Which of the following provisions must a for-profit corporation include in its articles of incorporation to obtain a corporate charter?I). Provision for the authorization of voting stock.II). Name of the corporation.
Answer(s): C
Choice "c" is correct. Both I and II.Rule: In order to obtain a corporate charter, a for-profit corporation must include in its articles of incorporation the name of the corporation and a provision for the authorization of voting stock. In addition, the articles of incorporation must include the names of the incorporators and the name and address of the registered agent. Choices "a", "b", and "d" are incorrect, per the above rule.
The corporate veil is most likely to be pierced and the shareholders held personally liable if:
Answer(s): B
Choice "b" is correct. Generally, a corporation is treated as an entity distinct from its shareholders and shareholders are not liable for the corporation's debts. However, where the shareholders do not treat the corporation as a distinct entity, such as where they commingle their personal funds with the corporation's funds, courts are likely to ignore the corporate form as well.Choice "a" is incorrect. An election to be taxed like a partnership under Subchapter S is not grounds to pierce the corporate veil.Choice "c" is incorrect. An ultra vires act is one beyond the corporation's powers. The persons who authorized the ultra vires act can be held personally liable for damages caused, but it is not a ground for piercing the corporate veil.Choice "d" is incorrect. Limiting personal liability is the main reason to incorporate. It is a ground for piercing the corporate veil only if it is done fraudulently (i.e., to avoid paying present creditors).
Generally, a corporation's articles of incorporation must include all of the following, except the:
Answer(s): D
Choice "d" is correct. A corporation's articles of incorporation need not contain any information regarding quorum requirements.Choices "a", "b", and "c" are incorrect because under the Revised Model Business Corporations Act a corporation's articles of incorporation must include:(1) The name of the corporation,(2) The name and address of the corporation's registered agent,(3) The names and addresses of each of the incorporators, and(4) The number of shares authorized to be issued.
Which of the following actions may a corporation take without its stockholders' consent?
Choice "d" is correct. Directors are free to make most corporate decisions unilaterally. However, decisions that might fundamentally change the nature of the corporation require the consent of the shareholders. The purchase of 55% of another corporation's stock can be quite insignificant to the purchaser and is not a fundamental corporate change.Choice "a" is incorrect because a consolidation is a fundamental corporate change. Choice "b" is incorrect because a merger is a fundamental corporate change.Choice "c" is incorrect because a dissolution is a fundamental corporate change.
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