 out of 0.5 points

• 	A real-estate agent, by virtue of his fiduciary duty to his principal, is not allowed to buy the property being sold by his principal without full disclosure to and consent from his principal. The real-estate agent does not want to disclose that he is the buyer of the property, so he forms a company and takes an offer to his principal from the company. On the basis of these facts, which one of the following is true if the principal finds out the company/buyer is owned by the real-estate agent and objects to the contract? Answer
  	Selected Answer:    The court would not enforce the contract and would “lift the corporate veil.” Correct Answer:    The court would not enforce the contract and would “lift the corporate veil.” Answer Feedback: You are correct! The courts will lift the corporate veil to prevent abuse of the concept of the corporation. (Topic 10.5) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 9, page 491. ISBN: 0-13-088202-X

• Question 11

  0.5 out of 0.5 points

• Which one of these is true? Answer

• Selected Answer:    A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. Correct Answer:    A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. Answer Feedback: You are correct! A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. (Topic 10.4)

• Question 12

  0.5 out of 0.5 points

• 	Ruth Sullivan, an employee of Zoltron Ltd., was authorized by the board of directors to purchase lot A from Stone Bros. Ltd. Although there were no restrictions set out in the incorporating documents, there were several internal rules for such sales. Contrary to these rules, she used Form 3 instead of Form 5 and obtained the signature of the president instead of the secretary when she entered into the contract on behalf of the company for lot A. Which one of the following is true? Answer
  	Selected Answer:

• The company would be bound if Stone Bros. Ltd. did not know of the irregularity and could not reasonably have known of it.

• Correct Answer:

• The company would be bound if Stone Bros. Ltd. did not know of the irregularity and could not reasonably have known of it.

• Answer Feedback:

• You are correct! According to the indoor management rule, a corporation cannot claim that it has not followed its own rules and procedures and thus avoid responsibility for the actions of its agents. As long as the agent is acting within the scope of its apparent authority and the third party has no notice of any irregularity, there is no need for the third party to enquire further if the authority appears to be in order. (Topic 10.4)

• Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 49, page 509. ISBN: 0-13-088202-X

[Elena Tcherkassky]

Hello Everyone! I was taking MA1 at fall session and next planning to take FA2. If someone interested to exchange assigments and quizes results please let me know. We had a great group studing together LW1, let's continue helping each other. Please let me know.
Whishing everybody Good Luck on the exam!
 

---

From: elenatch...@hotmail.com
To: lw1-s...@googlegroups.com
Subject: Re: {LW1 Summer} Quiz #5
Date: Mon, 13 Aug 2012 22:02:56 -0400

[Maryam Jan Mohammadi]

I am currently taking FA2 and can send you all the materials in exchange for the MA1 material. Let me know and thanks for the offer.

 

Maryam J.Mohammadi

Accounting & Leasing Coordinator

Del Management Solutions Inc.

30 Metcalfe Street, Suite 6002

Ottawa ON

K1P 5L4

T:(613)260-3416 Ext: 502

F:(613)260-3566

Email:mar...@dmsproperty.com

--
 
 
 

[Lori Roberts]

Sounds like a great idea. I'm also taking FA2 next!

Lori


Sent from Samsung Mobile

[Young Hong]

• Question 1

  0.5 out of 0.5 points

• 	Which one of the following situations would allow a shareholder to sue on behalf of the company? Answer
  	Selected Answer:     The company had been wronged (lost $30,000) by the negligent and fraudulent acts of one of its directors but the company refused to take any action against the wrongdoer. Correct Answer:     The company had been wronged (lost $30,000) by the negligent and fraudulent acts of one of its directors but the company refused to take any action against the wrongdoer. Answer Feedback: You are correct! A derivative action gives shareholders the right to sue directors on behalf of the company when the directors have done something actionable and the board will not act. (Topic 10.8) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 33, page 502. ISBN: 0-13-088202-X

• Question 2

  0.5 out of 0.5 points

• 	Smith, Jones, and Brown incorporated a company in British Columbia called XYZ Ltd. The three were sole shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the company, but they disliked his personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and employee and raised their own salaries as employees. They then voted Smith out as a director at the next shareholders’ meeting. Which one of the following provisions of the Act governing companies would aid Smith? Answer
  	Selected Answer:     Oppression remedy Correct Answer:     Oppression remedy Answer Feedback: You are correct! The oppression remedy allows individual shareholders who have been unfairly treated as a result of the way that the corporation was managed to seek a personal remedy. (Topic 10.8) Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 3, page 489. ISBN: 0-13-088202-X

• Question 3

  0.5 out of 0.5 points

• 	Which of the following describes the bylaws of a corporation? Answer
  	Selected Answer:     They provide the general operating rules to run the business of the corporation. Correct Answer:     They provide the general operating rules to run the business of the corporation. Answer Feedback: You are correct! The bylaws of a corporation provide the general operating rules to run the business of the corporation. (Topic 10.2)

• Question 4

• 0.5 out of 0.5 points

• 	Which of the following statements accurately describes the rights of shareholders? Answer

• Selected Answer:     The shareholders have the right to elect the members of the board of directors, and to certain information about the corporation. Correct Answer:     The shareholders have the right to elect the members of the board of directors, and to certain information about the corporation.

