Question 1(1 point)

Joe is a director of ABC Ltd. He is contemplating selling his vacant lot to the company for its expansion. Joe must:

Question 1 options:

take care that other shareholders are included

disclose his interest in the contract at the first shareholders meeting

disclose his interest in the contract at the first directors meeting

none of the above

Question 2(1 point)

O'Malley was a director of Canaero, a corporation specializing in aerial surveying. He was hired to work on a project for the corporation in Guyana, during which he learned alot about the terrain and made some useful contacts. He subsequently resigned from Canaero, formed his own corporation, and successfully tendered for a surveying contract with the government of Guyana.

Question 2 options:

O'Malley is in breach of his duty of care and skill

O'Malley is in breach of his fiduciary duty to Canaero and accountable to it for his profit on the contract

O'Malley is not in breach of his fiduciary duty

Question 3(1 point)

Financial statements of the corporation:

Question 3 options:

must be presented every quarter

are prepared by creditors

must be presented to the shareholders prior to the annual general meeting

must be presented every month

Question 4(1 point)

A private corporation:

is one that is also referred to as a reporting corporation

is one that is not permitted to offer its shares to the public

is subject to an annual audit

none of the above

Question 5(1 point)

A widely held corporation is usually subject to:

a restriction on the number of shareholders

a restriction on transferability

onerous disclosure laws

the supervision of one director

Question 6(1 point)

Rosina has recently developed a highly original computer program that, she claims, will revolutionize the practice of landscape architecture. She has been advised by a consultant that marketing the software is likely to be a highly profitable venture. However to develop and market the project will require working capital, which Rosina does not have. Fortunately her uncle, Bartolo, has agreed to put $100,000.00 of his savings into the project. With the held of a lawyer friend (who has advised them that they should each obtain independent legal advice), they have worked out a rough structure for their project, as follows: a) They will form a corporation, of which they will be the sole shareholders; b) Rosina will assign her copyright in the program to the corporation and will work full-time in developing and marketing it; c) Bartolo will contribute $100,000.00 in cash as working capital and will participate in major management decisions but will not be responsible for the day-to-day running of the business. Since Rosina will be giving up a fairly well-paid job in order to develop the new business, she is concerned that she should not be left entirely without income during the initial period (when there would be no sales revenue). In turn, Bartolo would like there to be some sort of guarantee of a reasonable return of income on his investment. Bartolo should:

Question 6 options:

take back a secured bond or debenture

become a common shareholder only

become an employee

insist on being the president

Question 7(1 point)

A corporation is:

a natural person

a legal person

a partnership

none of the above

Question 8(1 point)

The corporate security which carries the least risk to its holder is:

a preferred share

a bond or debenture

a non-voting share

a common share

Question 9(1 point)

All of these statements are correct EXCEPT for which of the following?

shares are equity in a corporation

shareholders are entitled to dividends only when the corporation makes a profit and the directors declare that dividends shall be paid

shares are a proportionate ownership of a corporation

shareholders are in a debtor/creditor relationship with a corporation

on a winding-up of a company, shareholders are repaid after creditors

Question 10(1 point)

When a corporation borrows to raise funds, it is said to:

issue equity

become a creditor

issue debt

become insolvent