The following are the characteristics of a close corporation, except: a. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid. b. Pre-emptive right does not extend to all stock issuances. c. Deadlock in the board is settled by the SEC upon the written petition by any stockholder. d. A stockholder may withdraw and avail of his right of ap

The following are the characteristics of a close corporation, except: a. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid. b. Pre-emptive right does not extend to all stock issuances. c. Deadlock in the board is settled by the SEC upon the written petition by any stockholder. d. A stockholder may withdraw and avail of his right of ap

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 3BCRQ

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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.
Direction: Write T if the statement is correct and F if the statement is incorrect. On the space provided, explain using the concepts discussed why your answer to a statement is T or F. 1. A corporation can be formed by mere agreement among shareholders. 2. Shareholders are not liable to corporate obligations in excess of their contribution. 3. Authority of the corporation to operate has to be granted by the state. 4. Death of a shareholder will dissolve the corporation. 5. Shares cannot be transferred without the consent of the other shareholders. 6. All incorporators are subscribers but a subscriber need not be an incorporator. 7. The ultimate control of the corporation rests with the board of directors. 8. Shareholders can transact business on behalf of the corporation. 9. All incorporators are shareholders but not all shareholders are incorporators. 10. In a corporation, minority shareholders are compliant to the wishes of the majority.
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 shareholders
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 stockholder dissatisfied with the management of the corporation done by the Board of Directors surrenders his certificate of stocks and demands the return of the subscription price paid by him. Can he rightfully do this? Explain.
What is the control requirement of § 351? Describe the effect of the following in satisfying this requirement: A shareholder renders only services to the corporation for stock. A shareholder renders services and transfers property to the corporation for stock. A shareholder has only momentary control after the transfer. A long period of time elapses between the transfers of property by different shareholders.
One of the following is not an attribute of a close corporation: Restriction can be made prohibiting the transfer of stock to outsiders unless and until the corporation buys these stocks from the transferring stockholder. Management of the corporation may be entrusted to the stockholders rather than to a А. В. board of directors. The number of stockholders may exceed 20 persons The stocks are not listed in any stock exchange or offered to the public. С. D.
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 FALSE
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.
In case of failure to submit the stock certificates on time, can the corporation choose not to terminate the right of appraisal?
Indicate whether each of the following statements is true or false. 1. The corporation is an entity separate and distinct from its owners. 2. 3. 4. 5. The liability of stockholders is normally limited to their investment in the corporation. The relative lack of government regulation is an advantage of the corporate form of business. There is no journal entry to record the authorization of capital stock. No-par value stock is quite rare today. False True
Which of the following statements is CORRECT? A The stock of publicly owned companies does not need to be registered with and reported to a regulatory agency such as the SEC. B When a corporation's shares are owned by a few individuals, we say that the firm is publicly traded. C "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. D When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public, or an IPO," and the market for such stock is called the new issue or IPO market. E If a firm goes public, it will always raise additional new capital for the firm itself.