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Law of Business Organizations, LS 435 (01) Corporate Financial Structure Name Classification of Shares Worksheet (#3) Directions: Make recommendations for the following situations: 1. A
Law of Business Organizations, LS 435 (01) Corporate Financial Structure Name Classification of Shares Worksheet (#3) Directions: Make recommendations for the following situations: 1. A will invest $100,000 in the corporation, and B will perform services without a cash or property investment. Both A and B are to receive stock, but they want to be sure that A gets all of A's invested capital back before B can receive any dividends on B's shares. 2. C invests $250,000, D invests $10,000, and E only performs services. All expect to share profits equally, but if the corporation is dissolved and liquidated, C must have a priority to the assets to recover all of C's invested capital first, then D has priority to recover D's invested capital, and C, D, and E will all share equally in the allocation of liquidated assets thereafter. 3. X and Y are both investors, and X intends to remain passive in the corporation by exercising no control, unless three consecutive dividends are missed. At that point, X wants to be able to elect all of the members of the board of directors. 4. M is willing to invest $1,000,000 in a corporation, but insists upon receiving a dividend preference of 25% per year. The board of directors of the corporation is concerned that this is a very expensive price to pay for invested funds, and have asked for a procedure to eliminate this investment by M at their option
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