30) If no-par stock is issued without a stated value, then A) the par value is automatically S1 per share. B) there is no legal capital. C) the entire proceeds are considered to be legal capital. D) the corporation is automatically in violation of its state charter.
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- Whereas, a decrease of the authorized capital stock will not be approved by the SEC if the effect is to prejudice the rights of the creditors, and yet no such qualification is provided for under the Corporation Code when it comes to the increase in authorized capital stock, because – It is an application of the coverage of the trust fund that always makes an increase of authorized capital stock favorable or non-prejudicial to the creditors of the corporation. It is presumed that creditors of the corporation will always be happy with the increased of its authorized capital stock. No appraisal right is triggered by an increase in the authorized capital stock of the corporation. Creditors of the corporation, not being within the intra-corporate relationship, have no standing on matters that pertain to the capital structure of the corporation.True or False. a corporation is cease to exist when its shareholders sell their stock.T2. stock holders are not liable for a corporation's actions or debt true or false
- 13) The principle of limited liability means: a) creditors cannot seize corporate assets b) that the corporations liability to creditors is limited to the amount of paid up capital c) a shareholder can lose no more than what he has paid for his shares in the event that creditors seize the corporations assets d) none of the above6. These give the holders the privilege to purchase shares of stocks at a price lower than the prevailing market price of the shares upon the issuance of new shares. 7. The difference of if the issue price is less than the par or stated value of the share. 8. A corporation which has no share capital and where no part of its income is distributable as dividends to its members. 9. A private corporation tasked by the government to provide public service. 10. The SEC issues the certificate of incorporation after this document is filed and duly approved.12. When a company retires its own common shares, the company must a.decrease the common share account balances by the original issue price. b.record a gain or loss depending on the difference between original selling price and repurchase cost. c.get the approval of the government to do so. d.issue a different class of shares to the former shareholders.
- all of the following are true about the issuance of non-voting common stock except a. it has been issued when the corporation wishes to raise capital through the sale of common stock but does not want to relinquish its voting control o b. it has been issued as a defense against an unfriendly takeover c it tends to result in the dilution of voting rights of current stockholders od. it tends to result in unequal voting rights among the shareholdersWhich of the following reduces a shareholder's S corporation stock basis? O Illegal kickbacks paid. O Depletion deductions in excess of the basis of property. O Nontaxable income. O No response is correct. O A 20% QBI deduction.If a company’s constitution does not contain rules governing the forfeiture of shares, then the company: Select one: A. can register the shares in the name of another shareholder but cannot receive payment from that shareholder. B. may forfeit shares and reissue them at a later date. C. may forfeit shares but not reissue them. D. cannot forfeit shares.
- A corporation cannot be held liable for personal indebtedness of a stockholder even if he is its President. TRUE FALSE By the doctrine of piercing the veil of corporate entity or looking at the substance rather than the form is meant that the law will regard the corporation as a mere association of persons and not of a legal entity separate and distinct from the stockholders. TRUE FALSE No par value shares may not be issued without being fully paid. TRUE FALSE Redeemable shares may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation. TRUE FALSE Treasury shares shall have no voting rights as long as they remain in the Treasury TRUE FALSE Treasury shares are entitled to participate in the distribution of dividends. TRUE FALSE7. With regard to preferred shares, a.their issuance provides no flexibility to the issuing company because their terms always require mandatory dividend payments. b.their shareholders may have the right to participate, along with common shareholders, if a dividend is declared. c.no dividends are expected by the shareholders. d.there is a legal requirement for a corporation to declare a dividend on preferred shares.When a certificate of stock is issued for shares whose subscription is not fully paid, then – a) the certificates are deemed null and void for being in violation of express prohibition of the Corporation Code. b) the directors and officers who allowed such issuance of the certificate shall be liable to the corporation for the balance of the subscription that remains unpaid. c) the shares are conclusively deemed fully paid as to every due holder in good faith of the certificate of stock. d) the registered stockholder shall no longer be liable for the unpaid portion of the subscription.