• Answer Feedback: You are correct! The shareholders have the right to elect the members of the board of directors and to certain information about the corporation (Topic 10.7).

• Question 5

  0.5 out of 0.5 points

• Which of the following does a shareholder bringing a derivative action need to show? Answer

• Selected Answer:

• That the directors will not bring the action

• Correct Answer:     That the directors will not bring the action

• Answer Feedback: You are correct! A derivative action occurs when shareholders bring an action, with permission of the courts, in the name of a corporation in respect of a wrong done to the corporation. In order to obtain permission for a derivative action, the shareholders must prove 1) that the directors will not bring an action; 2) that the shareholders are acting in good faith; and 3) that the action is in the best interests of the corporation or shareholders. (Topic 10.8)

• Question 6

• 0.5 out of 0.5 points

• 	Which one of these is true? Answer

• Selected Answer:     A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. Correct Answer:     A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority.

• Answer Feedback: You are correct! A corporation is bound by the acts of its officers as long as they are acting within the scope of their apparent authority. (Topic 10.5)

• Question 7

  0.5 out of 0.5 points

• 	Victor is a director of Transport Co. and has used his Private Co. to bid against Transport Co. for a shipping contract. Private Co. ultimately obtained the contract. The board of directors of Transport Co. has decided not to pursue the matter. What recourse is available to the shareholders of Transport Co.? Answer
  	Selected Answer:     Bring a derivative action Correct Answer:     Bring a derivative action Answer Feedback: You are correct! A derivative action gives shareholders the right to sue directors on behalf of the company when the directors have done something actionable, and the board will not act. (Topic 10.8)

• Question 8

  0.5 out of 0.5 points

• 	Which one of the following is true with regard to the rights of shareholders? Answer
  	Selected Answer:

• Shareholders have the right to request a court-appointed inspector to examine the auditing process.

• Correct Answer:

• Shareholders have the right to request a court-appointed inspector to examine the auditing process.

• Answer Feedback: You are correct! Upon application, the courts may appoint an inspector if a prima facie case establishes the probability of serious mismanagement. (Topic 10.7)

• Question 9

  0.5 out of 0.5 points

• 	Wolfgang is a dog breeder and the owner of Canine Co. He is also a director of Guard Co. which provides guard-dog services to various corporations. Guard Co. wants a steady and reliable supply of dogs for training and negotiates with various kennels. It also negotiates with Canine Co. Which of the following is true? Answer
  	Selected Answer:

• Wolfgang cannot vote as a director of Guard Co. on the proposed contract with Canine Co.

• Correct Answer:     Wolfgang cannot vote as a director of Guard Co. on the proposed contract with Canine Co.

• Answer Feedback: You are correct! A director has a fiduciary duty to the corporation and must disclose to the corporation that he or she stands to benefit from a contract with the corporation, and is not allowed to vote. (Topic 10.6)

• Question 10

  0.5 out of 0.5 points

• 	Art Raskle was an officer, director, and employee of a large reporting company. At a directors’ meeting, he was surprised but pleased to learn that the company was discussing a resolution to contract with the firm of Fielding’s Office Supply for $200 worth of office equipment. He and Patricia Eastern recently bought that business; Raskle has a 45% interest. Raskle voted for the contract and the resolution passed without discussion by a vote of 6-0. Several months after completion of the purchase, the other directors learned of Raskle’s interest in Fielding’s Office Supply and called on him to account to the company for any profit made. He admitted the ownership and a profit but referred to a provision in the articles of the company and also in his employment contract that provided that he, like the other directors, was relieved from his fiduciary duty to the company. Which one of the following is true? Answer
  	Selected Answer:

• Raskle must account for any profit made as a director because he failed to disclose his interest and voted on the question.

• Correct Answer:     Raskle must account for any profit made as a director because he failed to disclose his interest and voted on the question.

• Answer Feedback: You are correct! Directors must disclose to the other directors the fact that they stand to benefit from a contract with the corporation and must account for any profit from the queried transaction. (Topic 10.6)

• Source: Ruth Yates, Business Law in Canada: Test Item File, 6th edition (Prentice Hall, 2002), Question 34, page 503. ISBN: 0-13-088202-X

• Question 11

• 0.5 out of 0.5 points

• 	Which of the following statements most accurately describes the indoor management rule that applies to corporations? Answer
  	Selected Answer:     The corporation will be bound by the actions of its agent as long as a third party has no notice of any irregularity. Correct Answer:     The corporation will be bound by the actions of its agent as long as a third party has no notice of any irregularity. Answer Feedback: You are correct! As long as the agent is acting within the scope of its apparent authority and the third party has no notice of any irregularity, the corporation will be bound by the actions of its agent. (Topic 10.5)

• Question 12

  0.5 out of 0.5 points

• 	Which one of the following is true with regard to a derivative action? Answer
  	Selected Answer:     A derivative action is brought by a shareholder against the directors because they will not bring an action. Correct Answer:     A derivative action is brought by a shareholder against the directors because they will not bring an action. Answer Feedback: You are correct! A derivative action gives shareholders the right to sue directors on behalf of the company when the directors have done something actionable and the board will not act. (Topic 10.8)

Wednesday, August 21, 2013 9:58:38 AM EDT